Even before COVID-19, the civil aviation sector was seeing long-term disruption. But the pandemic changed the sector beyond recognition.


  • Cash and capital management remain front-and-center
    Liquidity will remain critical for all players for the foreseeable future. Cost efficiency will remain a continuous focus.

  • New business models and liquidity options emerge
    Changes in traveler profiles will necessitate a strategic business model pivot. Creative liquidity options and new revenue streams are needed.

  • Patchy return to international travel drives uncertainty
    Continued challenges remain right along the value chain. Airports, suppliers and financial players are looking for resilience and certainty.

Aviation industry insights

Until 2019, the market environment for the civil aviation sector was made up of mostly tailwinds. Sure, there were a number of challenges and disruptions. Demand for a greater focus on sustainability had put the sector under public scrutiny. Low-cost carriers were unbundling and commoditizing the air travel experience. Volatile operating costs were creating some margin pressures.

COVID-19 eclipsed most of those pressures overnight. In some cases, demand for air travel collapsed to 10 percent of pre-pandemic levels. The consequences for businesses across the sector - from aircraft lessors and trade creditors through to fuel and catering supply organizations - were often brutal.

What is now clear, however, is that the impacts of COVID-19 will reverberate around the world - and across the civil aviation sector - for years to come. The rollback of travel restrictions will be uncoordinated, patchy and uncertain in many markets. Consumer confidence will take time to rebuild, particularly in certain parts of the world. Business travelers will continue to Zoom their meetings for the time being.

In this environment, civil aviation players will need to place particular focus on cashflow forecasting and analysis, as well as cost management, general operational restructuring and - in a few cases - even formal restructuring options.

How can KPMG help?

Supporting the civil aviation sector

When facing a distressed situation or needing to deal with market disruptions, you need a partner and advisor that understands the sector, that has strong relationships with airlines, lessors and investors, and that has the insight to help you find opportunities to pursue alternative options to formal restructuring.

KPMG's restructuring team brings extensive experience working in industry and supporting civil aviation companies in distressed situations. We have been appointed to help some of the world's leading airlines, holding companies, suppliers and lessors deal with distressed and challenging situations, both formally and informally.

Case Studies

The situation:

COVID-19 sent passenger numbers and revenues down by more than 90% in a matter or months. The company faced significant cash and working capital challenges.

The solution:

KPMG moved quickly to conduct an assessment of the company's cash and working capital position, identifying targeted measures that would stabilize the business and allow it to continue to trade through the crisis. KPMG then took a deeper dive into each category, benchmarking leasing rates and analyzing the overall business plan. This led to detailed feedback on the company's position and future strategic direction.

The outcome:

The airline maintained operations through the crisis and continues to trade successfully, maintaining positive cash balances throughout. Revenues and profitability are now also growing on the back of important cost structure changes suggested and implemented by KPMG.

The situation:

Like all other airlines, Norwegian Air Shuttle's passenger numbers and revenues plummeted during the pandemic. By September 2020, the group was insolvent and required Examinership (a process similar to the Chapter 11 process in the US).

The solution:

KPMG's Kieran Wallace was appointed Examiner by the Irish High Court in November 2020. Overseeing the process across four wholly-owned subsidiaries of Norwegian Air Shuttle ASA, the KPMG team worked to protect the assets and reduce creditor balances through a scheme of arrangements while, at the same time, seeking investment that would allow the company to exit the Examinership process and continue trading.

The outcome:

The scheme of arrangement was approved by the creditors and by the High Court, allowing the group to exit Examinership in Spring 2021. The company now trades with a much-reduced fleet and leaner operating cost models.



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