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| 1 minute read

With travel promising to get worse before it gets better, travel sector companies need to prepare for the long haul

With the somewhat chaotic approach to travel corridors during the summer, and COVID restrictions growing around Europe as a second wave of infections takes hold, it promises to be a long winter for companies across the travel value chain. 

Most travel companies took action early in the pandemic to raise liquidity and reduce costs temporarily, through government furlough schemes and negotiations with suppliers. With optimisim that the pandemic would be over in a few months, and that travel would start to resume in the summer, many of these actions were short-term in nature, or premised on a reasonably rapid travel recovery.  

As we head into a second wave of infections in Europe, what has become clear is that travel demand is not going to recover to 2019 levels for many years. What far fewer companies in the travel sector are addressing at this point, is the scale to which they need to structurally adapt their businesses for the long-term. This includes reducing the size of the organisation to match future levels of demand, ruthlessly evaluating product/route/destination profitability, ensuring sufficient liquidity and a sustainable debt structure, and having a range of scenarios with detailed mitigation plans ready to implement should the worst case scenarios play out.  

As travel companies go into the loss-making winter season, and with little clarity on what travel might look like in 2021, now is the time for companies across the travel sector to fundamentally think about the future and begin the rapid restructuring that will be needed to survive and thrive in the long term.

The parent company of British Airways (BA) has revealed further losses and downgraded its outlook as renewed coronavirus restrictions knock demand for travel.

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travel, tourism, airports, airlines, iag, alixpartners

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