SHARE
COPY LINK

FINANCIAL CRISIS

Dramatic rise in bankruptcies

The number of Swedish firms going bust in March increased by 85 percent, in comparison with March 2008, according to a new report from credit rating agency UC.

“This is due to the weakening economy and the decline of private consumption in these worrying times,” UC’s Fredrik Polland said on Tuesday.

Worst hit by the wave of bankruptcies are newly started small and medium-sized retail firms in Stockholm, Gothenburg and Malmö.

“Many new stores and shopping centres have been established recently. When market demand declines there are not enough customers to go around. It is particularly apparent in the major cities where there are a large number of retailers.”

The situation was compared by UC to the crisis that hit Sweden in the beginning of the 1990s.

“The growth in bankruptcies that we are now seeing casts my mind back to the crisis at the beginning of the 1990s,” according to UC’s Roland Sigbladh.

Sigbladh warned though that the dramatic change on March 2008 should be placed in the context that last year experienced the lowest level of company failures in modern times.

“The crisis in the 1990s involved many more bankruptcies and differed from today with as there were property company failures. But the rate of the increase is familiar from that period,” Sigbladh said according to a UC press release on Tuesday.

Bankruptcies increased by 51 percent over the course of the first quarter.

1,909 companies filed for bankruptcy during the first quarter, 735 in March.

So far the rate of bankruptcies is lower than in 2003, in the wake of the IT stock market bubble. But UC forecast that these levels would soon be exceeded.

“But the proportion of company failures has some way to go to beat 2003. The large number of companies today is also in itself a significant explanatory factor behind the dramatic rise in bankruptcies,” according to UC.

Aside from retail the transport sector and the metal industry are the sectors which have been hit hard by the wave of bankruptcies.

NORWEGIAN

Norwegian’s subsidiaries in Denmark and Sweden go bankrupt

The struggling low-cost airline Norwegian has reported its staffing subsidiaries in Denmark and Sweden have filed for bankruptcy, meaning roughly three quarters of its pilots and crew will lose their jobs.

Norwegian's subsidiaries in Denmark and Sweden go bankrupt
A Norwegian Air Shuttle plane: Photo: Norwegian

In a press release issued on Monday afternoon, the airline said that the financial support packages offered by the Swedish and Danish government had not been sufficiently generous to keep the subsidiaries which employ pilots and cabin crew in the two countries solvent. 

”The impact the Coronavirus has had on the airline industry is unprecedented. We have done everything we can to avoid making this last-resort decision and we have asked for access to government support in both Sweden and Denmark”, said Norwegian's chief executive Jacob Schram in the statement.  

“Our pilots and cabin crew are the core of our business and they have done a fantastic job for many years.”

“It is heart-breaking that our Swedish and Danish pilot and cabin crew subsidiaries now are forced to file for bankruptcy, and I’m truly sorry for the consequences this will have for our colleagues,”  Norwegian's chief executive Jacob Schram said in the statement.  

“We are working around the clock to get through this crisis and to return as a stronger Norwegian with the goal of bringing as many colleagues back in the air as possible.”

The company said it was also immediately ending staffing deals with the OSM Aviation, which supplies it with crew based in Spain, UK, Finland, Sweden and the US.

The company said that 1,571 pilots and 3,134 cabin crew would be affected by the move, with only the 700 pilots and 1,300 cabin crew based in Norway, France and Italy being kept on.

In the release, the company blamed the “the lack of significant financial support” from the Swedish and Danish governments, which it contrasted with that of Norway, which has agreed to pay “all salary related costs” while staff are furloughed. 

The companies declared bankrupt include: 
 
Norwegian Pilot Services Sweden AB
 
Norwegian Pilot Services Denmark ApS
 
Norwegian Cabin Services Denmark ApS
 
Norwegian Air Resources Denmark LH ApS
SHOW COMMENTS