This is an article about the crisis of the passenger transport companies using the example of Naviera Armas, a famous Spanish ferry company.
We have read on the journals this week that Naviera Armas, one of the giants of maritime transport, is going bankrupt. The rating agency Moody’s has lowered its rating from Caa2 to Ca with a negative outlook, which places it on the verge of default.
The company proposed to its shareholders a capital increase to be put to a vote at the general meeting to be held on May 2020, and hired Houlihan Lokey, a firm specializing in corporate restructuring to ensure its viability, to get liquidity and to face his huge debt, according to information from Bloomberg. However, the miracle is not coming yet.
Currently now, the company cannot afford to pay interests on a 282 million euro issue that expires in 2023, due to the collapse of revenues because of the lack of passengers during the pandemic. Naviera Armas is still operating and has asked to Moody’s 30 extra days (included as term in their contract) before being declared in bankrupt.
We have mentioned before the consequences that could remain after the pandemic for travelling. Moreover, we regret the loss of value and the impoverishment of the services that travellers normally use, because of the restrictions and the banning of travelling during this period.
We are speaking about a navy sector that needed to evolve and dramatically reconvert when the low-cost flights started to cover many of their routes. They already managed to keep a piece of the market offering quality services and providing nice solutions to transport big stuff. For travellers using ships is still, besides being romantic, a good alternatives for specific plans.
Naviera Armas is a classic of the Spanish ferry companies, operating since 1941, which provides routes from Spanish Peninsula to Morocco and especially in between all the Canary Islands. To be able to move in between islands bringing with you your car, van, motorbike and heavy belongings is a service very well-appreciated by travellers and very needed by locals.
Of course, on Canary Islands, besides Naviera Armas do exist more companies like Líneas Romero or Fred Olsen, but to lose one of the important competitors is a handicap for all the passengers. Naviera Armas provides fair priced tickets and a very correct service. In addition, without it, some of the routes will run into a de facto monopoly in the short term.
Besides that, they own Transmediterranea, which is also a classic of the Spanish ferries from Spanish Peninsula to Balearic Islands and in between those islands. Spain has two main archipelagos and both are in threat now of losing one of their main operating ferry companies.
We have used both Naviera Armas and Transmediterranea. Recently, we have sailed with Naviera Armas on Canary Islands and our experience was good. The ticket price was cheaper comparing with the competitor from Fuerteventura to Lanzarote Island, the welcoming was really kind and professional, the boarding was quick and well-organized and the prevention measures for Covid-19 were always present and respected. They constantly reminded about wearing the mask since you are boarding and the security distances were very easy to keep. The bad news are that the ship was almost empty since there were very few tourist on the islands.
However, why there are that few tourist regardless all the prevention mesures? Many factors influence on that: the over frightening news on the media, the governments recommendations not to go anywhere, the restrictions and the constant changes of regulations that keep everybody out of the dare of making middle term plans. But, ladies and gentlemen we are not killing one or two concrete companies we are delving into a wound that will take a long time to heal and when the pandemic fortunately passed away some structural damages will remain for long.