The current health pandemic (also known as COVID-19) came by so fast. It crippled the largest and most powerful economies in all four corners of the globe. There was no time to waste, but not much time to shield the economy from suffering a horrifying meltdown. For many world leaders, the lives and health of citizens is a priority. Businesses and profits come second. Business closures due to the pandemic are unavoidable, but the scale of its casualties came as a shock.
Out of all, there are two industries that are greatly affected by the pandemic for very obvious reasons. The first is the energy industry and the second, the worst-hit of all, is the travel industry.
Energy, Oil, and Gas Industry
Since lockdown and mandated quarantines have forced people to stay inside their homes, the demand for petrol has decreased significantly. This is on top of the ongoing price crisis in the Middle East. On top of this, local travel has decreased severely for the past few months. It will take a significant amount of time for these companies to fully recover. Here are some of the large-scale businesses that declared bankruptcy due to the pandemic:
- Chesapeake Energy
- The famous sponsor of the NBA’s OKC Thunder has filed for Chapter 11 bankruptcy (or bankruptcy protection). It is one of the largest-scale companies, valued at $16.2B, affected by COVID-19. Although financial problems within the company started in 2013, the firm took a greater hit due to the ongoing health pandemic.
- Whiting Petroleum
- This offshore drilling company filed for bankruptcy in April of 2020. There are rumors that even if Whiting Petroleum’s stocks will fall by 50%, it might never recover. With climate change and environmental protection laws, many people are discouraged to buy their stocks.
- Diamond Offshore Drilling
- In a similar position as Whiting petroleum, increased debts and reduced demand dwindled the finances of this offshore drilling company. COVID-19 further decreased the demand, forcing the company to layoff hundreds of workers.
In a crisis such as now, business closures due to the pandemic will lead to millions of jobs lost. The purchasing power of the people will be reduced significantly, as income will come by slowly. This means that purchasing basic necessities like food and shelter will become the priority of buyers. This is why many retailers in the industry are severely affected by the pandemic. Here are some of the large-scale retailers that were significantly affected by the pandemic:
- J.Crew has started to undergo restructuring and reorganizing processes to recover from the devastating effects of the pandemic.
- JC Penney
- Closing down hundreds of stores nationwide, JC Penney seems to be the largest retailer affected by the pandemic. It has even closed down its iconic Manhattan store permanently.
- Neiman Marcus
- A famous luxury retailer in the US has also closed down a number of complexes all over the country.
- A brand that originated from Japan, Muji filed for bankruptcy in early July of 2020. The main reason for filing would be reduced sales throughout the country.
- Brooks Brothers
- One of the oldest and most iconic clothing line in the US, it has been in the business since the early 1800s. Brooks Brothers filed for bankruptcy in early July. It is actually not closing down, but a sale and reorganization of the company will be apparent. Currently, it is looking at two large buyers.
It may come as a surprise that some multiple food establishments chose to close down its doors to the public. Some brands chose to close temporarily, others permanently. It would seem that the extremes are terribly affected. In fact, small firms fail to keep afloat while larger companies incur larger debts. Here are a few surprising food industry casualties:
- Chuck E. Cheese
- Out of its 600 stores nationwide, a total of 34 stores will be closed permanently. This is due, again, to significantly reduced sales throughout the country.
- NPC International
- The owner of the largest franchise of Wendy’s and Pizza Hut in the US, NPC International filed for bankruptcy due to ‘rapid deteriorating liquidity’. It might permanently close down multiple franchises all over the country.
Airlines, Tourism, Communications and Travel industry
Tourism and travel are the most affected industry in this pandemic. International travel, even domestic tourism in the US, is severely affected. This is after the government discouraged movement to prevent the spread of the virus. Bankruptcies and business closures include communication companies, airlines, rentals, and more. Here are a few of the most affected businesses:
- A Mexican airline announced the resumption of operations this July, despite filing bankruptcy protection last June. It plans to remove a total of 19 jets from its lineup. This will result to a layoff of thousands of workers.
- LatAm Airlines
- This airline headquartered in Chile has suspended hundreds of flights in South America due to the continuous spread of the virus in both North and South America. This is the largest airline group in South America. It has not finalized its bankruptcy claims, but a rough estimate of a billion dollars is in consideration.
- If there is no tourism, there are no car rentals as well. This is why the largest rental company in the US is severely affected by the pandemic.
- Avianca Holdings
- Closure of borders in South America has affected the tourism industry significantly. It has recorded a total of $121 M in losses at the beginning of the year.
- Frontier Telecommunications
- This is one of the largest telecommunications companies affected by the pandemic. The company filed for bankruptcy in April.