MIAMI – Lugano-Agno Airport (LUG) will be put into “orderly” liquidation and 72 employees will lose their jobs as the COVID-19 pandemic has currently left the airport without any other options.

It is now unviable for LUG to continue operations in its current state in what is yet another airport that succumbs to the fallout of the coronavirus. Thus, the structure will be put into ordinary liquidation, pending a new solution with private sectors.

On Thursday afternoon’s press conference, Filippo Lombardi, vice chairman of the board of directors of LUC said, “The coronavirus epidemic has prevented another outcome.”

Lombardi went on to say that while the liquidation would be formalized next week at a shareholders’ meeting, it did not equate to bankruptcy as the airfield would further allow for minimal airport activity.

According to Swiss Newspaper, the now recently dismissed airport employees will continue to get their wages until the end of May while creditors that have agreed to reduce their claims, such as Skyline, will also receive their corresponding returns.

The effects of the pandemic on LUG saving referendums

Two April 26 referendums launched by the left against state support for LUG were postponed due to the pandemic, which impeded the citizens of Lugano and Canton to vote on helping or not the airport’s financial situation.

Lombardi stated that it would not have been responsible for the board of directors to apply for a loan that it knew it could not repay,” even though the beginning of Q1 had been positive for the airport, with a 40% increase in turnover.

But the vice-chairman correctly blamed the epidemic for the total collapse of the airport, stating that “with less than one flight per day, [the pandemic] cut the wings of the airport.”

In addition, negotiations started with Swiss carrier Lions Air to resume one flight between Geneva and Lugano have also been postponed to an unspecified date.

A bitter no contest for LUG

“[It is] sad day, which leaves a bitter taste. The airport loses the game without having had the opportunity to contest it,” said the president of the Board of Directors and Mayor of Lugano, Marco Borradori in relation to the postponement of the referendums.

Borradori did understand however why the referendums were postponed, noting that it was a common-sense decision and adding that pandemic had completely changed the paradigms of the predicament.

According to the Mayor, COVID-19 had an effect similar to a “bomb,” putting “the world of aviation on the ground,” specifically airports worldwide, including those of Zurich or Geneva. “Imagine a structure like that of Lugano.”

Thus, it was unsustainable for the trustees to use democratic strategies to hand out financial aid. “It would have been relentless,” admitted state councilor Claudio Zali, who expressed disappointment on behalf of the canton for the jobs lost.

Alas, the councilor deemed the whole ordeal as a “small defeat for democracy,” adding that with “hypothetical popular support, we could have had a different scenario. But now there’s no point talking about it.”

Seeking help from the private sector

According to Swiss Newspaper, in light of the liquidation, the canton will stop managing the airport, leaving the city, owner of the facilities and holder of the federal concession, in charge, at least for duration of this transition phase.

To this effect, airport activity will be kept to a minimum. In addition, for the transition period, respondents will hire staff for 13-14 Full Time Equivalents (FTE), as stated by airport director Maurizio Merlo.

Ultimately, it is going to be a waiting game for a new company with private investors to step in and save the airport. Thus, to speed up the process of acquiring such private investment, a working group was installed to head up the discussions.

A history of challenging circumstances for LUG

Since 2017, the airport has had problems related to the grounding of the Darwin company and the bankruptcy of the Slovenian company Adria Airways, which granted the Zurich-Lugano link in conjunction with Swiss.

However, according to Swiss Newspaper, the Lugano Municipal Council (Legislative Council) forwent beyond bridge financing for the year 2020, rejecting later another airport recovery plan set for 2024, and thus limiting any financial support from exclusive shareholder, the canton.