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Bleak Future For European Secondary Carriers?  
User currently offlinebestwestern From Hong Kong, joined Sep 2000, 6959 posts, RR: 57
Posted (2 years 2 months 3 weeks 4 days 18 hours ago) and read 7449 times:

Spanair, Bmi, Virgin atlantic, Cirrus, Malev, CSA Czech Airlines, LOT Polish Airlines, Air Baltic, Wind Jet, Blue Panorama, SAS.... to name a few.

Are the days of secondary network carriers in Europe coming to an end?

http://www.bloomberg.com/news/2012-0...rlines-on-alert-for-investors.html

http://www.aviationweek.com/aw/gener...20Day%20Of%20Reckoning%20Is%20Here


The world is really getting smaller these days
21 replies: All unread, jump to last
 
User currently offlinemozart From Luxembourg, joined Aug 2003, 2157 posts, RR: 13
Reply 1, posted (2 years 2 months 3 weeks 4 days 17 hours ago) and read 7265 times:

Interesting point. Maybe we'll really end up with the three big groups (BAIB, LHLXOSSN, AFKLAZ) as well as Turkish

You might add

- Air Berlin (already dramatic financial problems)
- TAP (dto)
- Cyprus (dto)
- Cimber Sterling
- Aer Lingus
- Brussels ("saved" only through LH takeover)
- Austrian (dto)
- Olympic (OK, that has been a problem child even in good times)

On the other hand, what works really well are the ones focusing on the lower market segments

- Ryanair
- easyjet
- Vueling
- FlyBe
- Norwegian
- Air Europa (though I am unsure about that one)

as well as some niche players such as

- Aurigny
- Darwin
- Eastern Airways
- Luxair


User currently offlineanstar From United Kingdom, joined Nov 2003, 5083 posts, RR: 6
Reply 2, posted (2 years 2 months 3 weeks 4 days 17 hours ago) and read 7261 times:

Quoting bestwestern (Thread starter):
Spanair, Bmi, Virgin atlantic, Cirrus, Malev, CSA Czech Airlines, LOT Polish Airlines, Air Baltic, Wind Jet, Blue Panorama, SAS.... to name a few.

I'd say mostly the short haul carriers. They are the ones that have a huge amount of competition from the LCC's.

Given Virgin Atlantic were profitable last year and have a decent bank balance I don't think there is any chance of them going anywhere.


User currently offlineju068 From Serbia, joined Aug 2009, 2579 posts, RR: 6
Reply 3, posted (2 years 2 months 3 weeks 4 days 17 hours ago) and read 7249 times:

Quoting mozart (Reply 1):
- Olympic (OK, that has been a problem child even in good times)

Huh? Olympic has been doing more than fine since it was privatized!


I think we can add Adria of Slovenia to the list. Now that Croatia is entering the EU the future doesn't seem that bright for OU either.


User currently offlinePe@rson From United Kingdom, joined Jan 2001, 19110 posts, RR: 53
Reply 4, posted (2 years 2 months 3 weeks 4 days 17 hours ago) and read 7187 times:

Quoting ju068 (Reply 3):
Huh? Olympic has been doing more than fine since it was privatized!

OA's 2010 net result (USD, millions) and net margin:

Net result -106.83
Net margin -24.23 %



"Everyone writing for the Telegraph knows that the way to grab eyeballs is with Ryanair and/or sex."
User currently offlineAsturias From Spain, joined Apr 2006, 2038 posts, RR: 16
Reply 5, posted (2 years 2 months 3 weeks 4 days 16 hours ago) and read 7018 times:

Calling SAS a secondary network is rearranging facts to suit one's agenda. One could just as well claim Iberia to be a secondary network airline.

I guess what you meant to say: airline that isn't in tight cooperation with or has merged with others and thusly isn't a huge blob of a company.

For every one of those airlines one can find another "secondary network" airline that's doing just fine. Obviously not counting SAS as secondary network:

Spanair -> Finnair
Bmi -> Icelandair
Virgin atlantic - Doing fine, actually (why are they on this list?)
Cirrus -> Air Nostrum
Malev -> Widerøe
CSA Czech Airlines -> Swiss
LOT Polish Airlines -> Austrian
Air Baltic -> TAP
Wind Jet -> Transavia
Blue Panorama -> Adria Airways

SAS -> *primary network* airline in huge finacial straits.

I don't see what the fuss is all about. Only on a.net do people consider it a strength to be the result of a megamerger or some big-huge blob. For instance it didn't help IB one iota to be owned by the same company that owns BA. IB is still strong, but that's old news.

asturias



Tonight we fly
User currently offlineju068 From Serbia, joined Aug 2009, 2579 posts, RR: 6
Reply 6, posted (2 years 2 months 3 weeks 4 days 15 hours ago) and read 6797 times:

Quoting Pe@rson (Reply 4):
OA's 2010 net result (USD, millions) and net margin:

Net result -106.83
Net margin -24.23 %

RESULTS (€ Thousand)
Sales 333,987
Profit after tax (80,935)

This what I found in MIG's financial result presentation for 2010.


User currently offlineHirnie From Germany, joined May 2004, 593 posts, RR: 0
Reply 7, posted (2 years 2 months 3 weeks 4 days 14 hours ago) and read 6759 times:

Quoting ju068 (Reply 3):
Now that Croatia is entering the EU the future doesn't seem that bright for OU either.

Would you mind to elabotate on this? Why is it a disadvantage for OU Croatia entering the EU?


User currently offlinePe@rson From United Kingdom, joined Jan 2001, 19110 posts, RR: 53
Reply 8, posted (2 years 2 months 3 weeks 4 days 14 hours ago) and read 6684 times:

Quoting ju068 (Reply 6):
RESULTS (€ Thousand)
Sales 333,987
Profit after tax (80,935)

Don't know what you're trying to prove here?

It made a loss, per your submission, of €81m. While not based on the historic rate, a simple conversion into USD at today's rate is a loss of USD$107m. This is obviously what I previously said - a loss of $107m.

It's beyond me how you think:

Quoting ju068 (Reply 3):
Olympic has been doing more than fine since it was privatized!


[Edited 2012-01-30 09:02:36]


"Everyone writing for the Telegraph knows that the way to grab eyeballs is with Ryanair and/or sex."
User currently offlineju068 From Serbia, joined Aug 2009, 2579 posts, RR: 6
Reply 9, posted (2 years 2 months 3 weeks 4 days 14 hours ago) and read 6587 times:

Quoting Hirnie (Reply 7):
Would you mind to elabotate on this? Why is it a disadvantage for OU Croatia entering the EU?

OU is not in the best financial shape and until now it was receiving state subsidies. With Croatia's entry in the European Union that will have to stop. So unless OU starts making money they will face same problems as Adria.

Quoting Pe@rson (Reply 8):

It's beyond me how you think:

Ok.


User currently offlineGCT64 From United Kingdom, joined Nov 2007, 1324 posts, RR: 1
Reply 10, posted (2 years 2 months 3 weeks 4 days 13 hours ago) and read 6382 times:

Quoting ju068 (Reply 9):
OU is not in the best financial shape and until now it was receiving state subsidies. With Croatia's entry in the European Union that will have to stop.

And as part of the EU they will be open to unfettered competition from the low cost heavyweights: FR, U2, DY, W6



Flown in: A30B,A306,A310,A319,A320,A321,A332,A333,A343,A346,BA11,BU31,B190, B461,B462,B463,(..50 types..),VC10,WESX
User currently offlineCPHFF From Sweden, joined Aug 2011, 139 posts, RR: 0
Reply 11, posted (2 years 2 months 3 weeks 4 days 13 hours ago) and read 6310 times:

Quoting bestwestern (Thread starter):
SAS.... to name a few

SK should not be classified as "secondary". Fleet size and route network suggests otherwize. YES, they are in dire straights financially, and Norwegian are doing everything they can to ruin their day, but SK is still a primary Airline.

As discussed here on A.Net many times before, SK does not really have the financial "freedom" to make too many drastic changes due to the ownership of the Danish, Norwegian and Swedish Governments. Then, add som very hostile Danish Unions in the mix, and you got a good receipe for disaster. Trying to run an Airline in 2011 with a structure from 1985 can only head one way.................................



Detroit is bankrupt. Don't forget to thank UAW folks!
User currently offlineshamrock604 From Ireland, joined Sep 2007, 4118 posts, RR: 13
Reply 12, posted (2 years 2 months 3 weeks 4 days 13 hours ago) and read 6262 times:

Quoting mozart (Reply 1):
Aer Lingus

When it is making significant profits in the middle of one of the worst recessions ever to hit a developed country (it's home market)??



Flown EI,FR,RE,EIR,VE,SI,TLA,BA,BE,BD,VX,MON,AF,YS,WX,KL,SK,LH,OK,OS,LX,IB,LTU,HLX,4U,SU,CO,DL,UA,AC,PR,MH,SQ,QF, EY, EK
User currently offlineEagleboy From Niue, joined Dec 2009, 1745 posts, RR: 2
Reply 13, posted (2 years 2 months 3 weeks 4 days 13 hours ago) and read 6262 times:
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Quoting Pe@rson (Reply 8):
Don't know what you're trying to prove here?

It made a loss, per your submission, of €81m.

I think the poster doesn't realise that the E81m in brackets means a loss.


User currently offlinevincewy From Taiwan, joined Oct 2005, 767 posts, RR: 1
Reply 14, posted (2 years 2 months 3 weeks 4 days 6 hours ago) and read 5353 times:

I thought Aer Lingus was making profits during 2010 and it's almost 30% owned by Ryanair.

Besides LCCs, BA, AF, and LH groups, I tend to think AY, EI, and TK (not really considered Europe and has gone global) have carved out their niche markets and can sustain on their own.


User currently offlineseabosdca From United States of America, joined Sep 2007, 5111 posts, RR: 4
Reply 15, posted (2 years 2 months 3 weeks 4 days 5 hours ago) and read 5200 times:

The US market is showing the way for Europe. Major consolidation in the European market is inevitable. Some small players will liquidate; some will merge into the big players; and some may survive by turning into contract carriers.

That is true for both legacy and LCC carriers. There will be consolidation in LCC world too.

Quoting anstar (Reply 2):
Given Virgin Atlantic were profitable last year and have a decent bank balance I don't think there is any chance of them going anywhere.

They are the US Airways of Europe. A carrier that is profitable and has carved out a workable niche but has long-term strategic issues. And in both cases people look at the long-term issues and for some reason think the carrier is going bust tomorrow. Not so.



Most gorgeous aircraft: Tu-204-300, 757-200, A330-200, 777-200LR, 787-8
User currently offlineRIXrat From United States of America, joined Nov 2005, 784 posts, RR: 0
Reply 16, posted (2 years 2 months 3 weeks 4 days 1 hour ago) and read 4197 times:

airBaltic got rid of its old management. The Latvian government ponied up about $110 million and hired Martin Gauss as CEO, who was CEO of the sinking Malev before he resigned there amidst the turmoil. I suppose BT is good for at least three years, although Turkish has been keeping a close eye on them. On the other hand, would the government let the milk cow go private if the milk turns out to be sour again.

User currently offlineIndianicWorld From Australia, joined Jun 2001, 2788 posts, RR: 0
Reply 17, posted (2 years 2 months 3 weeks 4 days ago) and read 3728 times:

Quoting RIXrat (Reply 16):
The Latvian government ponied up about $110 million

Isn't that illegal state aid in the EU?

Overall, there will be more consolidation as airlines try and compete. The days of a multitude of carriers, often for national pride more than anything else, is well and truely over. The EU rules make it very hard for that to happen anymore.

I can forsee 4 big carriers, a few large LCCs and some niche carriers, but the landscape will dramatically change over the coming decade in Europe.


User currently onlineBMI727 From United States of America, joined Feb 2009, 15507 posts, RR: 26
Reply 18, posted (2 years 2 months 3 weeks 3 days 23 hours ago) and read 3656 times:

Quoting bestwestern (Thread starter):
Are the days of secondary network carriers in Europe coming to an end?

Really I don't think that these "secondary" carriers are really secondary anymore, having been passed up by low cost carriers. And I don't think that life will be getting any easier for them either and will come down in many cases to being purchased by one of the European supercarriers (IAG, LH, AF-KL) or becoming a low cost carrier. Overall I expect mixed success.

Quoting seabosdca (Reply 15):

The US market is showing the way for Europe. Major consolidation in the European market is inevitable. Some small players will liquidate; some will merge into the big players; and some may survive by turning into contract carriers

I think that's where it's going, but traditional government intervention and general nationalism complicates it a bit. I think that the tide is definitely turning towards a more open playing field with fewer government strings attached, but I would also think that some countries faced with having no national carrier at all or one owned by a foreign company may not be too happy. Never mind that it has worked out fairly well before (like for OS and LX), but I think some people will not like the prospect.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlinePezySPU From Croatia, joined Dec 2011, 283 posts, RR: 0
Reply 19, posted (2 years 2 months 3 weeks 3 days 22 hours ago) and read 3242 times:

Well, since we mentioned JP and OU, why not add some more airlines from the region:

JA - 49% owned by TK already. Unfortunately, not much has changed since TK arrived and the management is still clueless about running an airline. The only reason they are still around are low competition levels in their market.

JU - Old fleet (they were the first carrier in Europe to receive 733 and it's still in their fleet (although, to be fair, most of them have low number of cycles); fleet renewal announcements every year, but no action) and bad management. Serbia is doing its best to sell the carrier, but there's no interest.

YM - Great fleet for this region, but a lot of corruption and clueless management.


User currently offlineIndianicWorld From Australia, joined Jun 2001, 2788 posts, RR: 0
Reply 20, posted (2 years 2 months 3 weeks 3 days 22 hours ago) and read 3089 times:

Quoting PezySPU (Reply 19):
JA - 49% owned by TK already. Unfortunately, not much has changed since TK arrived and the management is still clueless about running an airline. The only reason they are still around are low competition levels in their market.

Small market in an environment that is constantly heated by political pressures. Hardly ideal.

TK are also an airline with many challenges of their own, mainly around a very fast growth rate. Making such investments at a time they are facing some growth challenges is hardly ideal either, but they are constantly on the prowl it seems anyway.

In saying that, even LH has struggled to make its investments work. Its not an easy task.

Quoting PezySPU (Reply 19):
JU - Old fleet (they were the first carrier in Europe to receive 733 and it's still in their fleet (although, to be fair, most of them have low number of cycles); fleet renewal announcements every year, but no action) and bad management. Serbia is doing its best to sell the carrier, but there's no interest.

From my experience, operating any business in Seria over the past decade or so has been a difficult thing. So many changes and pressures have made running any business a very tricky experience.

Who would buy in such a situation? Only an airline that could afford to throw cash into the airline and start afresh, hopeing that Serbia moves into the EU, and one that is ready to fight through the current trading environment there. Although the EU is a double edged sword for some, as more carriers can move in, it still opens up many opportunities for what is currently a small home market.

Quoting PezySPU (Reply 19):
YM - Great fleet for this region, but a lot of corruption and clueless management.

Another small market, and an airline that will struggle to really thrive on its own, even at the best of times.


User currently onliner2rho From Germany, joined Feb 2007, 2499 posts, RR: 1
Reply 21, posted (2 years 2 months 3 weeks 2 days 17 hours ago) and read 1484 times:

To put it short, any secondary EU carrier operating short haul with a legacy cost structure will disappear - see BD and JK. Remember that all EU legacies admit to be losing money on short-haul but make up for it with long-haul profits. The only airlines that can make a profit today on short haul are ones with low cost base. Secondary airlines that can find their niche market in which they're strong (Finnair, Icelandair, ...) will also survive.

Quoting mozart (Reply 1):
- Air Berlin (already dramatic financial problems)

AB is saved for now by the EY investment. I wonder what plans they have in mind for them.


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