BestWestern
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Bleak Future For European Secondary Carriers?

Mon Jan 30, 2012 1:37 pm

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
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mozart
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RE: Bleak Future For European Secondary Carriers?

Mon Jan 30, 2012 2:31 pm

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
 
anstar
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RE: Bleak Future For European Secondary Carriers?

Mon Jan 30, 2012 2:33 pm

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.
 
JU068
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RE: Bleak Future For European Secondary Carriers?

Mon Jan 30, 2012 2:34 pm

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.
 
Pe@rson
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RE: Bleak Future For European Secondary Carriers?

Mon Jan 30, 2012 2:45 pm

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 %
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Asturias
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RE: Bleak Future For European Secondary Carriers?

Mon Jan 30, 2012 3:31 pm

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.

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JU068
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RE: Bleak Future For European Secondary Carriers?

Mon Jan 30, 2012 4:39 pm

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.
 
Hirnie
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RE: Bleak Future For European Secondary Carriers?

Mon Jan 30, 2012 4:47 pm

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?
 
Pe@rson
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RE: Bleak Future For European Secondary Carriers?

Mon Jan 30, 2012 5:01 pm

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."
 
JU068
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RE: Bleak Future For European Secondary Carriers?

Mon Jan 30, 2012 5:17 pm

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.
 
GCT64
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RE: Bleak Future For European Secondary Carriers?

Mon Jan 30, 2012 6:21 pm

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
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CPHFF
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RE: Bleak Future For European Secondary Carriers?

Mon Jan 30, 2012 6:39 pm

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.................................
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shamrock604
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RE: Bleak Future For European Secondary Carriers?

Mon Jan 30, 2012 6:46 pm

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)??
 
Eagleboy
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RE: Bleak Future For European Secondary Carriers?

Mon Jan 30, 2012 6:46 pm

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.
 
vincewy
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RE: Bleak Future For European Secondary Carriers?

Tue Jan 31, 2012 1:33 am

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.
 
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seabosdca
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RE: Bleak Future For European Secondary Carriers?

Tue Jan 31, 2012 1:55 am

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.
 
RIXrat
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RE: Bleak Future For European Secondary Carriers?

Tue Jan 31, 2012 6:11 am

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.
 
IndianicWorld
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RE: Bleak Future For European Secondary Carriers?

Tue Jan 31, 2012 7:44 am

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.
 
BMI727
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RE: Bleak Future For European Secondary Carriers?

Tue Jan 31, 2012 7:55 am

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.
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PezySPU
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RE: Bleak Future For European Secondary Carriers?

Tue Jan 31, 2012 9:15 am

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.
 
IndianicWorld
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RE: Bleak Future For European Secondary Carriers?

Tue Jan 31, 2012 9:36 am

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.
 
r2rho
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RE: Bleak Future For European Secondary Carriers?

Wed Feb 01, 2012 2:46 pm

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.