Who's Next to cease operation?

ljupco · Fri Feb 03, 2012 10:38 am

Looking at economic circumstances in Europe, a small and very divided market especially in SEE, rise of LCC and ULCC, seems to kill many airlines in Europe. Rumors, facts, no meter, time is not working also for JP, OK ...

I'm afraid to ask, and also very sad, but who is next! Is Malev's story a definite warning!

aeroblogger · Fri Feb 03, 2012 10:49 am

SAS is the word on the street...

mauriceb · Fri Feb 03, 2012 11:09 am

Maybe LOT? Think that the premium medium-sized airlines are the first to go. They just don't have the network to compete with the LCC's that mostly offer more diversity in routes, frequency. One more big thing is that more ''quality'' isn't enough to battle the cheap ticket prices LCC's offer.

Airlines like LH, AF-KL, BA-IB, have the advantage that they serve a lot of long haul routes, and offer good connection times on theire intra-Europe network. Not saying that these airlines don't struggle at the moment.

Think that Spanair and Malev are sadly just the beginning of the ''next'' round of busts. Smaller airlines need to find a ''high roller'' soon to merger (look at Italy for instance) or else im afraid we are in for a slaughter the next 2 to 3 years.,

GIANCAVIA · Fri Feb 03, 2012 11:12 am

Whoever is poorly run is next and thats the way it should be. Like I said in the Malev thread. Sad for the employees but not sad to lose badly run companies. Its logical.

Quoting aeroblogger (Reply 1):
SAS is the word on the street...

Me thinks you are spot on.

CYatUK · Fri Feb 03, 2012 12:33 pm

The Cypriot Government have announced their intention to sell their 70% (or majority of it) stake in Cyprus Airways (CY) to a Private Investor in an effort to bring the company back to profitability.

CY Pilots and most Cypriot political Parties support the move hence the question is how fast can Privatisation take place and if it can be fast enough to avoid a potential bankruptcy.

Rumors in Cyprus news sites mention that CY have at least two buyers one from the Middle East (Qatar) and one from Russia but in a formal statement the Company mention that they have no specific interest at the moment.

The privatization proposal is to be presented at the Cabinet during the coming week.

dellatorre · Fri Feb 03, 2012 12:41 pm

CSA, Adria, LOT, Tarom are all destined to disappear. Even Austrian may be gone!

aloges · Fri Feb 03, 2012 12:57 pm

Quoting Dellatorre (Reply 5):
Even Austrian may be gone!

How do you work that one out? They are no bmi...

Amsterdam · Fri Feb 03, 2012 1:16 pm

Air France and Scandinavian

bueb0g · Fri Feb 03, 2012 1:20 pm

Quoting Amsterdam (Reply 7):
Air France and Scandinavian

AF aren't going anywhere.

tcasalert · Fri Feb 03, 2012 1:22 pm

I hope SK aren't next, they have such an extensive Scandinavian route network and to lose them would be a big loss for Europe, as well as of course *A.

I have only positive experiences of flying with them, and in fact will be doing so this coming Monday again. Hope it won't be the last.

mauriceb · Fri Feb 03, 2012 1:38 pm

Quoting Amsterdam (Reply 7):
Air France and Scandinavian

Can u please explain? Why would AF collapse (and so KL)? Because they showd some really bad figures lately? AF has to much assets they can sell before they go belly up, in the most negative scenario they are up for a hugh re-structuring wich will lead to a considerable shrink, but even thats highly unlikely. AF-KL should be able to become profitable again just by putting the growth on some sort of a hold and focus on re-structuring and streamlining the company.

We have seen major airlines, who where in a far worse state, survive the last couple of years... its just the law of the strongest.

greenjet · Fri Feb 03, 2012 3:51 pm

aeroblogger (Reply 1):
SAS is the word on the street...

I would be surprised if it was SAS. I wouldn't have been surprised two years ago but they are actually turning a corner now and posted an operating profit of $155 million for the first nine months of 2011 (versus an operating loss of $220 million for the first nine months of 2010) and a net profit of $60 million (versus net loss of $310 million). The company's liquidity and gearing is a lot more robust than others. There is a renewed focus at the company after getting a good kicking from competition in recent years, particularly Norwegian, and for the first time in a long time the company does not appear to be rudderless, e.g. fleet rationalisation, elimination of unprofitable routes. The bankruptcy of Spanair will obviosuly have an impact on SAS but contingencies have been in place for some time.

dhr · Fri Feb 03, 2012 10:16 pm

Croatia Airlines should be added to the list as it is cash strapped, relying too much on government handouts while the government just doesn't have the money to provide it with the sort of money it needs. On top of that, its never made an operating profit since it was formed 20 years ago.

[Edited 2012-02-03 14:18:37]

davescj · Fri Feb 03, 2012 11:06 pm

I wonder if Austrian won't completely merge into LH. I would not be surprised to see SAS be acquired either.

I wonder if CSA and Tarom and possibly another smaller eastern European airline could merge to become a single larger, stronger carrier? I would think that Tarom and CSA would have some benefit from being in ST, because AF/KM don't' have great routes into Eastern Europe.

Dave

rjm777ual · Fri Feb 03, 2012 11:19 pm

You guys are all thinking european carriers. It could be an American carrier, like AA, although unlikely.

SR4ever · Fri Feb 03, 2012 11:24 pm

Let's say CY, JP, OU, as far as flagship carriers are concerned.

roseflyer · Fri Feb 03, 2012 11:25 pm

CSA has been selling assets for years to make their losses smaller, but still are losing money. When they have sufficiently drained all their capital and investments, I'd expect them to go.

It seems like the days of airlines with under 50 planes are going away. With stagnant growth and some shrinking, the old national airlines don't seem to be able to compete with the growing low cost carriers and the established major long haul airlines.

Viscount724 · Fri Feb 03, 2012 11:51 pm

I wouldn't be surprised if BA pulls the plug on their all-business/premium economy class 757 subsidiary, Open Skies, before too long. They're now down to just one route, ORY-EWR. Current economic conditions in Europe can't be good for that type of operation.

1stfl94 · Sat Feb 04, 2012 12:08 am

Quoting Viscount724 (Reply 18):
I wouldn't be surprised if BA pulls the plug on their all-business/premium economy class 757 subsidiary, Open Skies, before too long. They're now down to just one route, ORY-EWR. Current economic conditions in Europe can't be good for that type of operation.

Didn't they also just get rid of one of their 757s? Seems like they might be winding it down. Doesn't really make sense for BA to have both Openskies and the LCY operation for their all business traffic

SKY1 · Sat Feb 04, 2012 12:16 am

I hope UX can continue on the business by its own or being purchased by the Air France-KLM group like rumored in some UX employees.

sxf24 · Sat Feb 04, 2012 12:22 am

While SK and AF have their share of challenges, they are not even close to going under. Both have still have good liquidity positions and a dominant share of long-haul and business traffic in their hubs. That's not to say painful restructuring will not continue at both...

I would expect smaller carriers that have no long-haul networks and less than leading market share at their hubs to be at the biggest risk.

Airlines that lease their entire fleet are more likely to get down suddenly by their lessors than airlines that own most of their aircraft (like SK and AF).

[Edited 2012-02-03 16:26:16]

ZKOJH · Sat Feb 04, 2012 1:10 am

Well if you can think out of Europe and look at it worldwide add to the list AA, TN, and FJ - the last 2 are not in any great shape, this next year is going be tough for all..

smoot4208 · Sat Feb 04, 2012 1:16 am

Quoting ZKOJH (Reply 21):
TN, and FJ - the last 2 are not in any great shape, this next year is going be tough for all..

I imagine that since these airlines basically allow those islands to get tourists from them, their respective governments will continue to pump money into them

N62NA · Sat Feb 04, 2012 2:31 am

Quoting Amsterdam (Reply 7):
Air France

Well, they are going on strike Feb 6 - 9. Would serve them right!

aeroblogger · Sat Feb 04, 2012 3:44 am

I thought this was purely about European carriers....

Worldwide, I wouldn't be surprised if IT is next. They truly are in rough shape...

N62NA · Sat Feb 04, 2012 3:59 am

Quoting N62NA (Reply 23):
Well, they are going on strike Feb 6 - 9. Would serve them right!

I want to withdraw my comment, as I have just learned that it is not an Air France-only strike and that the reason for the strike is that the French government wants to force a citizen to report to the government if they intend to participate in a strike against their private sector employer. That's just a ridiculous infringement of the government on individual rights.

dampfnudel · Sat Feb 04, 2012 5:04 am

It would be a shame if SAS went out of business. If it happens, I wonder what LH will do.

LGWflyer · Sat Feb 04, 2012 6:20 am

Quoting TCASAlert (Reply 9):
I hope SK aren't next, they have such an extensive Scandinavian route network and to lose them would be a big loss for Europe,

Yes it would be quite a big loss, but if the worst did happen I think DY would take over and do well.

okobjorn · Sat Feb 04, 2012 6:41 am

Quoting dampfnudel (Reply 26):

I guess they would use the Swissair model...

redrooster3 · Sat Feb 04, 2012 6:45 am

What about Kingfisher and AI? I know they've been having trouble over their

aeroblogger · Sat Feb 04, 2012 7:51 am

Quoting redrooster3 (Reply 29):
What about Kingfisher and AI? I know they've been having trouble over their

Kingfisher would not be surprising. AI is pretty much guaranteed not to happen any time soon - our politicians like their free upgrades to first class from cheapo economy too much to stop funding the airline...

standby87 · Sat Feb 04, 2012 7:51 am

Do any of the contributors to this thread work in the Industry?
Have any of you found out that the airline you work for has suddenly stopped flying?

I do and I have - I can still remember feeling the blood draining from my cheeks when I found out that Swissair "weren't operating anymore".

It's not nice.

It's absolutely right to make informed speculation on the Internet, but please do spare a thought for those of us who might be working for the airlines you mention.

Thanks!

anstar · Sat Feb 04, 2012 8:15 am

Quoting redrooster3 (Reply 29):
What about Kingfisher and AI? I

I's say Kingfisher.

- They have grounded 15 aircraft in december

- Have had their Oneowrld membership put on hold untilt hey sort out finances

- Suspended yesterday from the IATA clearing house.

http://www.thehindubusinessline.com/...4304.ece?homepage=true&ref=wl_home

SKY1 · Sat Feb 04, 2012 8:23 am

Quoting aeroblogger (Reply 30):
AI is pretty much guaranteed not to happen any time soon

AI is the same case which AF is: French and Indian government are not going to allow their fall.

SASMD82 · Sat Feb 04, 2012 8:23 am

Will these economic circumstances accelarate or actually stimulate take overs? Let's say LOT, Adria, Czech Airlines, Croatia Airlines, JAT, Tarom, Bulgaria Airlines, Olympic and Air Baltic e.g. can be taken over quite easilyI think by larger western european carriers. Also bigger companies as TAP, Finnair, Aer Lingus, Virgin and IcelandAir may be taken over or will merge more quickly?

I don't believe that big carriers such as AF or SK will collapse.

PH-TVH · Sat Feb 04, 2012 8:58 am

Quoting N62NA (Reply 23):
Quoting Amsterdam (Reply 7):
Air France

Well, they are going on strike Feb 6 - 9. Would serve them right!

If you would only knew WHY they would go on strike....

Has little to do with the future of the company.

Danny · Sat Feb 04, 2012 9:10 am

Quoting mauriceb (Reply 2):
Maybe LOT?

Certainly not next but within next few years if they're not privatized and sold to large carrier they will have to disappear.

Quoting anstar (Reply 32):
I's say Kingfisher.

- They have grounded 15 aircraft in december

- Have had their Oneowrld membership put on hold untilt hey sort out finances

- Suspended yesterday from the IATA clearing house.

My vote is on them as well.

maddog888 · Sat Feb 04, 2012 9:16 am

Quoting SASMD82 (Reply 34):
Will these economic circumstances accelerate or actually stimulate take overs? Let's say LOT, Adria, Czech Airlines, Croatia Airlines, JAT, Tarom, Bulgaria Airlines, Olympic and Air Baltic e.g. can be taken over quite easilyI think by larger western european carriers

Given the current financial states of the "larger western European carriers", why would they want to take on any additional liabilities that are also hemorrhaging money.

Also people keep bringing up AA, but surely with the totally anti-competitive, anti-capitalist Chapter 11 that the USA has no USA airline has a hope of actually collapsing these days.

J

okapi · Sat Feb 04, 2012 9:28 am

Quoting PH-TVH (Reply 35):

Strike of SNPL-pilots, the biggest airline pilots union in France. Basically, the French government tries to enforce a law that guarantees minimum service even in case of strikes. To many (not only in the airline industry), this would be a severe limitation of one's right to strike. From a passenger point of view, a benefit. Workers call it a nightmare and when it comes to airlines, having part of their fleet parked somewhere around after the first flights in the morning have been completed would be a real mess. Take into account the required rest time for crew and the plane wouldn't probably be back in the evening. Moreover, this has to be discussed at all levels of company management otherwise, what happens if caterers of mechanics go on strike without that "minimum service" contract?

Back to the thread, I would say that almost all carriers are at risk as premium passengers (those flying for business reasons) are becoming a rarity lately. Profits are melting like snow under the sun. Smaller EU countries with ailing airlines will probably suffer first. And outside Europe, IT, AA are surely big candidates for either harsh reshape or bankrupt by the end of Q2.

LH506 · Sat Feb 04, 2012 9:45 am

Quoting SASMD82 (Reply 34):
Will these economic circumstances accelarate or actually stimulate take overs? Let's say LOT, Adria, Czech Airlines, Croatia Airlines, JAT, Tarom, Bulgaria Airlines, Olympic and Air Baltic e.g. can be taken over quite easilyI think by larger western european carriers. Also bigger companies as TAP, Finnair, Aer Lingus, Virgin and IcelandAir may be taken over or will merge more quickly?

I don't believe that big carriers such as AF or SK will collapse.

Why would LH, AF-KL or IAG take over these carriers??

The only two which may be of interest are

TP (Brazilian Routes) - I am sure LH Group has an interest as they are about to lose their partner in Brazil (JJ)
AY (Asian Network) - Maybe of interest for IAG. But now after the BM takeover, BA can chose to fly to most of the destinations by themselves with the additional LHR slots..

If the others go, the big three plus the LCC will just improve their loads

PezySPU · Sat Feb 04, 2012 10:07 am

Quoting SASMD82 (Reply 34):
Will these economic circumstances accelarate or actually stimulate take overs? Let's say LOT, Adria, Czech Airlines, Croatia Airlines, JAT, Tarom, Bulgaria Airlines, Olympic and Air Baltic e.g. can be taken over quite easilyI think by larger western european carriers.

There were several attempts to privatize Jat Airways, but without success.

Croatia Airlines and Adria Airways might be good for merging with each other, but both of them are loss-making. Wonder what would come out of that... LH might be interested in taking over both of them, but it first needs to digest some of its recent activities on that field. Adria is in trouble and restructuring. Croatia's finances are getting better and break even is expected for this financial year.

Mortyman · Sat Feb 04, 2012 10:54 am

Quoting aeroblogger (Reply 1):
SAS is the word on the street...

Doubtful

I am sure that the Scandinavian governments will continue to back SAS up, even if some of them are giving different signs at this point.

dhr · Sat Feb 04, 2012 11:09 am

Austrian will definately be downgraded as my collegues in LH Consulting have said that its MOST likely they will lose the long haul flying first. Austrian will end up a short haul regional carrier and its obvious that its proximity to MUC doesn't do it much favours.

bastew · Sat Feb 04, 2012 11:40 am

BD if the deal with IAG doesn't get regulatory approval.

PH-TVH · Sat Feb 04, 2012 11:58 am

Quoting okapi (Reply 38):
Strike of SNPL-pilots, the biggest airline pilots union in France. Basically, the French government tries to enforce a law that guarantees minimum service even in case of strikes. To many (not only in the airline industry), this would be a severe limitation of one's right to strike. From a passenger point of view, a benefit. Workers call it a nightmare and when it comes to airlines, having part of their fleet parked somewhere around after the first flights in the morning have been completed would be a real mess. Take into account the required rest time for crew and the plane wouldn't probably be back in the evening. Moreover, this has to be discussed at all levels of company management otherwise, what happens if caterers of mechanics go on strike without that "minimum service" contract?

To you its obvious... For the rest of the world a little bit less understandable...

For some reason french people are on strike so many days a year, government is
forced to take some measures in order to control these actions.

okay · Sat Feb 04, 2012 11:58 am

Hello all,

I have doubts about Blue1. As much as the airline is needed to have competition in Finland, the company is not making money. Also, the airline is a subsidiary of SK, not mainline SK, so it well might be SK shuts down the bleeding company and starts to fly HEL with its own metal, like it was before KF was created.

okAY

LOWS · Sat Feb 04, 2012 2:16 pm

Quoting dhr (Reply 42):
Austrian will definately be downgraded as my collegues in LH Consulting have said that its MOST likely they will lose the long haul flying first. Austrian will end up a short haul regional carrier and its obvious that its proximity to MUC doesn't do it much favours.

I have heard similar things from a friend of mine who works at SZG. It would be a shame as flying from VIE to MUC or FRA to go east is not inconsiderable backtracking. MUC is only really close to SZG and even then, it's about 2.5 hours away under the best circumstances (Railjet/EuroCity from SZG to MUC is 1.5 or so hours on a rather slow rail line and then 1 hour on the SBahn depending on the connection timing in MUC).

BasilFawlty · Sat Feb 04, 2012 3:30 pm

Likely candidates in my opinion:

- AirAsia X
- Air Zimbabwe
- Adria Airways
- Croatia Airlines
- CSA Czech Airlines
- Gulf Air
- Iceland Express
- Kingfisher
- LOT Polish Airlines
- Thomas Cook Airlines UK

LOWS · Sat Feb 04, 2012 3:49 pm

Quoting BasilFawlty (Reply 47):

- AirAsia X
- Air Zimbabwe
- Adria Airways
- Croatia Airlines
- CSA Czech Airlines
- Gulf Air
- Iceland Express
- Kingfisher

I doubt that MA will be able to get going again due to the extreme populist government and the instability and uncertainty that this has engendered makes investment in Hungary look like a big risk.

GCT64 · Sat Feb 04, 2012 3:56 pm

If we look at Europe, with the economic pressures of the last six months (and it being the winter season), I can't believe that any airline isn't hurting to some degree. The question is which are hurting most? and which are most at risk?

1. Large airlines have much more ability to flex the fleet and workforce - 4 x A321s per day on a route can easily be reduced to 3 x A321s or 4 x A319s to reduce costs / maintain yields. They can accelerate fleet retirements and, possibly, slow new deliveries. They also invariably have much stronger financial muscle to withstand extended periods of downturn. I think we can safely assume that LH, AF/KL, IAG, FR, EZY will survive almost any scenario.

2. Small airlines (less than 20 aircraft) have much less ability to flex resources and less financial muscle. As many have identified above, these are the ones at most risk.

3. As may not be apparent to those who live outside the EU, the local/national governments in the EU have far less ability to "save" the local airline than in most countries outside the EU. The EU will be watching closely, and is almost certain to stop any government pumping cash into their local airline.

So my list of candidates is unfortunately quite long and sadly, if the worst happens, the airports around Europe will become a lot less interesting.

[Edited 2012-02-04 08:01:03]

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