Air Belgium Working Out Of Cash… Once more
Longtime OMAAT readers will bear in mind my obsession with Air Belgium a number of years again. Nicely, there’s a reasonably vital replace, which is able to shock precisely nobody who has been following the airline — Air Belgium is on observe to expire of cash by the tip of the yr, and desperately wants new funding.
What’s Air Belgium?
Air Belgium is an airline that launched operations in 2018. Within the roughly 4 years because the airline launched, it has already reworked a number of instances:
- The airline began service with Airbus A340s, and initially flew between Charleroi Airport (outdoors of Brussels) and Hong Kong; the provider’s long run plan was so as to add routes from Charleroi to mainland China, and have that be the main focus
- Inside a matter of weeks, the airline suspended that route, realizing it wasn’t precisely an ideal enterprise mannequin; that was the final we ever heard of Air Belgium working passenger flights to China
- At this level the airline centered on turning into a moist lease operator, working flights for different airways that wanted further capability; the timing of this was good, as many 787s have been grounded attributable to engine points on the time
- In October 2018, the airline was on the point of liquidation, and an emergency common assembly was held to resolve whether or not or to not dissolve; the corporate ended up getting extra funding
- In July 2019, the airline introduced it could resume repeatedly scheduled flights, however would fly to the Caribbean as a substitute of China
- In June 2020, the airline introduced it could swap from Charleroi Airport to Brussels Airport, and would launch new routes, together with flying to Africa
- In July 2021, the airline introduced it could purchase two Airbus A330-900neos, and use these for passengers flights, changing Airbus A340s
- In December 2021, the airline introduced it could add Boeing 747-8Fs to its fleet, and develop devoted cargo operations
I nonetheless suppose again fondly on my Air Belgium flight from Charleroi to Hong Kong, which needed to be some of the weird flights I’ve ever taken. It had a complete of simply 25 passengers onboard. It’s not usually that the under footage are what a cabin seems like whereas enroute on an extended haul flight.
So the place does that depart Air Belgium at this level?
- The airline operates some cargo flights on behalf of Hongyuan Group, and has two Boeing 747-8Fs which are used for that
- The airline flies A330s with restricted frequencies to the Caribbean and Africa, however is consistently messing round with routes and frequencies
- The airline generally operates on a moist lease foundation on behalf of different airways
Is Air Belgium on the point of liquidation?
Les Information 24 experiences that Air Belgium wants no less than €10 million by the tip of this yr to keep away from chapter. The airline is anticipated to endure a €40 million loss for 2022, and has allegedly burned via €16 million since a brand new spherical of funding roughly eight months in the past.
For context on Air Belgium’s possession construction, the airline is 49% owned by the Hongyuan Group, 35% owned by the Walloon authorities, and 10% owned by the Belgian authorities and different non-public traders.
What does Air Belgium’s administration should say about speak of the corporate being in monetary hassle? In an interview with La Libre, Air Belgium CEO Niky Terzakis denies that the airline is susceptible to going out of enterprise… kind of. He acknowledges:
“Sure, the funds are tight, even very tight, however we get away with it!”
However he’s additionally satisfied that the corporate’s shareholders gained’t quit:
“It’s been mentioned for 5 years that the corporate is on the verge of chapter every time it seeks funds. It’s boring and tiring. After all we are able to proceed the actions in 2023. Our shareholders usually are not going to surrender.”
At this level Air Belgium isn’t simply on the lookout for sufficient cash to outlive, however is on the lookout for a giant funding in order that it will probably pursue a brand new marketing strategy but once more! The corporate desires some huge cash for this growth:
“Air Belgium is aiming for greater, greater markets. We’re not a low-cost firm. This might deliver the corporate into one other class, each by way of passengers and cargo.”
The airline did truly make a revenue of €6 million in 2019, which is the one yr the place the airline made cash. Satirically that was additionally the yr the place the airline roughly solely leased out its planes, and didn’t truly attempt to market its personal flights.
Air Belgium is as soon as once more discovering itself in a money crunch, and wishes extra financing earlier than the tip of the yr. Air Belgium’s CEO appears arrogantly assured that the airline will be capable to get more cash, as a result of apparently the corporate has yet one more nice new enterprise concept.
Air Belgium’s survival comes down as to whether the native authorities and Chinese language shareholders are keen to throw more cash on the airline. Frankly I’m amazed that Air Belgium continues to be in enterprise. Right here’s the factor — I believe the airline may do moderately effectively if it simply centered on cargo and being a moist lease operator, since there’s a giant marketplace for that.
Nevertheless, the airline has had nearly zero success advertising and marketing its personal flights, and it doesn’t truly keep in markets lengthy sufficient to construct up demand and identify recognition. I believe it’s time Air Belgium quit on making an attempt to function its personal passenger service.
What do you make of Air Belgium’s odds of survival?