The airline business for many is still an attractive and lucrative industry to venture into. Owning a carrier for some is a romantic investment – for others, an airline is a way to flex one’s political muscles, showcasing the capabilities of a nation in developing a flag carrier.
Yet at the same time, the aviation industry is one of the most competitive and difficult areas to become successful in. It seems paradoxical – as more people fly around the world, there are seemingly fewer options to choose from – consolidation is becoming a worrying trend.
Especially when the air gets colder and colder outside, the seasonality of cash flow strikes out those who are the least prepared. And 2019 was no exception to the rule – the year, notably in fall, saw several high-profile bankruptcies, some surprising, while others were a long time coming.
These are some of the biggest airline bankruptcies in 2019:
5) Adria Airways – bankrupt on September 30, 2019
The Slovenian airline abruptly stopped operations on September 30, 2019, after temporarily suspending flights twice the week before. But Adria was already in dire straits for quite some time – its most recent profitable year in 2014 was due to the fact that the Slovenian government privatized the airline and sold its brand name to an investment group called 4K Invest.
The move, heavily scrutinized by current Slovenian politicians, was just the tip of the iceberg for the flag carrier. It had multiple issues, including an aging fleet, a relatively small market and strong competition from the bigger birds in the sky.
Adria’s fall was initially seen as a disaster for the small European country, as the seat capacity at Ljubljana Airport (LJU) was significantly reduced before Lufthansa (LHAB) (LHA) stepped in to save the day. The German Group’s airlines, namely Austrian, Lufthansa (LHAB) (LHA) and Swiss have announced that they will replace former Adria frequencies, ensuring connectivity from the Slovenian capital.
4) Aigle Azur – bankrupt on September 27, 2019
One out of two French airlines that have collapsed this fall, Aigle Azur left many frustrated. The second-biggest airline in the country ceased operations due to “great economic difficulty”.
The sudden stop of operations affected up to 50,000 travelers, including passengers stranded at various airports. Aigle Azur was hopeful that a buyout would save the airline – it even had 14 takeover offers at one point in time, as its slots at Paris Charles De Gaulle (CDG) was hot property.
After various airlines, including Air France, had their initial takeover bids rejected, hopes diminished for Aigle Azur. Commercial Court of Evry finally put the final nail in the airlines’ coffin, when on September 27, 2019, it announced that all takeover offers are rejected. Aigle Azur officially stopped trading activities on the same day at midnight.
3) WOW Air – bankrupt on March 28, 2019
The provocative and ambitious long-haul low-cost airline was all about expansion – from its home base in Iceland, WOW Air offered flights to European airports like Copenhagen (CPH) or London-Gatwick (LGW). However, as its appetite grew, WOW Air bit off more than it can chew.
Attracting attention via such campaigns as 45$ for a one-way flight from the United States to Iceland, the low-cost carrier definitely found its place in a lot of traveler’s hearts.
But its massive expansion and sporadic route network came at a cost – in 2017, the airline’s financial situation was shaken, when it announced its first loss in two years. In 2018, the situation deteriorated further and WOW Air was seeking for an investor to take over. Icelandair confirmed it bought the airline on November 5, 2018 – only to say “lol nope” two weeks later, leaving the low-cost carrier to fend for itself in a cut-throat trans-Atlantic market. Indigo Partners, the parent company of such no-frills airlines like Frontier Airlines and Wizz Air, was also lined up as a potential investor – its investment never came to fruition. WOW Air ceased operations on March 28, 2019.
Yet that was not the end of the brand – at first, two former WOW executives and an investment fund linked to the Ryan family announced plans to launch WAB (We Are Back) and to acquire an Icelandic Air Operators Certificate (AOC). Secondly, Michelle Ballarin led the endeavor to re-launch WOW Air from the US, with initial plans to begin flights in October 2019.
However, it seems like neither attempt has been successful as of now.
2) Jet Airways – bankrupt on April 17, 2019
At one point in time, it was the largest airline in India. With over 120 aircraft bearing Jet Airways’ name, the carrier successfully competed with such airlines as the now-bankrupt Kingfisher Airlines and the crumbling Air India. At its peak, it was arguably the most successful full-service carrier in India.
Yet it stumbled in a spectacular fashion, as it failed to address the pressure from low-cost carriers in the domestic market.
Slowly, but surely Jet Airways operations started to cease. Lessors grounded aircraft, while various suppliers stopped providing crucial materials, like fuel for flights. The company announced on April 17, 2019, that if the State Bank of India did not provide emergency funds for the airline, it would cease flights.
Later that same day, the airline’s Chief Executive Officer Naresh Goyal announced that Jet Airways was suspending operations. Calling it an “extreme measure”, he noted that discussions with lenders and authorities “did not yield the desired results”. With only a handful of aircraft officially left in its fleet, including several Boeing 737 MAXs, the airline is very unlikely to restart flights.
1) Thomas Cook – bankrupt on September 23, 2019
The British tour operator closed its doors and left over 600,000 people stranded all over the world, kicking off the country’s biggest peacetime repatriation operation called Operation Matterhorn. While shocking to some, Thomas Cook’s collapse was no surprise – the travel group has struggled financially for quite some time.
The group’s airline was at the center of a rumor mill as early as July 2018, when Thomas Cook looked to offload the carrier to free up cash and repay its debt. The CEO of Thomas Cook, Peter Fankhauser, denied the rumors back then. Nevertheless, reports about the British tour operator looking to offload its carrier were constantly circulating, as Thomas Cook desperately needed to free up cash to repay the debt.
But as time went on, the group’s losses increased – in H1 2019 alone Thomas Cook losses were as much as $1.9 billion (£1.5 billion) and as negotiations to attract emergency funds fell through, the company had no choice but to close its doors for good.
Its German airline was spared and continues flying to this day. Recently, the European Commission approved a €380 million loan to Condor.
Honorable mentions
Even if the aforementioned bankruptcies were some of the biggest closures this year, they were not the only ones.
Avianca Argentina / Avianca Brazil – two Aviancia’s subsidiaries ceased flying on June 7, and on June 24, 2019, respectively.
XL Airways – the second French airline to collapse in H2 2019. The long-haul low-cost carrier was declared insolvent by the Commercial Court of Bobigny on October 4, 2019. When XL suspended flights on September 30, the French Minister of Economy and Finance, Bruno Le Maire, pointed fingers at Norwegian and Norway’s government – accusing the latter of providing funds for XL Airways’ competitor.
Germania – the German leisure and scheduled flight airline narrowly escaped bankruptcy in January 2019, when an investor steered the carrier out of dire straits. However, the deal fell through on February 5, 2019, and Germania ceased to exist.
FlyBMI – unfortunately, Brexit and oil prices were to blame for the demise of the regional airline, at least according to the airline’s press release. Other companies, including Ryanair and Loganair, announced that it would take over its routes and employees.
To sum up, the Top 5 biggest airline bankruptcies in 2019 are:
Thomas Cook
Jet Airways
WOW Air
Aigle Azur
Adria Airways