Airline Bankruptcies Highlight European Market Polarization

Javier Morales Sta Reporter

Only a month into 2023, two airlines in Europe already collapsed while others posted record pro ts, highlighting how polarized the European airline market has become. On Saturday, Jan. 28, the regional United Kingdom based company “Flybe” became insolvent, suspending trading and canceling all ights. is is actually Flybe’s second time collapsing; the airline was the rst to fold during the COVID-19 pandemic in March of 2020. ey received nancing, and were able to relaunch in April of 2022. Now, less than a year later, the airline is once again in administration and likely won’t survive. Company administrator David Pike blamed the bankruptcy on the late delivery of 17 aircra Flybe needed to operate a larger, more pro table schedule and called the collapse a “real setback in terms of the UK’s regional connectivity.” only by the speed at which Boeing and Airbus can build new planes. Ryanair, for example, is hoping to take delivery of 40 more 737 MAXs by summer; though delivery delays at Boeing may hinder those plans.

On the other end, Europe’s legacy airline holding companies are doing well. Air France-KLM, Lu hansa Group, and International Airlines Group (parent of Aer Lingus, British Airways, & Iberia) all posted pro ts in excess of $400 million (USD) last quarter. Both Air France-KLM and Lu hansa are reportedly in talks to buy the assets of the aforementioned Flybe, namely its slots at London Heathrow and Amsterdam Schiphol airports, according to e Telegraph.

Just two days later, on Jan. 30, the Norwegian startup airline Flyr suspended operations. e low cost carrier (LCC) o cially led for bankruptcy on Feb. 1. Flyr launched in June of 2021 and, at the time of ling, was planning on expanding this spring and leasing out six of its aircra to another European carrier in order to improve its nances. Flyr needed that lease agreement in order to survive but the agreement was contingent on Flyr securing $33 million (USD) in additional nancing which the company simply could not accomplish in time.

Meanwhile, large European LCCs have been posting record pro ts and strong nancial outlooks due to a robust budget leisure travel market. Ryanair and Wizz Air are already back to being pro table post-COVID, and Easyjet is expected to post its rst post-pandemic annual pro t this year. All of these airlines have ambitious expansion plans seemingly constrained e Lu hansa Group has submitted an o er to purchase a stake in Italy’s ITA, TAP Air Portugal is looking for a buyer, and Scandinavian Airlines is still losing millions despite voluntarily ling for bankruptcy protection last summer.

As for all of Europe’s airlines stuck in the middle —not big enough to match the likes of the legacy holding companies nor frugal enough to match the big LCCs—, it’s clear many will either meet the same fate as Flyr and Flybe or be acquired by one of the big three airline groups as the market continues to separate to extremes. In fact, the thinning has already begun.

Flybe and Flyr have made it clear Europe’s airlines have no choice but to aggressively slash costs or consolidate under the umbrella of an existing holding company in order to survive.