- A number of European airlines are on the brink of collapse.
- September has been a month of dominos falling in the airline industry.
- Ryan Air is showing a decrease in profits.
On September 23, 2019 Thomas Cook halted its operations. The company owned Thomas Cook Airlines and Thomas Cook Airlines Scandinavia. Thomas Cook was formed in 2007 by the merger of Thomas Cook AG and MyTravel Group. The group operated in two separate segments: a tour operator and an airline. Thomas Cook went into compulsory liquidation on September 23, 2019 and is now under the control of the Official Receiver. The company went into liquidation due to £1.7 billion debt. As a result, the UK Government is having to fly home over 150,000 customers from 18 countries. Brexit uncertainty contributed to the faster demise of Thomas Cook. The company was known for its all-inclusive travel model.
Thomas Cook’s Chinese, German, Indian and Nordic subsidiaries will continue to trade as normal, for now. However German Condor Flugdiens is demanding German government subsidies. Thus far Germany has refused financial subsidies. Condor is seeking bridge financing with the sense of urgency due to the collapse of its parent Company Thomas Cook. Lufthansa is considering a last minute bid, but it is not for certain. Deutsche Lufthansa is the largest German airline which, when combined with its subsidiaries, is also the largest airline in Europe in terms of passengers carried.
The aviation industry is heading into a downward spiral and the domino effect is starting to take shape.
French Airline XL Airways halted ticket sales on September 19, 2019 due to financial trouble. XL Airways is a budget carrier, requires $36.8 million and is requesting a rescue from Air France, headquartered in Tremblay-en-France. It is a subsidiary of the Air France–KLM Group and a founding member of the SkyTeam global airline alliance.
On September 16, 2019 Aigle Azur declared itself insolvent and has been placed in receivership. The flights continue. Air France is working on an offer and is one of the possible candidates for the takeover of all or part of Aigle Azur according to la tribune.
Ryanair could be next. In the 2nd Quarter of 2019 the company showed a profit drop of 21%. Ryanair is an Irish low-cost airline founded in 1984, headquartered in Dublin.
Norwegian Air Shuttle is not far behind, issuing notice to its creditors last week. The company’s bondholders accepted a two-year deferral in the taking of dividends obligations that the company issued in between 2015 and 2017. Norwegian Air Shuttle ASA, trading as Norwegian, is a low-cost airline and Norway’s largest airline.
It is clear a myriad of European airlines are on the brink of collapse. It is time for change in the European aviation industry before the full collapse can be felt due to the economic factors.