Summary
- Air Belgium has two weeks to secure a new investor to solve financial problems.
- A deal with Sichuan Airlines fell through, while an unknown investor remains.
- The potential investor wants government support, which is reluctant given financial struggles for multiple years.
Air Belgium
has just two weeks left to figure out a solution or that could be the end of the line. According to local media reports, the carrier is coming to the end of its bankruptcy protection program which it has benefitted from for nearly a year now. Earlier this week, a court ordered the company to find a solution to its financial problems, with the most obvious remedy being the entrance of a new investor.
Photo: Air Belgium
Initially, it seemed that China’s
Sichuan Airlines
was going to boost the airline’s capital with an investment but ultimately pulled out. An unknown potential investor remains, l’Echo reports, which was enough to convince the court to extend the carrier’s deadline beyond this week.
Air Belgium has just two weeks left
If it failed to secure an investment from the Chinese carrier, the airline was in trouble. However, an unnamed party appeared just recently, prior to a planned reorganization plan vote on September 4. That hearing and vote has been extended till September 19, giving the carrier a bit of time to sort out some details and hopefully secure additional capital.
The unnamed investor has one problematic condition, though, l’Echo reports. It wants the Walloon government to support the company as well. That is unlikely to happen the airline’s problems over the last year and resulting in millions in investment from the regional government.
Air Belgium urgently needs an investment of at least EUR 18 million given its financial problems both this year but equally throughout its history. Air Belgium’s success has been limited, plagued (among other things) by poor route choices and resulting low load factors.
L’Echo says that the airline’s profits have tumbled by 40% as a result of its shift in business strategy away from regularly scheduled passenger flights towards cargo and ACMI services.
A history of backtracking
Air Belgium has not been consistent in its operation. In fact, when it began flights in 2018 from the second-biggest airport and low-cost hub in Belgium, Brussels Charleroi, its plan was to fly to the Chinese cities of Hong Kong, Beijing, Shanghai, Xi’an, Wuhan, Zhengzhou and Taiyuan. Plenty of ambition indeed, but the carrier did not follow through.
Photo: Air Belgium
By March 2019, Air Belgium had axed its scheduled passenger flights with a view of returning to them in mid-2019 with flights to China followed by the Americas the following year. The airline repeated the process of launching and axing, going through destinations like Fort de France, Point-à-Pitre, Cape town, Johannesburg, Port Louis, Punta Cana and Wilemstad to name a few.
In September, the carrier suspended all scheduled passengers flights. It switched to ACMI and cargo flights, with plans as reported this year to phase out its Airbus A330-900 planes, plagued by engine issues.