2023-09-18 17:12:00
The airline Air Belgium announced on Monday that it was ceasing its own passenger activity, “chronically unprofitable” due in particular to competition in the market. The company will now focus its development exclusively on freight (cargo) and ACMI (chartering aircraft for other airlines) which offer it growth prospects.
The company’s board of directors also filed a judicial reorganization procedure with the company court by amicable agreement, in order to deal with its debt, return to profitability and allow it to reorganize. The court will consider the request in the coming days. In the event of a green light, the company will be able to negotiate agreements with its creditors to reduce its debt.
“The judicial reorganization procedure aims to ensure the sustainability of the company and in no case is the legal entity destined to be impacted“, specifies the company.
Air Belgium indicates that employees linked to passenger activity remain active during the procedure “and beyond”. Management wants to gradually reassign them to other activities.
Union reaction
The unions currently say they are worried regarding the situation. “Leasing, I hope there will be contracts,” says Nicolas De Commer, SETCa Walloon Brabant union representative.”If there aren’t any, what do we do with the staff? Are we putting him on economic unemployment? Should we fire him? Are we moving towards a Renault plan? I do not know. At first glance, I am skeptical. I don’t know at all where we’re going. The fear remains bankruptcy.“
“We have already had to deal with these temporary and fleeting rearrangements“, says Mikaël Bonneau, CGSLB permanent secretary. “Here, we are in a situation that is a little heavier, more worrying. We will obviously be vigilant.“
“Weakening of the company due to external events”
The revision of the development strategy is explained by a weakening of the company due to external events such as the coronavirus pandemic, the war in Ukraine, the surge in fuel prices or even inflation, explains the company. In March, faced with the impossibility of passing on the increase in fixed costs to ticket prices, it also canceled flights to unprofitable destinations such as the Caribbean and the French West Indies. Air Belgium then focused its activities on South Africa and Mauritius, while the capacity of the released aircraft was allocated to charter and ACMI (cargo and passenger) activities.
These obstacles have “severely affected” the profitability of the passenger activity and the company’s cash flow, underlines Air Belgium. “If Air Belgium’s budget forecasts anticipated a return to profitability in the fall of 2023, the financial difficulties of the past, linked to the current uncertain and difficult environment, are pushing Air Belgium to change strategy.”
The company’s board of directors considers that significant additional investments, in addition to those made in recent years, would be necessary to make the passenger business profitable.
What consequences for reservations?
For customers who have already purchased a ticket, flights scheduled before October 3 will be operated and return flights will be covered by Air Belgium, either directly or through other airlines. Those scheduled following this date and already paid for will be canceled and refunded.
Around 20,000 travelers are affected by the end of passenger flights to South Africa and Mauritius following October 3, we learned from the airline.
Founded in 2016, the airline employs around 500 people.
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