Hello all,
A interesting article titled - who's next?
Warsaw. (Interfax-Europe) - Polish low-cost airline Air Polonia cancelled all flights and will go out of business after Irish investor Crescent Capital stepped away from the company, which cannot afford to pay on its own the USD 800,000 in outstanding leasing installments for its aircraft, Air Polonia President Jan Litwinski said in a Polish public radio interview on Monday.
The downfall of the Polish carrier, which launched operations in December 2003 and whose debt totals PLN 30 mln, is likely just the beginning of a low-cost airline shakeup throughout Central and Eastern Europe (CEE), which is similar to recent turbulence on the Western European market, analysts and airline officials said. Among the latest airlines to go under is Italian carrier Volare, which announced its bankruptcy in November.
"All of the [low-cost] carriers in the region are running on losses," Jozsef Varadi, president of Hungarian rival Wizz Air, told reporters on Monday.
"Air Polonia was first to go down, but it will not be the last this winter. Only the companies that are the strongest financially and have the best cost structure will survive, the rest will die."
The financial strength is the most important factor determining survival on the market, which will have to consolidate, Aviation Economics analyst Tom Coombs told Interfax.
"There are likely to be several more airlines going out of business in the CEE region this winter… For example there are some 14 low-cost airlines operating in Prague, and that is just too many," Coombs said. "The ones properly capitalized are the most likely to make it through the winter season. Wizz Air announced a significant EUR 25 mln cash injection, [Slovakia-based] Sky Europe brags of strong support from its investors."
Wizz Air, which claims to have the lowest costs in the region recently acquired EUR 25 mln in a five year convertible loan, capital which secures its future for the next two years, Varadi said (see related story).
This winter will not prove the final test by far for the local airlines, as the survivors will have only a short time to build their market position before industry hot shots like Europe's top two low cost-carriers, Irish Ryanair and UK-based easyJet, start operating in the region. The market seems to be very attractive for low-fare airlines. In Poland, low-cost carriers took over 20% of the airline market - the EU average market share for low-cost airlines - within just six months.
"These airlines [Ryanair and easyJet] have a significant number of new aircrafts coming in over the course of the next five years, and it seems likely that a part of their fleet will be based in the Central and Eastern Europe," Coombs told Interfax.
To date, beside the downed Air Polonia, five low-cost airlines operated in Poland, including Hungarian Wizz Air, Slovak Sky Europe, as well as German GermanWings, Air Berlin and Niki.
Courtesey of
http://www.interfax.com
Cheers,
White Cap
