Charter airline Air Belgium, of which the Walloon government controls around 35% of shares, is fighting for survival. The €19 million raised earlier in the year has already run out and the company will need an additional €10 million to stay afloat, reports Belgian TV station LN24.
The charter airline is mostly known for long-haul flights to destinations in the Americas, with flights landing in Guadeloupe, Martinique, the Antilles, and other tropical destinations.
Poor exchange rates against the dollar, high airport taxes, fuel prices, and the rapidly deteriorating economic situation in Europe has weighed heavily on Air Belgium. Earlier in the week, the airline declared that it would axe all its flights to the Caribbean starting from the end of the year.
Floundering finances
Air Belgium is the brainchild of Niky Terzakis, Namur-born former CEO of TNT Airways SA, who spearheaded the logistics company’s expansion into Liège Airport. The aviation veterans also served as President of Logistics in Wallonia and an industry representative at the EU Aviation Platform.
Last March, Terzakis successfully managed to raise extra capital for the airline from its major Chinese shareholder, logistics group Hongyuan, which already owns several logistics centres at Liège and Charleroi airport. The Chinese company controls 49% of Air Belgium and joined as a major investor in February.
The €19 million invested by the Chinese company was intended to serve as support for the airline following the Covid-19 pandemic. This time, as the company flounders financially again, shareholders are less eager to help bail out the airline.
For its part, the Walloon government has already propped the company up with several million euros since its creation in 2016. Without the participation of Belgian shareholders in the recovery plan, the Belgian airline risks losing its licence, as flying under the Belgian flag requires a majority of Belgian shareholders.
The influence of its Chinese shareholder has become more apparent in recent months. Two new cargo planes commissioned by the airline will bear Hongyuan’s names and colours, with only the Belgian crown on the wingtip.
Tempered expectations
Air Belgium originally launched with ambitious plans for the future, tabling flights between Belgium and Hong Kong to ferry Chinese tourists to Europe. This endeavour ultimately failed and was scrapped just five months later. Likewise, the airline's route to the island of Bonaire was scrapped before it was started.
Now operating primarily as a charter airline, and finding some success transporting the Belgian Royal Family on their trips abroad, Air Belgium operates flights on behalf of tour and cruise operators, as well as some cargo routes.
Unfortunately for the would-be Belgian flag-carrier, the airline’s charter model never truly recovered from the Covid-19 pandemic. Since 2016, the airline has made a cumulative loss of €46 million.
In a response to allegations made by Le Soir over a mass exodus of pilots from the company, Air Belgium said that the airline was “very cautious for the upcoming winter and next summer’s flights programme.”
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The cost of fuel has increased by 75.3% for the airline since 1 January and as a result, the airline recently suspended routes to the Dominican Republic, Curaçao, Martinique, and Guadeloupe.
The economic woes are in stark contrast to other European airlines who made record profits during the summer of 2021. Brussels Airlines posted record profits and will even repay €290 million in Covid-19 stabilisation support to the Belgian Federal Government.
Despite the looming economic burden facing the airline, CEO Terzakis has remained cautiously optimistic. In September, the airline announced new routes between Brussels and the South African cities of Cape Town And Johannesburg. The airline hopes to attract 80,000 travellers per year with the new route.
