Page 50 - bne monthly magazine October 2022

50 I Southeast Europe bne October 2022
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Fears more Emerging Europe airlines to follow Romania’s stricken Blue Air
bne IntelliNews
It’s been a terrible two and a half years for airlines. Barely had restrictions on international travel imposed to contain the coronavirus (COVID-19) pandemic been lifted when Russia’s invasion of Ukraine sent energy prices sky high and caused an inflation- ary spiral that is shrinking household budgets in real terms across Europe.
The day before Romania’s cash-strapped Blue Air announced it was temporarily grounding flights on September 6, analysts from US-based research and brokerage firm Sanford C. Bernstein told Bloomberg they see Europe’s weaker airlines – which are disproportionately the smaller carriers located in Emerging Europe – as having a heightened risk of collapse this winter.
While few airlines went bust during the pandemic thanks to government support, they are now struggling with higher fuel and labour costs. Govern-
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ments, meanwhile, have shifted their focus away from the transport industry to the urgent need to help households through the cost of living crisis.
Using a new model of assessing bank- ruptcy risk based on competition, capacity, route networks and expected costs of leasing and replacing planes, Bernstein analysts told the newswire the most exposed carriers are from Alba- nia, Belarus, Bulgaria, Cyprus, Czechia, Georgia, Moldova and Romania (though without naming the airlines at risk).
By contrast, Europe’s strongest players "face negligible risk”, indicating a likely continuation of the consolidation seen in the European air transport sector in the years before the pandemic – when a number of smaller airlines from Central and Southeast Europe shut down or were taken over by bigger companies.
As bne IntelliNews reported at the time, while there were different stories behind the collapse of each company, they all happened against the underlying trend of an air transport market in the throes of consolidation. Carriers from the
small Southeast European countries
had been struggling particularly hard. National airlines from Albania, Bosnia & Herzegovina, Kosovo, North Macedonia and Slovenia had all folded in the years before the pandemic.
Blue Air grounded
Romanian lowcoster Blue Air has been struggling for years, as indeed has the coun- try’s flag carrier Tarom. On September 6, Blue Air announced that its bank accounts had been seized by the Ministry of Environ- ment, and it would not operate any flight from a Romanian airport between September 6 and September 12. This created chaos at Bucharest airport, and speculation as to the company’s future.