It has been a disruptive start to the year in Europe, with both Germania and bmi regional declaring bankruptcy. These were the sole scheduled operators of Rostock Laage Airport, a small coastal airport in northern Germany, meaning scheduled traffic there will grind to a complete halt, as will other regional destinations relying on holiday traffic operators.
UK carrier bmi cited rising fuel costs and concerns over Brexit as factors forcing it to cease operations on 16-Feb-2019. It operated 17 regional jet aircraft on routes to 25 European cities, including Munich services to Rostock, Brno, Lublin, Saarbrucken and Bristol, carrying +500,000 passengers on 26,000 movements in 2018.
Germania filed for bankruptcy proceedings with Berlin-Charlottenburg’s District Court in early Feb-2019, operating a final service from Fuerteventura to Nuremberg in the early hours of 05-Feb-2019 before its AOC was removed by the German Civil Aviation Office.
Even prior to its announcement, Germania admitted it failed to pay its staff and that of its maintenance and charter subsidiaries for the month of Jan-2019, which no doubt set off the alarm bells of the German Luftfahrt-Bundesamt, to whom carriers must prove solvency in order to maintain operations.
There may yet be some hope for the ailing carrier, as a “high level of investor interest“ has made itself known to insolvency administrator Rüdiger Wienberg assigned to the Germania case. He believes there is still an opportunity to incorporate the more profitable parts of the business, including slots, without any inherent liabilities.
Important slots will also be up for grabs in Duesseldorf Airport in particular, with Laudamotion and Eurowings already expressing interest in lucrative capacity left by Germania as they look to expand as second tier airports in Germany.
The amount of funding estimated by Germania is small, somewhere around EUR15 million and EUR20 million to hold it over until summer and begs the question why the German government itself could not have stepped in during its financial woes, given the airline’s importance for regional airports in the country. Being primarily a European holiday carrier, by summer 2019 it could have ramped up operations with strong forward bookings scheduled in the period, and payed back any outstanding debt.
Mr Wienberg maintains there is potential for select routes Germania previously operated and believes it important that the airline retain operations in order to not forfeit allocated slots, as well as continue to maintain aircraft and retain employee contracts at least until Mar-2019. Most recent financial data published in the Bundesanzeiger register is from FY2016, where Germania reported a loss of EUR7.7 million down from a loss of EUR6.8 million in FY2015. Reports indicate its financial situation has not improved since, explaining the hesitation by investors thus far.
In more than 35 years of operations, Germania had developed from a mini charter airline to a mid-tier player in the German and European tourism industry broadly, operating to important European and North African holiday destinations in Egypt, Spain, Turkey and Greece. What’s more, it represented a major portion of smaller airport activity in Germany such as Erfurt, Muenster, Nuremberg, Friederichshafen, Dresden, Bremen and Rostock Laage.
Though commitments from other regional carriers such as TUIfly, Corendon, Sunair, SunExpress and most recently Laudamotion, now part of Ryanair, from its Palma de Mallorca hub will party fill the gap in some spots, most of these locations are set to lose out heavily in 2019, so dependent were they on holiday operators such as Germania and the hub connections offered by bmi.
The European bankruptcy trend for these smaller carriers means only bad news for niche destinations like Rostock. These locations need to go to great lengths to entice airlines to operate there and are usually restricted anyway in terms of what airlines can operate there depending on fleet composition.
Though there may be “way too many players in Europe”, as Lufthansa Group CEO Carsten Spohr said at the CAPA – Centre for Aviation World Aviation Outlook Summit last year, there are also a huge number of destinations in Europe and it is impossible to connect all of them without reliable small tier carriers whose fleet compositions can cater for limited infrastructure these locations provide.