LONDON – Scandinavian low-cost carrier, Primera Air, has announced via an internal memo to its employees that on October 2 it will file for bankruptcy after 14 years of operations.
In a leaked memo to the airline’s staff, Primera Air’s Director of Flight Operations, Anders Ludvigsson, stated that the reason for filing bankruptcy is “due to the high cost for the aircraft with corrosion last year, as well as the delays of our new Airbuses,” which have caused increased expenses in wet-leasing and flight cancelations.
According to Ludvigsson, Primera Air’s owners failed to secure additional financing, therefore forcing the carrier to enter into administration tomorrow.
Reportedly, the airline had to spend an additional €20 million in unexpected wet-leases, which added up to an amount that’s not manageable under the carrier’s present business plan.
Ludvigsson also confessed that the past seven years “have not been without its challenges” and thanked his colleagues for all of the hard work.
“We got the permits, we flew the flights, we got good reviews from the passengers,” he said. “We fulfilled our part of the mission.”
But the Director of Flight Operations ends his letter admitting that “the financial and commercial aspects, we could not influence,” blaming the airline’s management for the imminent failure.
The airline’s last remaining flights on October 1 are operating regularly. However, it is expected that once these planes land at the base, the airline is to cease operating.
The Official Announcement Followed
About one hour after Ludvigsson’s letter was leaked, the airline released an official statement, citing the very same reasons
The airline highlights the fact that Airbus’ delays in delivering the A321neos forced Primera Air to spend about €20 million in wet leases and about €10 million more in repairing an aircraft that suffered elevated levels of corrosion.
Primera Air launched operations in 2003 as a charter airline running European flights on behalf of tour operators.
Eleven years later, in August 2014, a new division based in Latvia was established. Primera Air Nordic and Primera Air operate a fleet of 15 narrow-body aircraft, including Boeing 737s and Airbus A321s.
In 2017, the airline continued expanding as competition in the European arena intensified with the presence of other LCCs like Norwegian and WOW Air.
The airline announced in July 2017 new transatlantic flights from three new bases in Europe: London-Stansted (STN), Paris-Charles de Gaulle (CDG) and Birmingham (BHX), with flights to Newark and Boston.
Primera Air launched operations to New York, Washington DC, Boston, and Toronto from London and Birmingham—all with single-aisle planes aiming to compete against the aforementioned carriers.
As the carrier continued to show important signs of growth, new planes were ordered: 20 Boeing 737 MAX 9 and three A321neo aircraft that they have on order.
The airline took delivery of its first A321neo in April 2018—the first of three the type to be taken by the Scandinavian carrier on a lease agreement with GECAS in 2018.
However, in June this year, the airline canceled its planned summer transatlantic flights from Birmingham (UK) to New York following further delays in the delivery of brand-new A321neos from Airbus.
Earlier in May, Primera Air canceled its Toronto flights as well, also attributed to a delay in aircraft delivery from Airbus.
“Plans for the transatlantic routes have been in the making for over a year, and both Primera Air and Birmingham Airport have put a lot of effort into promoting the new routes which were welcomed by the region,” said the airline’s CEO in a statement.
In August, the carrier was ultimately forced to suspend all Birmingham operations. “Primera Air is ceasing operations from Birmingham Airport to Alicante, Tenerife, Las Palma, Reykjavik
The airline has also confirmed a reduction of routes from London Stansted from October with them dropping the route to Alicante and reducing the number of flights to Malaga.
While Airbus has not directly responded to the bankruptcy of Primera Air, the manufacturer will now have to divert the A321neos to other customers.
This bankruptcy ultimately results not just in lost business for Airbus, but for Boeing with the several 737 MAXs the carrier had on order.
With Primera Air’s folding, the market is becoming more pressured on airlines across the industry to be the most competitive, affordable to the consumer.
There are rumors that both WOW Air and Norwegian are also in danger of becoming insolvent, signaling that the long-haul-low-cost model they’re operating has margins so tight, that it’s unfeasible to operate.