MIAMI – As Airways Magazine previously reported, LEVEL’s Austrian Subsidiary, Level Europe (VK, also known as Anisec) ceased operations in June. This was a significant loss for International Airlines Group (IAG), but was this bankruptcy caused by COVID-19?
The story begins in 2017. IAG has long wanted to enter Vienna and since the bankruptcy of Air Berlin, they had a chance to finally enter this market. The airline group registered a company (Anisec Luftfahrt) in Austria to merge Niki (HG) into the new Vueling (VY) subsidiary.
The airline ceased all operations on the 13th of December, not even 2 months after the parent company, Air Berlin did. This followed Lufthansa’s failed takeover which would have not been approved by the European Commission. IAG bid €36,5 million for 15 A321 aircraft. and slots.
A month later, it was announced that Niki Lauda’s airline overbid IAG and took over Niki. At that time Laudamotion (OE) would have been partners with Lufthansa Group: Condor (DE) managed ticket sales and marketing.
This partnership didn’t last long, as in March Ryanair (FR) acquired a ~25% share in the airline. This was a major setback for IAG and they withdrew from Vienna until June 2018.
At the meantime, budget airline Wizz Air (W6) opened a base in Vienna, Eurowings Europe (EW) further expended and the Ryanair-owned Laudamotion started cheap flights.
This was a huge development for Vienna Airport as low-cost airlines were barely present there previously. Its passenger traffic increased by almost 11% (3 million) and its aircraft operations by 7% after 7 years of decline.
In Late June, IAG finally announced the launch of the new airline. Anisec would operate 4 ex-Air Berlin A321s to 14 European destinations both holiday and commuter routes in just 3 weeks.
The fares, in the beginning, were cheaper than the competition.
After commencing operations on the 17th of July 2018, the airline started a huge sale: it offered 50.000 tickets for €0,01 (1 cent). Even I took advantage of this sale flying to London Gatwick and back. After this sale, the prices went significantly up, way over the competition (including full-service Austrian).
At the end of 2018, the airline had very low factors. Passengers reported about 100 passengers on the Gatwick flights and about 30 (or less) on the others.
This was very low on a 210 seater A321 and speculations started to arise about the fate of the airline. Among Vienna-based aviation fans, it was believed that the airline will be one of the next airlines to cease operations.
As the competition was making profits and was expanding quickly, Level had to keep up and announced a few more routes for the summer schedule of 2019.
The airline also acquired A320 for its Vienna base and announced a new base in Amsterdam which would replace Vueling. They also lowered prices, however, its Vienna presence was still behind the competition.
As the financial targets were still not met, Anisec closed a few routes including Copenhagen and Seville.
This trend continued until the start of COVID-19. In October Willie Walsh, CEO of International Airlines Group in a presentation said that the airline is way below plans and expectations. He said:
- The competition in the Austrian capital is even tougher than in Paris.
- The biggest key in Vienna now is the ticket price.
- They receive great customer feedbacks for both bases.
The airline was renamed from Anisec to Level Europe (not confusable with the French OpenSkies and the Iberia-operated Spanish brand). On March 9th a spokeswoman in an interview said that LEVEL was not planning to reduce operations, yet it ceased all operations a week later together with Austrian and Lauda.
They completely revised operations and planned only 10 routes from Vienna (canceling LGW, OLB, DBV, and others).
On the 18th of June after not receiving state aid, the airline filed for insolvency without a successor. The affected are 129 creditors, 231 employees (198 in Austria, 33 in the Netherlands) and ticket holders. The airline’s liabilities are about 12,3 million euros.
The press release mentioned an increase in bookings in the Q4 of 2019. The airline tried to reduce costs in many ways including negotiations with suppliers and providers, short-time work and they also received salary support by the state.
The Credit Protection Association of Austria criticized the government for not providing state aid for the airline, even though it met all the requirements according to them.
It also mentioned Austrian’s three-digit support and the 200 jobless Austrian employees and their families. The employees later held a demonstration in central Vienna and then turned to court over the airline’s bankruptcy.
Summing up, we can see that the airline was struggling from day 1. The 50.000 “free” tickets were a huge failure, not bringing the planned marketing boom. Even though, it was an airline which both passengers and employees liked.
It was expanding on one hand and shrinking on the other to be successful. We will never know whether if its plan was working.
I think IAG’s decision to shut down now was also a tactical move – therefore they can “blame” it on the virus and will not be considered as “IAG’s failed airline”. However, the main victims are the employees and their families who became jobless amidst the coronavirus.