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Airline Management, Restructuring

Primera Air fails to secure long term financing and shuts down, but was its collapse inevitable? Its product positioning was vague, LCC or Full Service, point to point with no feed, small 7 aircraft fleet (5 x A321neo and 2 x B737-800, plus 2 x A321LR and 18 x B737-9 on order) of its own, late aircraft deliveries, unexpected maintenance and then too many ACMI leases and starting too many long haul routes at once sealed its inevitability?







Primera Air blames ‘several unforeseen misfortunate events’ for its collapse, but did it take a risk too many in entering the competitive trans-Atlantic market?


The European carrier Primera Air surprised everybody when it burst into the trans-Atlantic market earlier this year. After over a decade serving mainly Mediterranean markets from the Nordics and Baltics, the airline launched flights this summer from new bases in Birmingham, London Stansted and Paris Charles de Gaulle to destinations in North America. In recent weeks it had revealed plans to also introduce trans-Atlantic flights from Berlin, Brussels and Madrid, but instead it has this week filed for bankruptcy, certainly a victim of external factors, but also perhaps of an overambitious business strategy.


  • Primera Air and Primera Air Nordic ceased trading on 01-Oct-2018 after failing to secure long-term financing;

  • It describes ‘several unforeseen misfortunate events” for leaving it with “no choice” but to file for bankruptcy, leaving passengers stranded across Europe and North America;

  • The company had historically served Mediterranean leisure routes from the Nordics, Baltics and Scandinavia, but this year entered the trans-Atlantic market;

  • The two airlines had a combined fleet of 15 aircraft, but with more than 20 more on order.

The fact that CAPA’s team of analysts were this week debating whether the airline should be classified as a ‘Low Cost’ or ‘Mainline’ carrier due to its ‘low fare, high quality’ model perhaps helps explain why almost a year on from the collapse of airberlin and Monarch Airlines that we are discussing the collapse of another European carrier. While known within the industry having first been established as JetX in Iceland back in 2009 and latterly operating with Danish and then Latvian licences as part of the Primera Travel Group conglomerate of Scandinavian travel agencies and tour operators, it unfortunately had limited brand recognition outside of its core markets.


Therefore, when it revealed ambitious plans to acquire a small fleet of modern generation short-haul airliners and utilise them on flights across the trans-Atlantic, it was met with surprise. Unfortunately, and despite strong marketing, the ambitious strategy to be one of the first movers in this marketplace and deliver its own interpretation on the emerging low cost long haul model, did not translate into bookings and low demand quickly saw flights from Birmingham reduced and then cancelled entirely.


Its strategy was brave and The Blue Swan Daily questioned earlier this year if its low fare, high quality model would stimulate demand enough for it to compete some well-established operators in the highly competitive market. While easier to fill an Airbus A320 or A321 than a widebody, the airline was restricted to heavy point-to-point markets without the strength of the feed enjoyed by its network rivals. APD out of the UK would also have been a factor as it endeavoured to provide the low fares required to stimulate the market, and rising costs, including fuel may not have been factored correctly into the plan.


But issues outside of its control also weigh heavily on its closure, especially the delay with deliveries of its new aircraft from Airbus and the additional and unexpected costs incurred by leasing equipment to maintain flight schedules. The airline says “several unforeseen misfortunate events” over the past two years “severely affected the financial standing” of the business. These included the EUR10 million loss of one aircraft due to severe corrosion problems, the “severe delays of aircraft deliveries” that were “incredibly problematic” and resulted in “operational issues, cancelations of number of flights, loss of revenues” and cost over EUR20 million to overcome.


“The company has been working relentlessly during the last months to secure the long-term financing of the airline. Not being able to reach an agreement with our bank for a bridge financing, we had no other choice than filing for bankruptcy,” it explained in a statement on the evening of 01-Oct-2018 after news on its collapse was leaked.


“Without additional financing, we do not see any possibility to continue our operations. This is an enormous disappointment after the incredible hard work and dedication put into building the airline,” it added.

So what now? Much of Primera Air’s fleet has already been impounded at airports as debtors seek renumeration. Staff – many of which may have previously been employed by Monarch Airlines – once again find themselves out of work in October.


The CAPA – Centre for Aviation Fleet Database lists Primera Air (IATA: PF; ICAO: PRI) as operating a fleet of eight aircraft comprising five new A321neos and three Boeing 737-800s. It also had outstanding orders for more than 20 aircraft, including a couple of A321neoLRs and 737MAX-9s. Its sister operation, Primera Air Nordic (IATA: 6F), had a similarly sized fleet of 737s, comprising two 737-700s and five 737-800s.


TABLE – While only a small carrier in terms of fleet size, Primera Air (top) had ambitions to grow its model, especially in the trans-Atlantic market, while its sister carrier Primera Air Nordic (bottom) remained focussed on the company’s historic markets
Source: CAPA – Centre for Aviation Fleet Database





Primera Air tweaks trans-Atlantic network as it prepares for low cost long haul debut


Primera Air has confirmed plans to expand its new low cost long haul trans-Atlantic operation to a fourth North American destination, but poor initial sales has seen it scale back its activities out of Birmingham Airport, including the cancellation of its planned Boston route. The airline expects 2018 to be a “defining” year for the business as it evolves from an European leisure carrier into an emerging trans-Atlantic airline.

Adding to its soon to launch flights to Boston and New York in the United States of America (USA) and Toronto in Canada, the Nordic airline is to add Washington to its network with flights commencing in Aug-2018 with a five times weekly schedule from London Stansted. The airline is also considering adding flights to Montreal, Canada from 2019.

In a switch from its European-based activities, Primera Air is opening new bases in Birmingham, London Stansted and Paris Charles de Gaulle for flights to New York, Boston and Toronto this April along with new routes from UK to Málaga, Palma de Mallorca, Alicante, Barcelona, Chania, Málaga and Palma de Mallorca.

“We’ve been planning to add Washington from the beginning of our transatlantic flight project,” explains Andri Már Ingólfsson, president and owner of Primera Air. “We see a strong demand for this route and we are the first low-cost airline to start operations between both cities.” Although it will face no direct competition out of London Stansted, British Airways, United Airlines and Virgin Atlantic Airways serve the city pair out of London Heathrow.

Primera Air’s trans-Atlantic network will be served using its new single-aisle Airbus A321neo and A321neoLR aircraft in a two class configuration: full-service premium and low-fare economy, offering free Wi-Fi and onboard charging points throughout to meet modern customer needs. It is due to receive six aircraft in spring 2018 with two further aircraft due in late 2018. In 2019 it will receive its first ten Boeing 737-MAX9 aircraft with eight more following in 2020 when its two A320neoLR are also due to arrive.

There has been a lot made about new aircraft technology supporting a movement in the deployment of narrowbody equipment on thinner routes. This is not new and such equipment, mainly in the form of the Boeing 757, has been regularly flying between the United States of America (USA) and Europe. But, it is clear that new generation and more efficient narrowbodies are opening this market to new entrants like Primera Air, meaning this small, but very dynamic, niche segment is undergoing transformation.

But this new aircraft efficiency does not guarantee success. Primera Air has already found that in the Birmingham market. Whether it is simply low demand, competition from other markets or brand awareness, but the airline has already cancelled the launch of its planned Birmingham – Boston route due to “lower demand… mainly driven by insufficient incoming traffic”. This in turn has also resulted in the reduction of its Birmingham – New York service from daily to four times weekly.

Things seem more favourable in the London market where alongside the new five times weekly London Stansted – Washington route, Primera Air will have the capacity to also boost its flights between London Stansted and Toronto, upping frequencies from three to five per week from Aug-2018.

While new to the UK and French markets, Primera Air is well known across Scandinavia and the Baltics being part of the Primera Travel Group that operates travel agencies and tour companies in Sweden, Denmark, Norway, Finland, Iceland and Estonia. Over the coming years it plans to further grow its long-haul network increasing its presence at Birmingham, London Stansted and Paris CDG, as well as opening other new bases.

“With our brand new Airbus321noes, we are opening routes previously traditionally served only by widebody aircraft. With unmatched efficiency of these new-generation aircraft, we will be able to offer unprecedented prices to our passengers,” says Mr Ingolfsson. “We are very proud to be offering a low-fare/high quality product and service concept, that will be perfect both for leisure and business travellers.”

Primera Air is certainly aiming to ride the new low cost long haul wave and is among the pioneers of the model in the trans-Atlantic market. The big question is can its low fare, high quality model stimulate the market enough for it to compete some well-established operators in the highly competitive


About Aviation Doctor - Helping aviation companies to transform the present into a more profitable tomorrow

I am a Canadian and EU national with an MBA and 33+ years experience in aviation business development with 20 years overseas and work in 30+ countries. A former investment/merchant banker (mergers and acquisitions to corporate turnarounds). airline and OEM senior executive and past owner of 6 successful aviation companies in 3 countries (executive jet charter/management companies, aircraft sales, aircraft broker, airline/aerospace consulting to aircraft insurance). I have a very diverse aviation background with 75+ aviation companies (50+ airlines of all sizes, OEM's, airports, lessors, MRO to service providers) as consultant, executive management, business analyst and business development adviser. Excellent success track record in International Business Development. Most work with airlines is with new start-ups and restructuring of troubled carriers. I sold new business jets, turboprops and helicopters for Cessna, Raytheon, Gulfstream to Eurocopter as an ASR as well as undertaking sales and marketing of commercial aircraft for Boeing, de Havilland, Dornier, Saab and Beechcraft. Brokered everything from LET-410's to B747's and from piston PA31 to G550 business jets. I look beyond the headlines of the aviation news and analyze what the meaning and consequences of the new information really means. There is a story behind each headline that few go beyond. Picked the name Aviation Doctor, as much of my work has been with troubled companies or those that want and need to grow profitably. I fix problems in the business for a better tomorrow. You can reach me with comments or suggestions at: Tomas.Aviation@gmail.com I write a lot of Articles and Posts on LinkedIN: https://www.linkedin.com/in/tomas-chlumecky-3200a021/


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