Air Belgium is to cancel all its scheduled flights from October 3 and is intending to file for court-authorised restructuring.
The airline said its passenger operations were proving to be chronically unprofitable and it would from October focus solely on wet lease and freight services. It is reported to have asked the business court in Brussels to initiate judicial restructuring proceedings with a view to negotiating agreements with its creditors on its debt.
A report in aviation24.be said flights scheduled before October 3 would be operated by Air Belgium, either directly or through other airlines. Flights scheduled after October 3 and already paid for by passengers would be cancelled and passengers would be reimbursed as a matter of priority in the scope of the proceedings.
Air Belgium said it had been weakened by the combined impact of the pandemic, the Ukrainian conflict, rising fuel prices and inflation.
“All these factors have had a very severe impact on the profitability of the business and on the cashflow,” it said.
The airline had forecast profitability by January 2024, but now says the difficult environment and continuing financial pressures are forcing the company to rethink its strategy.
It saw a 74% increase in sales in 2022 compared with 2021 and a turnover of €228 million (R4,6bn) last year, compared with €131 million (R2,7bn) the year before. It saw simultaneous growth in passenger transport (+39,9%) - and freight (+63,3%).
However, its expenditure – salaries, fuel prices and lack of profitability on certain routes – dramatically rose last year, from €152 million (R3,1bn) to €302,8 million (R6,2bn). Air Belgium also suffered from late delivery of two passenger aircraft, which saw it miss the 2023 charter season.
Air Belgium had already stopped flights to the Caribbean due its inability to match low fares offered by French airlines, and was conducting flights to Mauritius and South Africa – Johannesburg and Cape Town.
The airline, which employs 500, says it will discontinue unprofitable businesses and it intends to reassign employees in the passenger airline business to other activities within the company.
Air Belgium had previously revealed it had been in talks with a potential investor but its auditor had cast doubt over the airline’s ability to continue operating.