The future is not looking bright for beleaguered Air Belgium, following an almost year-long reprieve from bankruptcy during which an as yet unsuccessful search for investors has taken place.
Judicial reorganisation and pivot
A judicial reorganisation process has so far protected the carrier from its creditors, despite annual losses of 22 million euros and a 40% drop in sales. These occured after it ceased operating its hyped-up but ultimately loss making passenger flights to China, the Antilles and South Africa, in September 2023 and managed to halve its losses thanks to the restructure.
At the time, the airline aimed to pivot to focus on its supposedly growth-generating business-to-business services, freight transport and inter airline leasing and said employees would be offered roles around those functions.
But 2024’s annual results showed turnover had plummeted from 258 to 156 million euros at the year’s midway point. Auditors were unwilling to make future financial pronouncements due to continued “uncertainty” surrounding potential investors.
Unknown investor’s demand for 75% stake unlikely to succeed
The company had claimed that negotiations with interested parties, including cargo specialist Sichuan Airlines, were making “significant progress” but since then no deal has been forthcoming. At a business hearing in Nivelles last week, the airline, founded by Niki Terzakis in 2016, was ordered to get its affairs in order and given a two-week extension to secure a takeover bid, after it said an unknown investor had appeared on the scene post the judicial reorganisation deadline.
However news agency Belga and the Belgian Echo report that a successful takeover seems unlikely in that timeframe under the terms set out.
What’s the problem?
In the short term Air Belgium needs to raise 18 million euros. Business antenna Lpost says the potential investor has offered 6 million for 75% of the company, as long as the Wallonian authorities also put 10 to 12 million into the pot without taking a stake. But the airline is already almost half owned by Chinese logistics group Hongyuan and cannot increase the stake held by foreign investors without losing its Belgian operating licence.
Previous Wallonian administrations have already poured millions of euros into the upstart carrier, in which Terzakis only retains a small stake. The government’s appetite for further support increasingly appears to be on the wane, prompting the Echo to suggest that bankruptcy seems inevitable, as officials now prefer to leave the problem in the hands of a private sector whose capacity for a rescue has proven elusive.
