European aviation: bankruptcy season is around the corner
The failures of WOW Air and Aigle Azur that European market saw in 2019 are unlikely to mark the end of the bankruptcy season in the continent, lessors believe. In a panel discussion at AIR Convention Europe 2019, Marian Pistik, the head of asset management at International Airfinance Corporation and Rob Watts, the CEO of Aerotask have exchanged views on what is there to come for the market in the near future.
While the United States has seen many years of airline consolidation, which has left four top airlines control approximately 80% of the market. But this has not yet been the case in Europe, which remains largely fragmented, explains Pistik, adding his personal view that the old continent has “way too many airlines”.
Another problem in Europe, in Pistik’s view, is that there are still a lot of state supported airlines. The state protectionism affects the market and its competitiveness. “In my view, Europe has one low cost carrier too many,” he adds.
Therefore, more bankruptcies are likely to follow. Pristik also predicts more consolidation of European carriers into major blocks, giving Lufthansa’s (LHAB) (LHA) strategy to acquire various airlines from the continent as an example of “a step forward in the right direction”.
Watts, who in general agrees to Pistik’s view, expects not only more fallouts of European airlines, but also places a timeline in the next couple of months. The upcoming October, and winter season in particular, will likely to show “the pressure sets in and where the bankruptcies happen,” says Watts, adding: “Bankruptcy season is right around the corner”.
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