Air Belgium bankruptcy “inevitable”

Air Belgium faces inevitable financial collapse.

The outlook for Air Belgium is grim, as the airline faces what now seems to be an inevitable bankruptcy. Despite a year-long effort to avoid financial ruin, the company has struggled to attract investors willing to help keep it afloat. This lack of success follows a series of setbacks, including the termination of its passenger flights and ongoing operational losses.

A judicial reorganisation process initially offered the airline some respite, shielding it from creditors. However, Air Belgium has been unable to turn the tide, with losses reaching 22 million euros annually. Moreover, a significant drop in sales—by as much as 40%—has compounded the airline’s financial woes. This sharp decline occurred after the company ceased its unprofitable passenger routes to destinations like China, South Africa, and the Antilles in 2023. The reorganisation did allow Air Belgium to cut its losses in half, but it has not been enough to put the airline on a sustainable path.

At the time of the restructuring, the airline sought to focus on its business-to-business operations, such as freight transport and leasing services for other airlines. It hoped that this shift would bring in much-needed revenue. Employees were also offered positions within the new focus areas. However, despite these efforts, the airline’s 2024 financial report revealed a drop in turnover from 258 million euros to just 156 million euros by mid-year.

Negotiations with potential investors, including a well-known Chinese cargo operator, Sichuan Airlines, appeared to be promising earlier in the year. Nevertheless, no deal has materialised. An unexpected investor came forward after the deadline for reorganisation had passed, but doubts remain over whether any agreement can be reached in time. Last week, at a business hearing in Nivelles, Air Belgium was given a two-week extension to secure a takeover bid.

Air Belgium urgently needs to raise 18 million euros to stay afloat. One potential investor has offered to contribute 6 million euros in exchange for a 75% stake in the company. However, the deal hinges on the Wallonian authorities providing an additional 10 to 12 million euros without acquiring any ownership in return. Complicating matters further, the airline’s Belgian operating licence is at risk if foreign ownership exceeds current limits, as it is already nearly half owned by Chinese logistics group Hongyuan.

Previous investments from Wallonian administrations have been substantial, yet there is little appetite for further government support. Founder Niki Terzakis holds only a small stake in the company, and there is growing sentiment among officials to let the private sector handle the situation. With no clear rescue in sight, it seems likely that Air Belgium’s financial collapse is just around the corner.