La Compagnie is the all business class transatlantic airline that started flying in mid-2014. Their first route was between Paris and Newark, and I was able to review that flight within days of when they launched operations. Last summer La Compagnie launched flights between Newark and London as well, which they later ended up canceling.
When the airline started flying I gave them six months until they went out of business. I was wrong, because it just so happened that the cost of oil dropped from $100 per barrel to $50 per barrel shortly after they started flying. Lucky them, eh?
Nonetheless I haven’t been able to figure out their long term goal. They’re all over the place in terms of their growth strategy. Maybe they’ll expand out of New York to Europe. Maybe from the west coast to Asia. They don’t really know. So while I’m sure they can continue to just barely squeeze by and maybe even break even, long term the business model just isn’t materializing, as has been the case with so many business class airlines that came before them.
Understanding La Compagnie’s CEO
La Compagnie’s CEO, Frantz Yvelin, actually started an all business class in early 2007, called L’Avion. It did basically the same thing that La Compagnie is doing now. Presumably L’Avion never turned a profit either, but they really lucked out when they managed to sell to British Airways in July 2008, so they could expand their OpenSkies division.
The airline sold for ~$107 million, which isn’t bad for an airline that was around for just a bit over a year and didn’t turn a profit.
So Frantz Yvelin started an airline, sold it to their biggest competitor, and then started (basically) the same airline over again.
I assumed that this time around he actually hoped to turn a profit, because he couldn’t possibly expect to sell again, could he? British Airways wouldn’t buy the airline again, and who else really has a reason to buy a struggling airline?
Well, we now have our answer, and it’s strange.
La Compagnie in merger talks with XL Airways
Bizarre as this may seem, French media has been reporting that La Compagnie is in merger talks with XL Airways, which is a French low cost airline.
In theory the airlines are very different — La Compagnie operates an all business class configuration, while most of XL Airways’ planes are in an all economy configuration (they have A330s with over 400 seats, in a 3-3-3 configuration).
So what they have in common is that they both have low cost business models, rather than actually having similar products.
But the story doesn’t end there. Apparently Air France is also in talks with XL Airways about a possible takeover, as Air France could use XL Airways as the start of a new low cost longhaul carrier. Air France wants to compete with the longhaul low cost carriers, but realistically it would be tough for them to start that from within. While they can quite easily reconfigure their own planes with more seats, realistically it would still be tough for them to lower their costs. The could have a much easier time accomplishing this by taking over an existing carrier.
At this point we just have rumors, though they sure are interesting ones. Given how over the place La Compagnie’s strategy has been, it sure seemed to me like there had to be some other goal they had. I should have known all along they were hoping for a takeover. That being said, I had no clue what other airline could possibly be interested.
A takeover of La Compagnie by XL Airways could be interesting to see, strange as it may seem. It might not even stop there, as Air France is apparently involved in talks with XL Airways as well.
It’ll be interesting to see what comes of this…