Air Belgium On Brink Of Liquidation… Again

In a development that will surprise nobody who has been following the airline, Air Belgium is once again on the brink of liquidation. Now, this is a familiar story, as Air Belgium seems to have nine lives. However, the situation is definitely more dire than in the past, and I don’t see how this can have a positive outcome…

Some background on Air Belgium’s struggles

For those who aren’t familiar with Air Belgium, let’s start with some background. The airline was founded in 2018, and seemingly hasn’t had success with anything, but it’s still (sort of) in business:

• The airline started service with Airbus A340s, and initially flew between Charleroi Airport (outside of Brussels) and Hong Kong; the carrier’s long term plan was to add routes from Charleroi to mainland China, and have that be the focus
• Within a matter of weeks, the airline suspended that route, realizing it wasn’t exactly a great business model; that was the last we ever heard of Air Belgium operating passenger flights to China
• At this point the airline focused on becoming a wet lease operator, operating flights for other airlines that needed extra capacity; the timing of this was good, as many 787s were grounded due to engine issues at the time
• In October 2018, the airline was on the brink of liquidation, and an emergency general meeting was held to decide whether or not to dissolve; the company ended up getting more funding
• In July 2019, the airline announced it would resume regularly scheduled flights, but would fly to the Caribbean instead of China
• In June 2020, the airline announced it would switch from Charleroi Airport to Brussels Airport, and would launch new routes, including flying to Africa
• In July 2021, the airline announced it would acquire two Airbus A330-900neos, and use those for passenger flights, replacing Airbus A340s
• In December 2021, the airline announced it would add Boeing 747-8Fs to its fleet, and expand dedicated cargo operations
• In November 2022, the airline was reportedly on the brink of bankruptcy, but the airline managed to raise some more capital last minute
• In March 2023, the airline cut flights to the Caribbean, as they were unprofitable, and instead focused on Africa
• In September 2023, the airline cut scheduled passenger flights altogether, instead focusing on cargo and wet lease operations

I still think back fondly on my Air Belgium flight from Charleroi to Hong Kong, which had to be one of the most bizarre flights I’ve ever taken. It had a total of just 25 passengers onboard. It’s not often that the below pictures are what a cabin looks like while enroute on a long haul flight.

Air Belgium is running out of money again

About a year ago, Air Belgium started a reorganization process, whereby the airline discontinued regularly scheduled flights. Even with these changes, the airline is still losing a lot of money.

As you’d expect when discontinuing regularly scheduled flights, the carrier’s revenue fell drastically, by roughly 40%. In the first half of 2024, the airline had revenue of €156 million, compared to €258 million in the same period the year before. Meanwhile losses have totaled €22 million. Air Belgium has been operating two freighter Boeing 747s, plus two Airbus A330s.

Unfortunately Air Belgium now seems to be running out of options:

• Air Belgium had reportedly been in negotiations with Sichuan Airlines for a possible deal on cargo operations, but that didn’t end up materializing
• Air Belgium needs to raise €18 million by September 19, 2024, in order to stay in business
• One potential investor has offered €6 million in exchange for a 75% stake in the company, though this deal is contingent on the government providing up to €12 million in additional funding, without increasing its stake
• The carrier has the further issue of potentially having its Belgian operating license suspended if the foreign ownership stake is increased, as Air Belgium is already nearly half owned by China’s Hongyuan Group

So we’ll see how this plays out. The airline has just over a week left to get new funding, or it’s going to have to liquidate. In fairness, the airline has managed to avoid liquidation several times now, but it doesn’t seem to me like Air Belgium has many levers left to pull.

I can’t imagine what logical justification one could have for investing in Air Belgium at this point, as I’m not sure where the upside is. The airline is losing money with cargo and wet lease operations, and I’m not sure acquiring four random planes is really worth a whole lot, especially with the company’s debt.

Bottom line

Air Belgium is once again on the verge of liquidation. The airline has until September 19 to find new investors, or else it will be forced to liquidate. All deals up until this point have fallen through, and on top of that, Air Belgium is limited in terms of its potential investment options.

It amazes me that Air Belgium has remained in business for so long, given the consistent losses we’ve seen at the carrier, plus the lack of upside.

What do you make of Air Belgium’s odds of survival?