Air Belgium has decided to discontinue its own passenger business and focus exclusively on "cargo and ACMI for passenger and cargo flights" due to economic challenges that have resulted in the airline acquiring debt.
The airline said in a press release on September 18 that its passenger business "in the face of increased competition is proving to be chronically unprofitable to date".
It noted that a number of economic and geo-political events had "weakened the company" in recent years, including the Covid pandemic, the war in Ukraine, high fuel prices, inflation and reduced consumer spending.
The airline said these factors combined caused financial challenges which, combined with current market challenges, are "forcing Air Belgium to change its strategy".
The airline stated: "The activities of cargo and ACMI (Aircraft, Crew, Maintenance and Insurance, or wet lease), i.e. the leasing of aircraft between airlines for passenger and cargo flights, constitute two profitable lines of business with growth prospects."
It added that it would discontinue the passenger business because "despite the many investments by Air Belgium in recent years and the strengthening of commercial initiatives, the Passenger business is still unprofitable. After numerous studies, Air Belgium’s Board of Directors reached the conclusion that turning a profit on this front would require substantial investments in addition to those already made in recent years, which has not been possible."
Air Belgium's Board of Directors has filed for judicial reorganisation by way of an amicable agreement. If this is approved, the company will be able to negotiate agreements with its creditors with the aim of reducing its debt.
Passenger flights scheduled after October 3 have been cancelled.
Elaborating on the difficulties it has faced in recent years, the company said the grounding of its fleet at the start of the pandemic in 2020 weakened the airline financially as its revenue dropped but its fixed expenditures remained unchanged.
Then the airline faced more hardship with rising fuel costs following the start of the Ukraine-Russia war in February 2022, as well as economic challenges with inflation and the consequent decline in consumer spending.
In March 2022 the airline decided to cancel flights to "unprofitable and highly price-sensitive destinations" including the Caribbean and the French West Indies.
As of April 2023, the company has concentrated its activities on South Africa and Mauritius.
"The capacity of the released aircraft has been allocated to Charter and ACMI (cargo and passenger) activities."
Air Belgium entered the all-cargo market in 2021.
It began operating four Airbus A330-200 freighter aircraft on behalf of CMA CGM in March 2021. The airline subsequently started operating Boeing B747-8 freighters.
Air Cargo News has contacted Air Belgium to request more information on its plans for its aircraft.
