When airline chiefs get together as they did this week at ITB in Berlin, the warnings are coming thick and fast.
Once again Norwegian came in for most likely failure. Michael O’Leary CEO of Ryan Air Group has had it in for Norwegian for as long as I can remember. His concerns are genuine and based on its bizarre financial record and opaque business structure, coupled to a sharp awareness of low cost operations.
It’s largely owner-financed and underwritten share issue for €350 million was only successful because Bjorn Kos its founder, and the underwriters were responsible for finding the money. There was a dumbfounded silence from nearly everyone else when asked to commit. As O’Leary said, “what happens when they run out of the €350 million?”.
Willy Walsh of IAG and Lufthansa Group’s Carsten Spohr we’re equally as damning over the poor practices redolent in the low cost market. All are looking forward to the day when, and it’s not far off now, RyanAir Group, IAG, EasyJet, Lufthansa Group and AF-KLM control 80% of the European aviation market.
All of them see a point in the 2019-21 period where fuel prices will rise and a recession – Britain’s caused by an disorderly Brexit, Germany may be just 0.1% away in quarterly growth from a recession even now, and most of Europe will follow, will send airlines without resolved a sturdy cost bases into collapse.
And the E.U. Big 5 will be waiting to pick up the pieces.