Air Belgium’s Board of Directors announced that it has decided to review the company’s development strategy and make changes to its operations.
These changes include the suspension of Air Belgium’s passenger flight operations effective from October 3, 2023.
The airline revealed in a statement that its board of directors met 18th September 2023 and decided that it will concentrate on its two growth-generating B-to-B activities, namely cargo and ACMI (leasing between airlines) for passenger and cargo flights, and discontinue its own passenger business.
It said that in the face of increased competition, its passenger business is proving to be ‘chronically unprofitable’ to date.
Air Belgium cited that a series of external events have weakened the company in recent years including Covid, the war in Ukraine, soaring fuel prices, inflation and falling consumer purchasing power, and the current instability of the socio-economic and geopolitical environment as reasons for its change in strategy.
“In order to address its current debt and return to profitability, Air Belgium's Board of Directors has filed for judicial reorganisation by way of amicable agreement…
“The aviation sector has gone through numerous disruptions over the last three years that have severely impacted the profitability of passenger operations for airlines, and Air Belgium is unfortunately no exception,” said the airline.
When it comes to the judicial reorganisation proceedings, it said the business court will examine the application in the coming days.
“If it concurs to open such proceedings, the company will be able to negotiate agreements with its creditors so as to reduce its debt.
“These agreements may include the negotiation of more favourable terms, the partial reduction of the existing debt and the deferral of interest,” said the airline.
Air Belgium said that the proceedings are also intended to reorganise the company’s lines of business by disposing of or, where appropriate, discontinuing unprofitable activities which would have no prospect of viability if continued and that the judicial reorganisation proceedings do not directly concern employment but do concern creditors.
“Employees in the passenger segment will continue to work during the proceedings and beyond, as management intends to reassign them gradually to other activities operated by the company,” said the airline.
The airline also noted that flights scheduled before October 3, 2023, will be operated and return flights would be handled by Air Belgium, either directly or through other airlines, however, flights scheduled after this time and already paid for by passengers would be cancelled and would be reimbursed as a matter of priority in the scope of the proceedings.
“Air Belgium is deeply sorry to announce the discontinuation of its Passenger business at such short notice. All options for maintaining this activity or continuing flights after 3 October were examined, but the financial situation did not allow this,” said Air Belgium.