In the last two years, the company has had to fork out unforeseen costs running to tens of millions of pounds because of corroded planes and late delivery of new aircraft
PRIMERA Air has filed for bankruptcy, leaving thousands of British passengers stranded around the world today.
The budget airline, which launched its transatlantic flights from London Stansted to New York and Boston for as little as £99pp in March with huge fanfare has collapsed.
The airline was founded in 2009, and since then it has served 97 destinations in more than 20 countries.
But the problems started to emerge when the airline launched its flights to the US.
In 2017, at the same time that the airline announced that they would be launching a transatlantic route, the company was forced to spend nearly £10million on rebuilding one of their planes that had been severely damaged by corrosion.
Then this June, the airline temporarily suspended flights from Birmingham to New York and Toronto until 2019, blaming the cancellations on late delivery of its long-haul A321neo aircraft from Airbus.
Andri Már Ingólfsson, CEO of Primera Air said at the time: “The plans for the transatlantic routes have been in the making for over a year and both Primera Air and Birmingham Airport have put a lot of effort into promoting the new routes which were welcomed by the region.
“Unfortunately, we did not anticipate such severe Airbus delays and the hold-up has meant we are forced to make this difficult and disappointing decision.”
The delay in the Airbus delivery was a huge blow to the company, as they had been relying on the new fuel-efficient Airbus A321neo aircraft to make their new UK to US routes profitable.
But Primera did not give enough leeway in the planes’ delivery time to allow for any problems on the production line, which meant they were left struggling when the planes did not arrive on schedule.
This meant that they were forced to lease 26-year-old planes from National Airlines, which cost them £17.78million, in order to keep the planned flights running.
As well as the extra cost, this also meant that their advertised ‘non-stop’ flights from London to New York actually touched down in Iceland to refuel, because the old planes lacked the fuel capacity to make the entire 3,500 mile journey.
Then to make matters worse, the leased aircraft was grounded for several days because of engine issues.
As a result, regular complaints began to surface from disgruntled passengers of delayed and cancelled flights.
With these unforeseen extra costs running into tens of millions of pounds, the small airline has been fighting to stay afloat by working behind the scenes on securing a bridge-financing loan from their bank, but they had no success.
In a statement, the board of Primera Air said: “During the last 2 years, several unforeseen misfortunate events severely affected the financial standing of Primera Air.
“The company has been working relentlessly during the last months to secure the long-term financing of the airline. Not being able to reach an agreement with our bank for a bridge financing, we had no other choice than filing for bankruptcy.
“Weighting the potential losses due to future delivery delays, and the added exposure to our partners and lessors, and bearing in mind the difficult environment that airlines are facing now due to low prices and high fuel costs, we have decided to cease operations now, where it will have a
smaller effect on our clients, due to the timing of the year, rather than increasing the exposure.
“Without additional financing, we do not see any possibility to continue our operations.”
