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Prime era ends

Primera Air shut its engines permanently in October this year. Alan Dron analyses the sequence of events that led to the airline’s closure
 

The bad luck that compounded Primera Air’s troubles was being caught up in the delivery problems that afflicted Airbus this year due to the late arrival of engines from suppliers.


As the directors of Primera put it in their statement announcing the airline’s closure, those delays to the company’s planned fleet of Airbus A321neos resulted in the cancellation of flights and loss of revenues. On top of that, Primera had to lease in replacement aircraft to keep faith with customers. That resulted in a further €20 million-plus of unanticipated costs. This year’s rapid rise in fuel prices added to the toxic financial mix.


That sort of financial strain could not be borne by a small company. Attempts over several months to find new sources of funding ultimately failed, and Primera ceased flying on 2 October, another name to join those of Skywork, Cobalt and VLM, that have vanished from Europe’s skies this summer.


Primera, which had a small fleet of A321s and Boeing 737-800s, had been around the Nordic region since 2003, but in recent times had attempted to break out of the traditional short haul European charter market into the burgeoning long haul low cost sector.


“They just hit a really bad patch of bad luck,” says Mark Drusch, Vice President of international aviation consultancy ICF. “They attempted to pivot out of their existing market into a long haul market and ran into these unfortunate roadblocks.


“The Airbus problem affected everyone, but they affect you disproportionately if you only have a few aircraft. If you only have four aircraft and need to fly them heavily in the summer to generate cashflow to get through the winter, that can really be a death knell.”


However, Drusch does not see the company’s failure as an indicator of structural weaknesses in the low cost long haul market: “I don’t see Primera as a canary in the mine; they had a standalone situation.”


Primera had started to expand rapidly in the past couple of years, garnering considerable publicity as it launched its cut-price transatlantic fares. It began to launch new services at a breakneck pace, with some closing down again almost as quickly.


It had, for example, planned a series of transatlantic services from Birmingham to New York and Toronto. The US service began in May 2018, with the Canadian sector due to start in late June. However, in early June it announced that both these services were being suspended as the result of “ongoing late delivery of long haul A321neo aircraft from Airbus”, and that it was pulling out of the Midlands airport.


Following the Birmingham announcement, Primera Air’s CEO, Andri Már Ingólfsson, was cited by the BBC as saying: “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.”


That decision left an estimated 10,000 passengers that had booked with Primera either seeking compensation or asking for alternative transatlantic flights with the carrier from London Stansted.


As its expansion began to collide with its growing lack of aircraft, it started to gain an unhappy reputation for heavily delayed or cancelled flights, with passengers anecdotally finding it difficult to claim compensation for their flight problems.


Also, a possible factor in the airline’s problems was its complex organisational set-up. Owned ultimately by an Icelandic company, it was based operationally in Latvia, and had a Danish airline operator’s certificate (AOC). >>

 


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