Story ID: CBprimera10022018
European Low-Cost Carrier Primera Air Collapses
By: Cathy Buyck
Caption: Puts part of the blame for its financial difficulties on aircraft delivery delays 
Word Count: 591
Efforts by Airbus and Boeing to promote their newest generation narrowbodies as the ideal aircraft for thin low-cost long-haul routes suffered a major dent with the collapse of Primera Air, whose abrupt closure stranded crew and passengers around Europe and North America. “Airline Primera Air and IATA codes PF (Primera Air Denmark) and 6F (Primera Air Nordic in Latvia) have been suspended as of today, October 2, 2018,” it stated on its website and social media accounts, as it partially blamed “severe delays” of aircraft deliveries for its financial difficulties.

It also said that “potential losses due to future delivery delays, and the exposure to...partners and lessors,” combined with the current low-price, high-fuel-costs environment had prompted it to cease operations now. The company nevertheless admitted that a lack of operating capital contributed to its decision. “Without additional financing, we do not see any possibility to continue our operations,” it acknowledged.

As recently as last month, the Nordic carrier announced plans for services from Brussels, Berlin Tegel, Frankfurt, and Madrid Barajas to a handful of destinations in North America such as Newark International, New York JFK, Washington Dulles, Boston Logan and Toronto Pearson using new Boeing 737 Max 9s. Plans called for deliveries of its Max 9s to start next year. Primera Air and Boeing announced a commitment for 20 of the narrowbodies in May 2017, encompassing an order for eight units, purchase rights for four additional examples, and a lease agreement for eight more airplanes from Air Lease. 

Primera Air had committed to serving as the launch carrier for the Airbus A321LR, which just received joint European Aviation Safety Agency and U.S. Federal Aviation Administration certification to fly up to 4,000 nautical miles with 206 passengers with extra fuel stored in up to three additional center fuel tanks. The airline placed an order for eight A320neos, including two long-range A321LR variants leased from AerCap, for its planned transatlantic network at the Paris Air Show in June 2017.

Plans called to initially link London Stansted, Birmingham, and Paris Charles de Gaulle airports to Newark, Boston, and Toronto from April 2018. Its foray into the low-fare transatlantic market, however, did not happen without hiccups, partly owing to the later-than-scheduled arrival of its CFM International Leap-1A-powered Neos.

“2018 began with a fantastic start of our low-cost, long-haul project with a brand-new Airbus 321neo fleet; however, due to severe delays of aircraft deliveries this ended up being rocky and incredibly problematic: operational issues, cancellations of a number of flights, and loss of revenues are just a few to mention,” Primera Air stated. In addition, it said, it suffered €20 million in costs to lease replacement capacity aircraft and fulfill passenger obligations.

Primera Air’s struggle “points to certain limitations of the low-cost approach to long-haul connections, a strategy that Norwegian Air Shuttle has started to expand massively in 2018 with initial failures on certain routes,” European credit rating agency Scope Ratings noted. “However, Norwegian has the size and capacity to balance those failures with the short-haul business of the group.” The Norwegian LCC in recent months pulled several transatlantic services between secondary airports, including services from Belfast and Edinburgh to Providence, Rhode Island, and Newburgh, New York, with Boeing 737-8s.

Based in Denmark and Latvia with two separate AOCs, Primera Air operated as part of the Primera Travel Group, which runs travel agencies and tour operating companies in Sweden, Denmark, Norway, Finland, Iceland, and Estonia. The airline carried just over 1 million passengers last year.