Norway's Flyr Files For Bankruptcy, Cancels All Flights
Norwegian LCC Flyr has become the second European airline to collapse within a week.
The 18-month-old Boeing 737 operator suspended flights and filed for bankruptcy on Feb. 1, just four days after UK regional Flybe halted operations and went into administration.
“The [Flyr] board concluded on Tuesday evening [Jan. 31] that there are no alternatives for further operation. The company will file for bankruptcy on Wednesday morning [Feb. 1]. Flyr has now ceased trading and all flights are cancelled and will not be rescheduled,” Flyr announced via its website Jan. 31.
Oslo-based Flyr warned on Jan. 30 that it faced a “critical short term liquidity situation,” after failing to secure underwriting for a much-needed capital raise of up to NOK330 million ($33.4 million). This, in turn, placed a lifeline deal to sub-lease six 737s for charter flying this summer in jeopardy. That NOK30-90 million contract, signed in December 2022, was conditional on Flyr securing financing.
On Jan. 31, Flyr’s board voted unanimously to file for bankruptcy with Oslo city court. “There is no longer a realistic opportunity to achieve a solution for the short-term liquidity situation,” Flyr said in a stock market disclosure. The company apologized to everyone affected by its “landing” and advised passengers to pursue refunds with their credit card companies.
Flyr’s shares have been suspended on the Euronext Growth Oslo and bankruptcy trustees will now be appointed. Flyr is a publicly listed company and its ownership is spread across 24,000 shareholders. The company employs around 450 staff.
Two key factors contributed to Flyr’s demise: COVID and weak domestic demand, caused by distribution problems. In a December 2022 interview, newly appointed Flyr CEO Brede Huser told Aviation Daily that the omicron COVID variant cost Flyr NOK500 million, and the fledgling airline did not receive any state-backed loans. Record-high fuel costs also began to bite.
“In July, we had the same ex-fuel unit cost as Norwegian did. We had 10 aircraft, they had 70 aircraft, so we are very cost-efficient on a low scale,” Huser said in December. After Norway’s peak holiday season ended in mid-August 2022, Flyr began to redeploy its fleet from European leisure routes to domestic operations, but competition was fierce and Flyr could not capture enough traffic.
“The weakness for Flyr, since the start, has been domestic traffic,” Huser said. “We didn’t quite have enough travel-agency distribution and corporate agreements to absorb that increase in domestic.”
Local travel agent Berg-Hansen, which has 40% market share of business traffic in Norway, only began distributing Flyr in November.
Flyr used IATA’s New Distribution Capability (NDC) from its launch and had planned to start travel-agency distribution just before summer 2022, but this was delayed to November. “Part of the explanation is the choice of NDC technology,” Huser said, because there was a lack of IT capacity to upgrade travel agency systems to NDC.
When IATA launched NDC in 2012, it was heralded as a way for airlines to take greater control of their products and create a more tailored experience for passengers. A decade later, small- and mid-sized airlines have struggled to keep pace with evolving NDC standards. The transition to NDC also requires heavy investment from travel retailers—and some airlines are using this new pipeline to deliver the same old content, with no NDC features.
Huser abandoned the planned domestic ramp-up and Flyr instead grounded six aircraft, furloughed half its staff, slashed its cost base by 50% and redeployed its remaining capacity to major European cities and leisure destinations. Aviation Week Network’s Tracked Aircraft Utilization tool shows how Flyr started to grounded aircraft from November.
Huser, who was previously Flyr’s CFO, took over leadership of the airline from founding CEO Tonje Wikstrøm Frislid on Nov. 25 to mark a new chapter for the carrier. But Flyr’s November financing plan ultimately failed to take off, leading to the Feb. 1 bankruptcy application.
Flyr launched in June 2021 and carried 1.8 million passengers using a fleet of six 737-800s and six 737-8s. According to the Aviation Week Network Fleet Discovery database, the six 737-8s are owned by Air Lease and were scheduled to remain with Flyr until 2031, while the 737-800s had been leased until 2027-28 and are owned by a mix of lessors: Air Lease, Bank of America, Orix Aviation, Pembroke and SDH Wings Leasing.
News of Flyr’s demise follows immediately after the failure of UK regional Flybe, which suspended flights and entered administration on Jan. 28, less than a year after its April 2022 relaunch. Flybe operated a fleet of eight De Havilland Canada Dash 8-400 aircraft.
“Unfortunately, the company had to withstand a number of shocks since its relaunch, not least of which was the late delivery of 17 aircraft which it needed for its schedule, and which has severely compromised both the airline’s capacity and its ability to remain competitive,” joint Flybe administrator David Pike said. “This has driven significant financial losses and [was] an associated cash drain for the business.”
The old Flybe failed in March 2020. The reincarnated airline was led by CEO Dave Pflieger, the former CEO of Alaska-based regional airline Ravn Air.
Birmingham, England-based Flybe had been operating 17 routes, connecting 10 UK airports plus Amsterdam and Geneva. UK Civil Aviation Authority data shows that, other than in their first month of operation, Flybe never achieved an average monthly load factor higher than 55%.
UK pilots’ union BALPA noted that sudden airline collapses are “hugely damaging” for everyone involved. “Many of the staff of Flybe will have recently suffered the harrowing effects of one bankruptcy, and now they are being subjected to yet another. BALPA will not only support its members through this difficult time, but will seek to work with the [UK Transport Department] to improve the regulatory framework to avoid such sudden and precipitous events in the future,” BALPA General Secretary Martin Chalk said.