An extraordinary general meeting is convened this Thursday afternoon to discuss the situation of the start-up Belgian airline Air Belgium.
According to Belgian newspaper l’Avenir, Air Belgium is today facing financial difficulties due to the defection of its main Chinese client UTour. The question of the continuation of the activities is clearly at stake, but the current shareholders propose not to give up. They demand the increase of ACMI flights operated for third companies and the search for new shareholders.
According to information obtained by L’Avenir from various sources, the financial situation is very serious at Air Belgium. Its main Chinese client UTour failed to meet its commitment to provide Air Belgium with a sufficient number of Chinese passengers to fly between Charleroi and Hong Kong. Furthermore, UTour has practically imposed very low fares so that the profitability of the route is no longer assured. As a result, Air Belgium has been forced to stop flights to Hong Kong in early October to avoid affecting its accounts negatively in an excessive way. However, the sudden unforeseen termination of its single route seriously unbalanced its business and development plan: the airline had to pay tens of thousands of euros to compensate the affected passengers.
Today, shareholders and executives have decided to continue and expand the ACMI flights operated for third-party companies (Air France, TUI fly, British Airways, etc.), which will generate sufficient revenue.
Meanwhile, Air Belgium finds itself in a situation where its net assets are reduced to less than half of its capital. Therefore, in line with Article 633 of the Companies Code which requires it, the Board of Directors convened an extraordinary general meeting of shareholders to ask the question of whether to continue or to liquidate the airline.
The Board of Directors proposes to shareholders to continue the adventure, but with measures likely to allow the Belgian company to cross this turbulent zone and stabilise its financial situation. These include the search for new air routes to operate and the strengthening of flights for third-party airlines (ACMI flights). It is also about a diversification of activities with the launch of cargo flights. The search for new shareholders is also on the agenda in order to finalise a capital increase within a few months. There should also be a drastic reduction of the operating costs by privileging now essential expenses.
Optimism, however, remains because Air Belgium has signed this Wednesday a strategic partnership with the Chinese company HNCA in the presence of the Prime Ministers of both the People’s Republic of China and the Kingdom of Belgium.