Bankruptcy risk of small airlines - Report also for a company in Cyprus

Companies are being squeezed by ever-increasing costs in fuel and wages

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Europe's airlines are facing the risk of bankruptcy this winter, as the energy crisis and inflation force governments to direct support measures to citizens and businesses. According to analysts at Sanford C. Bernstein, the Old Continent's weakest airlines face an increased risk of financial collapse this winter, as states that bailed out airlines during the pandemic crisis now focus on supporting other sectors, as well as households which are affected by galloping inflation.

According to Bloomberg, amid the pandemic and transportation restrictions, few airlines were driven to collapse as they benefited from government support measures. Now, however, the scene seems to be changing, since not only are government priorities being revised, but the companies themselves are being pressured by the ever-increasing costs of fuel and wages. Added to the above is the seasonal decrease in travel, the investment firm said in a note on Monday. This comes at a time when governments are struggling to relieve citizens of bloated bills. Smaller carriers in Central and Eastern Europe will be more vulnerable, Sanford C. Bernstein analysts said, citing a new model to assess bankruptcy risk based on competition and capacity levels, route networks and potential lease costs and aircraft replacement.

Europe's top six airlines face negligible risk, analysts said, with low-cost carriers Ryanair Holdings, EasyJet and Wizz Air Holdings maintaining their credit rating and groups including Air France-KLM, IAG and Deutsche Lufthansa they can rely on government assistance if needed. The most exposed airlines include one from Cyprus and two from Albania, as well as companies based in Belarus, Bulgaria, the Czech Republic, Georgia, Moldova and Romania. This will favor the stronger players in Eastern Europe, notably Wizz and Budapest-based Ryanair, Bernstein concludes, which have the potential to expand into markets that will be "orphaned".