XL Airways Suspends Operations

 - September 30, 2019, 2:53 PM
An XL Airways Airbus A330 lands at Paris Charles de Gaulle Airport. (Photo: Flickr: Creative Commons (BY-SA) by airlines470)

Paris-based XL Airways on Monday suspended operations after failing to secure a takeover bid despite calls by the CEO and employee unions for the French government and Air France to intervene. The embattled leisure airline, which in January placed an order with Airbus for two new A330-900s to support its then growing network, urgently needed €35 million to carry out its restructuring and keep afloat. It declared itself insolvent September 20 and asked a commercial court to place it into receivership. The court in Bobigny, near Paris, gave the company until September 28 to find potential investors. It received only expressions of interest and no firm offer.

In a statement, XL Airways said it would suspend operations as of September 30 at 3 p.m. local time “due to its financial difficulties,” noting that it had taken the decision in collaboration with the French civil aviation authority and the administrators appointed by the relevant French Court. The suspension would last until October 3, it said, indicating it still hopes for a rescue even though management last week admitted it had unsuccessfully negotiated with several potential buyers for more than a year.   

The airline employs 750 people and transported some 730,000 passengers in 2018 mainly on long-haul flights to the French Antilles, the U.S., Cuba, the Dominican Republic, Mexico, the Indian Ocean and Jinan, China aboard a fleet of four leased A330s configured in a single economy class. As part of its restructuring, it planned to install a premium economy cabin.

Aigle Azur rests under Dreamjet Participations, the same holding company that owns Le Compagnie, which operates all-business-class flights between France and Newark Liberty International Airport.

In an odd twist of events, France’s minister of economy and finance Bruno Le Maire is holding Norwegian Air Shuttle partly responsible for XL Airways' bankruptcy, claiming the low-cost carrier received illegal state aid from the Norwegian government. “Norwegian Air is undercutting prices while in debt and receiving public funding from Norway,” Le Maire said during a television debate on Sunday. “That’s something I cannot accept because competition rules should be the same for everyone. We cannot accept it in Europe; we cannot accept it either from Norway,” he said. He vowed he would write to the European Commission “to tell them to put it right.”

In a response to queries from AIN, Norwegian stated it has never received any form of government aid. “Our routes between France and the U.S have been embraced by French and American travelers alike, thanks to our new planes, low fares, and award-winning service,” it said.

Only a small part of its French route network—mainly its routes to the U.S.—overlaps with that of  XL Airways.

It remains unclear whether or not France intends to file a complaint using the EU’ s new Regulation 2019/712 on safeguarding European airlines from unfair competition by third-country airlines. While Norway is not part of the EU, the country is part of the European Economic Area and the European Common Aviation Area, the European single aviation market, and therefore governed by EU aviation rules and regulations, including on competition and state aid.