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Warning for Romanian airlines: the risk of



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Financially weaker European airlines will face an increased risk of collapse this winter, as states that bailed out their airlines with subsidy programs and emergency interventions during the pandemic crisis now focus and support in other areas amid rising inflation, according to analysts at consulting firm Sanford C. Bernstein, cited by Bloomberg. Among the companies affected by the problems are also those from Romania.

If in the whirlwind of the pandemic crisis there were few airlines in Europe that were forced to put the lock, amid a wave of aid from governments, air carriers are now facing increasing pressure, caused mainly by higher costs of fuels and labor issues. In a note addressed to investors, Bernstein analysts also draw attention to the decrease in air transport activity in the coming period, due to seasonality.

The attention of governments is, however, now directed elsewhere, trying, each according to their powers, to respond correctly to the crisis that is announced in the ever-increasing bills that energy consumers will receive.

Smaller airlines in Central and Eastern Europe will be the most vulnerable, according to the report by analysts Alex Irving and Clementine Flinois, who in this paper cite a new model for assessing bankruptcy risk based on levels of competition, carrying capacity, routes operated and likely aircraft lease and replacement costs.

Europe’s top six airlines face negligible risk, according to Bernstein. Thus, low-cost giants Ryanair, EasyJet and Wizz Air retain their investment-grade credit ratings, while major national companies Air France-KLM, IAG SA and Lufthansa AG could still rely on help from national governments, if this thing will become necessary.

The list of the most exposed airlines includes one from Cyprus, two from Albania, as well as airlines from Belarus, Bulgaria, the Czech Republic, Georgia, Moldova and Romania, without the report naming them explicitly.

Such a situation should favor the strongest players active on Eastern European routes, mainly Wizz Air and Ryanair, according to Bernstein, with the two companies having the ability to quickly allocate aircraft to markets, routes and slots that could be released.