Azores Airlines Is In Financial Trouble

Last summer I had the chance to fly Azores Airlines from Boston to Ponta Delgada to Lisbon. Azores Airlines is a cute little airline that uses the Azores as a connecting point between North America and mainland Europe. They also allow free stopovers in the Azores, which is an awesome opportunity, since the islands are stunning. It’s a similar concept to what Icelandair and WOW Air do, except on a smaller scale.

The airline consistently has attractive fares, so I think they’re a great option across the Atlantic, even if their onboard product is pitiful.

Historically the airline has been struggling due to their fleet. They use Airbus A310s for their longhaul flights, which are ancient and an operational nightmare, as the airline has frequent cancelations (last year they canceled flights to Boston for an entire week, for example). While flying an A310 was an awesome blast from the past, the plane is a gas guzzler and unreliable, so clearly it’s not a great option nowadays.

On top of that, Azores Airlines has leased planes from HiFly, which I imagine aren’t cheap either.

So operationally the airline has just been a total mess, though that should change soon. The airline will be retiring their A310s in the coming weeks, as they’re taking delivery of six A321neo and A321LR aircraft, which they’ll use for their flights to North America and mainland Europe.

This should greatly improve their financial performance, both in terms of the operational reliability of their planes, and also in terms of the operating costs. So even though the airline is days from operating these planes, it looks like they may still be in trouble.

It’s being reported that Azores Airlines has about €200 million in liabilities, and they need a capital injection to get out of the hole they’re in, or else they won’t be able to pay their employees, etc. The Portugal News quotes the coordinator of Azores’ workers commission:

“What we are asking is that (the regional government) injects enough money into the company so we can pay this debt or at least reduce it to a more comfortable level and set up our summer operation.

At the moment the debt is completely unpayable, we don’t have the financial resources to pay the wages without going to ask the bank, so how can we pay the debt?”, he asked.

Jaime Pacheco said the workers were extremely concerned and that 2017 had been a very unusual year.

The year was unusual in that we could not get out of the red and see better earnings and we couldn’t manage because we have old aircraft, there were many irregularities and this cost us a lot of money”, he added.

Clearly they’re in a pretty lousy situation. They can’t keep up with their current debt, and while it seems like the airline will turn a corner thanks to lower operating costs and improved reliability, short term they don’t have a practical way of digging themselves out of the hole they’re in.

I’ll be curious to see whether the government steps in to help…

(Tip of the hat to Frank)

Comments

  1. Unless the territory / government is a major creditor, seems like it would be sensible to let the company go bankrupt and start a new, more efficient airline with a better fleet. The cost of any layoffs / economic disruption would be less than the additional money poured down the hole.

  2. How unlikely would it be that TAP lobbies the govt so that Azores goes bankrupt and TAP takes over the routes to the Azores?

  3. They want to be bigger than they should. The company plays an important role connecting the 9 islands in the azores. That part of the company will always exist because it has to, even if the local government pays the bill. Now….when it comes to connecting the Azores with mainland Portugal, they have the competition of TAP and also Ryanair. And on their transatlantic routes (Boston and Toronto), they used to be the only direct option from Portugal. Now TAP flies to both cities. So yes, I’m pretty sure they are in trouble.

  4. They need to limit frequency to North America. Their sad version of Business Class
    is always filled with employees.
    Get rid of the high-paid flight attendants who enjoy 4 night stays on a North American trip.
    The Portuguese government can’t bail them out – any loans are already going to pay the fat-cats at TAP.

  5. Is SATA and Azores Airlines the same company? I flew SATA to Boston from the Azores once … definitely disorganized

  6. @Mike B

    Yes, it’s the same company. They just use the SATA name for their inter island service and use the Azores Airlines name for their connections to mainland Portugal and for their flights to the U.S. and Canada.

  7. Flew a trip in March from BOS to PDL and onward to Horta. Excellent results: the new A321NEO is a great airplane, cabin service was superior to US carriers on a transatlantic flight, easy connections at PDL to the Dash8 Q400s that run interisland flights for SATA. Efficient ops despite tough weather and winds. I wish them luck. Small fleets can be a challenge to keep tourists happy and on time. Mechanical problems are inevitable. Folks should stop complaining and be glad that this airline exists. Perish the thought that Ryanair will dominate with their extra fees and tight seat pitch !

Leave a Reply

Your email address will not be published. Required fields are marked *

* I consent to the collection of my name, email address, and content so that One Mile at a Time may manage comments placed on this site.