Romania's Blue Air celebrated 15 years of operation yesterday. Having recently returned to profitability, we take a look at Blue Air's position within the Romanian aviation industry.
Blue Air is no doubt an interesting airline. The carrier is headquartered in Romania a market accounting for less than 1% of Europe's aircraft count. Data from 2017 shows that Romania had a total of 62 registered planes. Compare that to the likes of Germany with 1,100 planes. Romania and Eastern Europe in general, is a tough market to operate in. Neighbouring countries have struggled to sustain a stable flag carrier. For example, Hungary which is on the North East border of Romania, previously had its own carrier named "Malev". Unfortunately the airline declared bankruptcy back in 2012, leaving the country with no flag carrier.
Romania has two major airlines: TAROM (flag carrier) and Blue Air. Both carriers have been struggling to achieve profitability over the past few years, with Blue Air diving into losses and then swimming back out and TAROM consistently losing money. In fact, Blue Air's 2019 financial year results recorded a EUR8.9 million operating profit. This is compared to an operating loss of 19 million in 2018. Moreover, the carrier's net profit reached EUR3.4 million compared to a net loss of EUR24.4 million last year. Blue Air says it has focused on optimizing frequencies on certain flights and most importantly, prioritizing its low cost model.
"We are pleased to announce an improved financial performance in 2019, as reaching the profitability threshold, after three years of financial losses due to accelerated operational growth, is an important achievement for Blue Air. We have ambitious plans to better meet the expectations of our passengers; our turnaround strategy is beginning to take effect which will ensure the long-term sustainability of our company." - Oana Petrescu, CEO Blue Air.
Blue Air has also acquired Air Moldova, further growing its presence in Eastern Europe. Whether this was the right move considering its only recent return to profitability, this will definitely allow the carrier to expand its presence in Europe. It's worth noting that Blue Air already has operating bases outside of Romania such as Larnaca (Cyprus) and Turin (Italy). As part of its 15th anniversary, Blue Air had actually announced a new route between Turin and Comiso in Italy.
In 2017, 39% of Romanian-registered aircraft had an age of over 20 years. This is significantly higher than the European average of only 17%. However, this is slowly changing. Blue Air says it hopes to get rid of its Boeing 737 classic aircraft as soon as next year. The carrier has an order for 12 Boeing 737 MAX, the first two of which were supposed to have been delivered this year. The type has been grounded worldwide and is still awaiting re-certification. Once received, deliveries will continue. Blue Air says it continues to have faith in the MAX, adding that it hopes to take its first by summer next year. Blue Air is not only looking to replace the classics with the 737 MAX but also more Boeing 737NG planes.
Over recent years, Blue Air has expanded rapidly. Especially in terms of its fleet numbers, Blue Air has managed to surpass flag carrier TAROM (see figure above). When looking at TAROM's fleet growth, its easy to tell that the airline has focused on a more stable growth strategy which makes sense when operating in such a delicate market. However thanks to Blue Air's major fleet expansion, it has managed to grow its network rapidly and become a major player within the Romanian industry in just a short amount of time.
It will be interesting to see how Blue Air grows in the future. As we saw with the likes of Wow Air and Primera Air, an excessive growth strategy doesn't always go to plan. However it is always exciting to watch an airline grow and we are curious to see what the airline will become in the near future with its new 737 MAX's, Moldovan sister airline and further route expansion.
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