SkyEurope Airlines was the first low-cost carrier in Central Europe.
It was founded in Slovakia in 2001 – two years before Wizz Air was founded in Hungary – and from then, it grew rapidly for the next few years. However, in spite of transporting more and more passengers, the airline never turned profitable. Instead, in 2009, it went bankrupt.
In this article, I take a look at SkyEurope’s story from its humble beginnings through its fast growth, all the way to its even faster demise.
Filling A Gap in the Market with Embraer EMB-120s
At the turn of the millennium, Christian Mandl, a Belgian entrepreneur, had the idea of launching a low-cost carrier based at Bratislava airport in Slovakia.
With the growing popularity of low-cost carriers in Western Europe and Bratislava’s central location, the idea made a lot of sense. Besides being able to serve a large part of the Slovak population, the airport is also within easy driving distance from several cities in Austria, Hungary, and Czech Republic including Vienna, Gyor, and Brno.
While he had the idea, he lacked airline industry expertise. As such, he partnered with Alain Skowronek – former Sales & Marketing Manager at Virgin Express and General Manager at City Bird Airlines – to launch the airline, SkyEurope.
SkyEurope Airlines was founded in 2001, and after receiving all the necessary permits as well as its first aircraft – an Embraer EMB-120 with 30 seats – it was ready to start operations. The airline’s first flight took passengers from Bratislava to Kosice in the east of Slovakia on February 13,2002.
Between that year and 2004, the airline expanded its fleet to seven EMB-120s. It also expanded its route network launching flights from the Slovak capital to Prague, Zurich, Milan, Venice, and other European cities.
Some of those were successful while others – like the route to Prague – turned out not to work.
SkyEurope Airlines Goes Jet with Boeing 737 Classics
As the airline’s ambitions kept growing, it started finding its fleet of EMB-120s to be a limiting factor in its expansion. Because of that, it decided to lease its first jet, a Boeing 737-500, in 2003.
With its new aircraft’s longer range, higher capacity, and increased comfort, it was able to launch a route to London. This route turned out to be highly successful for SkyEurope, and the airline later launched it from its other bases including Budapest and Prague as well.
By the end of 2005, SkyEurope added further six 737-500s into its fleet. By the same time, it also retired its Embraer fleet.
Using these aircraft, the airline increased its presence in Bratislava, launching flights to Amsterdam, Manchester, Copenhagen, and other cities. It also expanded its footprint by opening new hubs in Budapest, Warsaw, and Krakow.
In the same period, its net loss worsened from 10 million EUR in FY2004 – a level above which it never returned – to 29 million EUR in FY2005.
Arguably, the company was starting to spread itself a bit too thin.
Fueling Growth with a Boeing 737-700 Order
In spite of the losses, the airline had no plans of slowing down its growth. In fact, it was quite the opposite – the losses were justified by the growth.
To raise funds for further expansion, SkyEurope Airlines went public on the Vienna and Warsaw stock exchanges in 2005. It used the raised funds to – among other things – place its first order for brand new aircraft – for up to 32 Boeing 737-700s including 16 firm orders and 16 purchase rights.
The first of these aircraft was delivered in March 2006.
Fourteen more aircraft followed over the next couple of years, however, the airline never took up the rest of its order. In spite of that, by April 2008 when it received its last 737NG, the airline had not only replaced all of its classic 737s but also grown its fleet considerably.
During the same time, the airline shifted its strategy westward, opening a base in Prague in 2006.
Later on, in 2007, it also opened a base in Vienna. That was an interesting decision considering that the Austrian capital is less than 100 km away from Bratislava. The airport was more expensive to operate from and had considerably more competition as well.
In a way, the strategy seemed to be working.
Its passenger numbers grew from 745,000 in FY2004 to almost 3.8 million in FY2008.
The Inevitable Bankruptcy
Even though SkyEurope’s passenger numbers grew year-on-year, that did not positively reflect on its financial performance. The airline lost 57 million EUR in FY2006, 24 million EUR in FY2007, and 59 million EUR in FY2008.
Not only that, but starting from 2007, the company had negative equity.
By September 2008, the company’s troubles were becoming apparent. Among other liabilities, it owed about a million EUR in overdue social security payments. Its share price fell from the IPO price of 6 EUR per share all the way down to 20 cents at the beginning of its last year of operations, 2009.
The beginning of 2009 was also when SkyEurope’s situation got critical as it had to return six of its aircraft to GECAS due to its inability to pay for them. The airline managed to keep its operations largely intact by wet leasing aircraft from other companies.
That didn’t last too long, though.
On June 22, 2009, Paris Orly airport impounded one of SkyEurope’s aircraft for failure to pay its invoices. A couple of months later, Vienna airport stopped handling its flights.
SkyEurope solved the latter problem by moving those operations to Bratislava.
Even that didn’t help save the company, though. On August 31, 2009, it received final warnings from Prague airport and one of its fuel supplier, and later that day, the company was declared bankrupt.
It ceased all of its operations starting from September 1, 2009.
Since the dissolution of Czechoslovakia in 1993, about fifteen airlines most of which don’t exist anymore were formed in Slovakia.
Of those, SkyEurope was – in some regards – the most successful one. It operated the largest fleet and it served the most destinations. At the same time, though, the airline was never able to turn profit. Arguably, it spread itself too thin and opened too many bases for the sake of “growth.”
In either case, though, it gave many people in Slovakia as well as its neighboring countries a chance to fly for the first time.