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sad news Primera going under

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sad news Primera going under

Old 2nd Oct 2018, 11:34
  #21 (permalink)  
 
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I honestly thought Small Planet went bust sometime earlier this year.
I think that was Small Planet Germany. As far as I know the original is still going.
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Old 2nd Oct 2018, 12:14
  #22 (permalink)  
 
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Originally Posted by msbbarratt View Post
Misjudging what the business costs are is quite common. Apparently a lot of restaurants fail because the forget that bread, butter, sauces, salt and pepper all cost money too. It's the little things that are too trivial to think about that stack up.

Perhaps there ought to be some kind of legal lower price limit on airline tickets, so as to protect passengers' interests. If you're selling tickets at Laker-esque prices, it seems likely you're going to go bust. If an airline is offering tickets at way too low a cost to be sustainable as a business, why is that business allowed to operate at all? I admit that that might be somewhat contentious in a free market society! For quite a lot of people buying a long haul ticket is a notable investment, and they're always going to buy the cheapest seat available. If they ploughed that much money into, say, a bank savings account and the bank went bust, they'd get their money back.

Also, at what point does an airline business collecting large sums in fares well in advance of the fly date stop being a struggling airline and starts becoming a Ponzi scheme? Of course I'm not saying that that's what's happened here with Primera, there's no evidence of that that I'm aware of. I'm merely pointing out that the way tickets are sold well in advance for large sums makes it very easy for a Ponzi-esque situation to arise, likely unintentionally. What incentive is there for senior management to call a halt at the proper moment when so long as the company is trading they're likely collecting their remuneration packages?
Most businesses fail due to poor money management. They cannot control their costs, and greed by owners play a big part in why a business will fail. I have seen companies with full order books fail because they had little or no cash in the business; overgeared, in debt and unable to meet creditor payments on due dates. The story is all too familiar.
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Old 2nd Oct 2018, 14:01
  #23 (permalink)  
 
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Originally Posted by Hotel Tango View Post
I think that was Small Planet Germany. As far as I know the original is still going.
Yes, you're right. The German subsidiary is filing for bankruptcy and restructuring, the Lithuanian parent company continues. Thanks!
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Old 2nd Oct 2018, 14:26
  #24 (permalink)  
 
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That is what they call the race to the bottom....
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Old 2nd Oct 2018, 19:48
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According to SMT MEMBER, our ENT doctor, the demise of this patient is put down to that chronic condition that has reached epidemic proportions across the EU, namely the employed -self-employed- status syndrome.
Here in the UK we have already been prescribed with a serum, under the brand name of IR35 Public Sector. An improved and more effective version is expected to be ready for prescription, under the brand name IR35 Private Sector, on 29 October when the Chancellor opens his red case and commences treatment for all our ills.
I wonder whether this will ring any angelic chords on MO`s favourite instrument, the Celtic Harp.
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Old 2nd Oct 2018, 19:48
  #26 (permalink)  
 
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Originally Posted by PA28161 View Post
Most businesses fail due to poor money management
DMGT got an offer of 1bn for the regional newspaper arm of their company (it was actually 1.4bn but what's 400m between friends?) and they declined because they believed the offer was feeble.

No other offers were on the table and so six years later they sell the same arm of their company for 53m.

You couldn't make it up.
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Old 2nd Oct 2018, 20:27
  #27 (permalink)  
 
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Most certainly sad news for the employees who deserve our full sympathy and help finding new jobs. Not necessarily sad for the industry as a whole; ludicrously unrealistic fares which could only possibly have been sustained by absolute rock-bottom conditions of service.
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Old 2nd Oct 2018, 21:50
  #28 (permalink)  
 
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Originally Posted by ShotOne View Post
Most certainly sad news for the employees who deserve our full sympathy and help finding new jobs.
From what I’ve heard in the last few hours I gather the first priority for some of the employees is simply finding help in getting home from North America....I really hope somebody can help them out.

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Old 2nd Oct 2018, 23:52
  #29 (permalink)  
 
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Originally Posted by wiggy View Post
From what I’ve heard in the last few hours I gather the first priority for some of the employees is simply finding help in getting home from North America.

Not just the employees. From the Wikipedia page:-

...many planes were in the air at the time of the decision. In many cases, passengers learned that the airline was shut down while in line to board the plane. Passengers were left without flights or refunds, and no employees left to assist.

I flew transatlantic with them in May ex STN. They struck me as a pretty chaotic operation.
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Old 3rd Oct 2018, 06:20
  #30 (permalink)  
 
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Not just the employees
I appreciate that but at least the customers (or at least those who had return tickets with Primera) have now been given access to agreed repatriation fares that being offered by certain operators and probably have a job to get back to

Norwegian offers repatriation fares to those affected by Primera... - Norwegian

https://www.britishairways.com/trave...b?p_faqid=7073

They may also have some protection by virtue of insurance, having used a credit card etc...


OTOH unless the situation has changed overnight crew who were in the middle of a working trip are not being offered these fares/protections.There were reports that there were/are crew members crew stranded at airports yesterday, without access to preferential fares and were struggling to get home...and of course they now have no income stream and no job to come back to.

Last edited by wiggy; 3rd Oct 2018 at 08:01.
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Old 3rd Oct 2018, 07:07
  #31 (permalink)  
 
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Passengers at least will be covered by travel insurance, so should not be out of pocket regardless.

is there any kind of industry insurance crews can take out to cover this sort of thing?
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Old 3rd Oct 2018, 08:45
  #32 (permalink)  
 
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[QUOTE=Global_Global;10264045]That is what they call the race to the bottom.... [/QUOTE
Lot of bottom feeders in eastern europe
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Old 3rd Oct 2018, 08:51
  #33 (permalink)  
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On another forum it seems WOW are bringing the crews back.

Nice to see BA VS and DY helping the pax get back home.

BA helped me in 1982 back home from LAX when Laker went under the day after I arrived - they happily took my now worthless staff ticket and put me in Club - Thanks BA.
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Old 3rd Oct 2018, 21:14
  #34 (permalink)  
 
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Perhaps there ought to be some kind of legal lower price limit on airline tickets, so as to protect passengers' interests.
To an extent, you have a similar protection for many flights made by UK AOC operators through the ATOL scheme - admittedly not a minimum charge, but a way to make sure you get to where your ticket promised. But as WHBM pointed out, in Europe especially, the regulatory system is just not up to overseeing such things. Whilst EASA might say their role is only safety, the current systems for operating aircraft, maintaining them and regulating that have been put in place in Europe by that expert Agency is so full of holes that it enable canny businessmen/women to run airlines and to abuse their customers by taking advantage of the multiple loopholes which exist with almost zero oversight of their activities because none of the CAAs involved know who's responsible for what. (I apologise to those who may be running airlines and who genuinely want to provide a service to their customers.)

I wish all those industry people affected the best for resolving the problems that this collapse causes as quickly as possible.
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Old 3rd Oct 2018, 22:09
  #35 (permalink)  
 
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Can someone explain why Primera Nordic was allowed to re-register a substantial airline under Latvian CAA oversight, when it wasn't owned there, it's top management didnt come from there, it didn't operate there, and as far as I can tell its aircraft were never seen there. Oh, and it's name implied it came from some other countries to the west.
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Old 3rd Oct 2018, 22:13
  #36 (permalink)  
 
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My guess is that their employees knew something was going on a week ago, judging from the distracted crew trying to make a position report over the Atlantic last week. I remember at the time listening in on an HF frequency while waiting to call Gander and coming to the conclusion that I wouldn't get on a Primera Air aircraft as a passenger if you paid me.

The news yesterday perhaps fills in some of the pieces about why they didn't seem to know where they were or where they were going. My sympathy for the stranded crews.
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Old 3rd Oct 2018, 22:27
  #37 (permalink)  
 
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Originally Posted by WHBM View Post
Can someone explain why Primera Nordic was allowed to re-register a substantial airline under Latvian CAA oversight, when it wasn't owned there, it's top management didnt come from there, it didn't operate there, and as far as I can tell its aircraft were never seen there. Oh, and it's name implied it came from some other countries to the west.
At the risk of opening wounds, which I don't mean to do as we have a different thread for exactly this topic, I think it is entirely to do with how EASA has been set up and sits above individual EU members' own CAAs. It seems Latvian CAA oversight is considered good enough but UK CAA oversight will not be. Strange but true....

Think Easyjet and their new set up in Vienna - more or less the same thing although they do operate into and out of Vienna, I suppose.
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Old 3rd Oct 2018, 22:31
  #38 (permalink)  
 
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Originally Posted by WHBM View Post
Can someone explain why Primera Nordic was allowed to re-register a substantial airline under Latvian CAA oversight, when it wasn't owned there, it's top management didnt come from there, it didn't operate there, and as far as I can tell its aircraft were never seen there. Oh, and it's name implied it came from some other countries to the west.
1. Primera Nordic is/was indeed a Latvian registered company and therefore eligible for AOC in Latvia.
2. It wasn't owned in Denmark either, it doesn't mean anything within EU & EEA. You can ask the same about Norwegian or even better SAS Ireland.
3. Its top management wasn't from Denmark either and anyway see 2) above
4. I thought they were looking to start some operations ex RIX but anyway how much SAS Ireland operates from Dublin?
5. Actually this airline was very much about Nordic countries in terms of actual operations and top management. What is wrong here?

Another poster below has mentioned ATOL - if you buy a ticket only on BA or VS you are not covered by ATOL anyway, it is a tour operators oriented scheme.
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Old 4th Oct 2018, 13:19
  #39 (permalink)  
 
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Fursty Ferret, no front line employee knew until the 11th hour I assure you. This is a new operation with the vast majority of FOs having no prior TA experience. No surprises the voice reports were a bit rough!

As someone who spent 6 months there (I left when the agency cocked up everything they could with my pay, contract, parking), here's my view of things:

Firstly, I think (but not sure) that the parent company purchased and owns the planes. They have either "sold" them in order to lease them back or have leased them directly to the airline. Airbus and Boeing heavily discounted the planes as they thought they had what was a trusty partner to show case their latest green-jets. If the parent company is still the owner of those planes, they can be sold for a tidy profit indeed especially because of all the delays other airlines are experiencing.

However, as posted on here by someone, Primera had some highly dodgy employment practices and were about to be handed it to them by a Danish union. Separately, the Icelandic owned, Malta based but UK head quartered employment agency that recruited and employed every person working the transatlantic operation and some Boeing pilots too (ASTA - run by the same mob that runs Mountain High) applied a very amateurish understanding of UK employment law. They screwed up by thinking they could deduct an employees annual leave provision from their contracted days off per month! That's right, pilots and cabin crew found back in June that because they requested 5 days leave, they had 5 off days missing! This sounds outrageous, but it's true and apparently quite normal in some European countries.
Because of this cockup, they had to ramp up recruitment resulting in a much higher wage bill.

The contracts were poorly worded and amateurish and a constant source of consternation. They completely forgot about parking then retrospectively advised that money would deducted from salaries to pay for airport parking. Also, there was a massive issue with overtime payments. In the first month of operation, there was going to be a mass exodus over this. In the end, when pilots and cabin crew threatened action, the agency had no choice but to accept they made a mistake by not paying crew the "double" rate that was promised in the contract. All of this dealing another blow to their projection of how much profit they as an airline would make. All in all, Primera/ASTA misjudged how much the wage bill could be.

The reality of running a longhaul operation (and I'm no expert), especially one that flies mostly throughout the night is that you exhaust the hell out of crew who end up calling in fatigued/sick. You then pay others thousands in overtime and suddenly it all becomes unaffordable. Towards the end some people were making double their basic in over time alone. Good for them, but not sustainable for the company. As a low cost operator, margins are tight and my conclusion is that the Icelandic management saw it was not going to be viable in the long term.

Rumour within the company was because of the discounts, there were limited delay penalty clauses. So the sub-chartering most likely did have a massive, unrecoverable impact. One thing's for sure. The A321Neo has no problems carrying a full load of passengers and fuel between the East Coast and Western Europe. Airbus got it right and the the 737 Max has big boots to fill. Whether or not it can fly across the pond cheaply is not just linked to how fuel efficient the aircraft is but also what the front-line (operating) staff are prepared to put up with contract/pay wise. I think we have now reached the point where airline ticket prices cannot go any lower because the human beings responsible for delivering the service want to be paid a decent wage. Finally!

Happy to be corrected by people in the know on anything I've said above.

Last edited by RudderTrimZero; 4th Oct 2018 at 14:26.
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Old 4th Oct 2018, 15:17
  #40 (permalink)  
 
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WHBM
It is the same reason as Andorra and Switzerland has a substantial Merchant Marine.
Because they can, and we let them.
Norway as the 4th biggest Nation in Shipping, lost out to these scams after the Second WW after saving the UK ( according Churchill , not me)
The thanks was Panama, Monrovia etc etc purchasing thousands of letterboxes and letting ANYONE have a Shipping licence for a small fee.
At one point we had to make a Norwegian International Shopping Registry to stop the" out - flagging " of the Norwegian fleet.
A certain BK wants the Aviation Industry to model itself after this destructive model.
After all he is a good Shipping Lawyer.

RuddertrimZero
Interesting insight.
We now have 737 and A321 that can outfly the max duty for a single crew on two sectors. ( Out and back.)
I have done a few 13 hrs, two sector days myself, long haul with a fuel-stop. Cant be used for much the next day.
Anyway
A long haul ops with the Max or the A321 is still long haul and eats crew , I suppose.
Good luck to all this winter.
Brent just hit 86,5US a barrel today.
Regards
Cpt B
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