Although European airlines were hit hard by the Covid-19 crisis, not all are in the same boat both in terms of their ability to withstand it and in terms of access to public aid. Specifically, certain “flag-carrier” companies, such as Air France-KLM or Lufthansa, in a critical financial situation, were saved thanks to government support. On the other hand, a few large low-cost airlines, such as Ryanair or Wizz Air have sufficient financial strength to enable them to overcome the crisis. The situation of middle cost companies such as easy Jet appears to be more uncertain. Our thesis is that the European market, in a situation that was already fragile before the health crisis, is probably going to experience a strong restructuring movement that will benefit low-cost actors following the bankruptcy of small operators and the attrition of the large incumbent airlines, which will be forced to reduce their wings, unless they resolutely adopt a low-cost medium-haul model.

This study was written by Emmanuel Combe, University Professor, Professor at the Skema Business School, Vice-President of the Competition Authority, and Didier Bréchemier, Senior Partner, in charge of the transportation and travel sector at Roland Berger.