What Led To Bankruptcy: Aigle Azur

Aigle Azur, France’s second-largest airline at the time of its demise, was one of the many airline casualties of 2019. By the time it was liquidated on 27 September, Aigle Azur had become the 12th airline to fold since the beginning of the year. But what went wrong?

Aigle Azur Airbus A319
Aigle Azur was liquidated in September, an incredible 73 years after it was founded. Photo: Getty Images

Last year we, unfortunately, saw many airlines go under. But it wasn’t just small, young airlines which went bankrupt. Among the list of airlines that failed in 2019 were several significant, well-established names, Aigle Azur is one of them.

Aigle Azur was founded in 1946, specializing in offering flights to various French overseas territories and operating several transport contracts for French authorities. Despite being an established airline for many decades, Aigle Azur spent most of its life as a relatively minor carrier, specializing in regional flights.

Aigle Azur’s big break

One move, in particular, led to much of Aigle Azur’s success in the late 2000s and early 2010s. Following the liquidation of Air Liberté and Khalifa Airways in 2003, Aigle Azur managed to secure a host of routes to Algeria- a big market for travel from France, given its sizeable Algerian population.

These France-Algeria routes proved lucrative for Aigle Azur at a time when the rest of its route network was reasonably sparse. It then followed up with expansion into Morocco in 2006, serving the capital of Rabat, as well as Casablanca, Marrakech, and other cities.

Off the back of its successful expansion into North Africa, Aigle Azur was able to offer an increasingly wide range of flights out of its Paris Orly base throughout the late 2000s and early 2010s. But the airline also chose to open several high-risk routes, such as a service Paris-Baghdad in 2010.

Aigle Azur’s final decline

While the routes to Algeria were responsible for a significant increase in passenger numbers and profits for Aigle Azur, upper management attempted to pursue expansion into the rest of North Africa. Unfortunately, the airline’s plan to build a strong network in the region did not come to fruition, as the expansion took resources away from the rest of its long-haul network. Aigle Azur’s losses began to mount as a result of its confusing route offering.

Alongside Aigle Azur’s miscalculated North African expansion, the airline suffered as a result of disagreements between upper management and various shareholders. In 2017, American-Brazilian Airline entrepreneur David Neeleman acquired 32% of Aigle Azur’s shares from Weaving Group. Neeleman’s arrival at Aigle Azur prompted the hiring of a new CEO, Frantz Yvelin.

Aigle Azur Airbus A320
Aigle Azur suffered from leadership issues. Photo: Anna Zvereva via Flickr

 Yvelin eventually stepped down just before Aigle Azur was finally liquidated, but he wasn’t the only controversial figure among the airline’s top figures.

French businessman Gerard Houa, who owned a 20% stake in the airline, reportedly tried to install himself as the airline’s leader. Houa was unsuccessful, but the power struggle only served to escalate Aigle Azur’s problems at a time when it needed unified leadership.

Unfortunately, even though Aigle Azur held many valuable slots at Paris Orly Airport, attempts to secure a takeover deal were unsuccessful. Air France and Transavia have subsequently announced their plans for expansion into Algeria in the absence of Aigle Azur.