Debonair flies into cash crisis

By This Is Money
Updated: 18:00 EST, 30 September 1999

 

The battle among low-cost airlines to offer passengers the cheapest flights possible has claimed its first victim, with Debonair being put into administration.

All scheduled flights on troubled low cost airline Debonair have been grounded.

Passengers due to fly with Debonair were told of the news at Luton airport this morning.

The Luton Airport-based airline's chief executive Franco Mancassola admitted in February this year that the group was suffering because of an 'unrealistic' price war between the low-cost operators.

The battle had been sparked by overcapacity and threatened the whole industry, he said.

Debonair has faced stiff competition from rivals Go, easyJet and Ryanair which have all constantly slashed the cost of their tickets in the hunt for extra customers.

In February, Debonair unveiled third-quarter earnings results which were below the City's expectations.

Sales in the three months to December 31 last year were up only marginally at £8.6 million from £7.6 million for the same period in 1997.

The airline also suffered a massive pre-tax loss of £4.4 million, which had improved only slightly from its £5.2 million deficit in 1997.

Mr Mancassola had high hopes for Debonair when he unveiled plans to set up his short-haul European flights airline in 1994.

He was sure Debonair could succeed despite having witnessed the collapse of Air Europe, Laker Airlines and Dan-Air following a price war waged by Europe's larger carriers.

Mr Mancassola wanted Debonair to complement rather than compete with British Airways and was confident that there would not be the 'drastic price cutting that they have in America'.

The company finally began flying planes in 1996 but suffered a loss of £15 million as a result of developing its network which flies passengers to Rome, Barcelona, Copenhagen, Dusseldorf, Madrid and Munich.