Low-cost Norwegian airline Flyr will file for bankruptcy on Wednesday, just 20 months after its first flight and days after the collapse of British regional carrier Flybe.
The loss-making startup needed to raise the necessary cash to continue operations. As a result, all future Flyr departures have been canceled, and ticket sales suspended, leaving more than 400 employees without jobs and thousands of ticket holders with travel plans disrupted.
Flyr was founded in August 2020 by a group of Norwegian aviation veterans who believed there was space for a budget airline operating out of Oslo, especially with Norwegian and SAS limping.
The airline aimed to serve 35 high-demand domestic and European leisure destinations, offering a no-frills experience at discounted prices and selling tickets exclusively through its mobile app.
However, amid pandemic travel restrictions and economic uncertainty, the airline’s first flight from Oslo to Tromsø didn’t take off until June 2021. By that point, it had already spent much of its war chest.
Flyr generated some initial enthusiasm about Norwegian passengers as it undercut competitors on well-trafficked domestic routes. But its load factor had fallen to around half by the winter of 2021-22, perilously low for a budget airline that relies on filling seats.
Despite this, Flyr embarked on an ambitious expansion plan in 2022, funded by new investment. It extended its network to 40 destinations, including tourist hotspots Alicante, Malaga, Nice, Las Palmas, Barcelona, Rome, Paris, Berlin, and Brussels, and ski destinations in the Alps. At its peak, it operated 12 aircraft.
However, Flyr didn’t bring in enough money to offset these investments. In the first nine months of 2022, it hemorrhaged more than NOK 1 billion ($100 million).
To slow down its burn rate, Flyr trimmed its winter schedule for 2022-23, slashing Norwegian domestic services and reducing its European network to a few key destinations. It also reduced its active fleet to six aircraft and furloughed staff.
However, the belt-tightening was too little, too late. The airline failed to raise sufficient additional investment to continue operating. A last-ditch wet lease agreement with an unnamed European carrier may have given Flyr a lifeline through the summer of 2023. But it was scuppered after Fly failed to raise additional capital.
The company’s board concluded that “there is no longer a realistic opportunity to achieve a solution for the short-term liquidity situation.”
“Many thanks to everyone who has chosen to fly with us over the past year and a half,” the airline said in a farewell note on its website. “We will miss you all from the bottom of our hearts and deeply apologize to everyone affected by the fact that we now have to go in for landing. We encourage everyone who has booked a ticket with us to contact their credit card company for a refund.”
Why did Flyr fail? Analysts point to the turbulent skies during its launch, including pandemic travel restrictions and shifting travel patterns.
It also repeated a mistake many hungry budget airlines made by adding routes and aircraft too quickly, even as its current flights were taking off half-full. Flyr also leased new Boeing 737 MAX aircraft when planes from the previous generations would have been cheaper.
There are also too company airlines competing for too few passengers in Norway. Kjetil Håbjørg, vice president at rival SAS, recently suggested the market is saturated and tickets are sold too cheaply. “Either the market has to get bigger or the capacity reduced,” he said.
Flyr may have gambled on the collapse of either Norwegian Air or SAS, both of which have struggled in recent years. The unexpected survival of both carriers left little room for a new market entrant.
While the post-pandemic aviation market is buoyant, capitalizing on pent-up demand, headwinds are strong for newcomers, especially if they don’t have deep pockets. Flyr is the second European airline to collapse this week, following the failure of U.K. regional brand Flybe.
Flybe, which was rescued by a U.S. hedge fund following an early pandemic collapse and relaunched last April, had a different set of difficulties. It struggled to expand its network after a delay in the delivery of 17 leased aircraft. Additionally, many of the regional routes it previously ran had been colonized by competitors or seen a collapse in demand as business travel was replaced by virtual meetings.