Primera Air filed for insolvency on October 1st only a few months after starting regular flights from London Stansted and Paris Charles de Gaulle to North-America. However, the history of the failed low-cost airline is much longer. The company was founded in 2003, focusing on charter flights for Nordic tour operators that were part of its holding company Primera Travel Group. Primera Travel Group is owned by Andri Már Ingólfsson, an Icelander, through holding companies in Iceland and Cyprus (Belamer Ltd).
Primera Air’s business structure was not straightforward, being an Icelandic company with two subsidiaries: Primera Air Scandinavia, registered in Denmark, and Primera Air Nordic, based in Latvia. It struggled with economic weaknesses, its financial report for 2015 showing a negative equity of 22 million Euros. Its finances showed no signs of improvement in 2016. The company operated with a profit in 2017 due to the sale of some of its Boeing aircrafts. However, the planes were not to be delivered until 2019. The negative equity meant the company was had no financial value by its Icelandic holding company PA Holding , as reported by Túristi. The news site’s questions regarding the difficult financial situation of Primera Air, sent to its CEO, went unanswered and the airlines were declared bankrupt only one day after the article was published (link in Icelandic).
Asked how a company with negative equity was not only able to purchase new aircraft, but also able to introduce new Trans-Atlantic routes and pass inspection by aviation authorities, Ingólfsson claims in an email to Túristi a few days after the bankruptcy, that local aviation authorities had always been informed on the company’s financial situation.
“Otherwise, our operating licence would have been terminated,” he said, going on to explain that the late arrival of new Airbus aircraft played a defining role in the company’s collapse, as it forced Primera Air to lease 26-year-old, less fuel-efficient aircrafts to maintain scheduled flights over high-season.
“Airbus had around 120 aircraft grounded and was unable to deliver them on time. This delay cost Primera Air over 20 million Euros, and a net loss of 40 million Euros,” says Ingólfsson.
The company also saw a total of 13.6 million Euros in unrealized gains from selling older aircraft.
“These were real profits that were to strengthen the company’s financial position. Unfortunately, our bank would not regard this as security for a bridge loan,” Ingólfsson said. In turn, Arion Bank will lose up to 1.8 billion ISK (13 million EUR) following Primera Air’s bankruptcy. The bank saw a 7% drop in it’s share price the day Primera Air filed for bankruptcy and still hasn´t bounced back.
But the interest of Arion Bank in Ingólfsson businesses isn´t limited to Primera Air. According to a statement issued by Ingólfsson Saturday one of Primera Travel Group subsidiaries, Danish company Primera Travel AS, will change its name to Travelco Nordic and become the parent company of all Primera Travel Group’s travel agencies in the Nordic region. According to the statement, all Primera Travel Group’s obligations to Arion bank will be moved to the new, rebranded parent company. According to Túristi’s sources, the bank has accepted new securities in Ingólfsson ventures in Iceland.
Initially Ingólfsson planned to issue a press release, regarding the structural changes, this Monday according to an email he sent to Turisti on Saturday. That was his only answer to our question why the name of the parent company of his travel agencies in Scandinavia had just been changed on their websites. However Ingólfsson sent out the previously mentioned statement, about the structural changes, to all major media in Iceland less than an hour after the correspondence with Turisti.
He has not answered questions about what will happened to the former parent company Primera Travel Group which reported 5.5 mio. EUR loss in 2017. The name of Primera Travel or the founder, Ingólfsson, is not to be found on the new Travelco Nordic website.
