Volotea files for creditor protection after losing €350 million since 2022

Volotea enters creditor protection after losing €350 million since 2022

The paradox is textbook: an airline that fills its planes may be closer to the courtroom than one flying half empty. According to the figures cited by participants in the discussion, Volotea has filed for creditor protection after racking up losses of around €350 million since 2022, the same year the Spanish state bailed it out with €200 million through SEPI (Spain's state-owned industrial holding company). The loan matures in 2029 and repayment has not yet begun.

The announcement came as a cold shower for those who flew with the airline on its routes between mid-sized cities, bypassing the major hubs. The immediate question is what happens to tickets already purchased, and how much real margin an airline has that, according to the figures cited, earns just a few euros per passenger in a good year.

A full plane doesn't cover the fuel bill

A full flight only means the price was attractive, not that the business is profitable. A low-cost carrier's margin in a good year is only a few euros per passenger, so it takes just one major cost spiraling to swing from profit to loss. And the biggest of all is fuel, which typically accounts for between a quarter and a third of total costs. With crude oil at high levels, carriers that hadn't hedged their jet fuel with fixed-price contracts have been paying market rates.

Volotea's model adds its own peculiarity: routes between mid-sized cities, many of them seasonal and with few weekly frequencies. It works well when everything lines up, but leaves little cushion to absorb a bad year. Europe's best low-cost airline, went the official narrative. The numbers, for now, tell a different story.

€200 million of public money and a repayment still pending

SEPI's 2022 bailout injected €200 million into the company. Since then, according to the figures being cited, Volotea has lost €350 million. In other words, more than it received has gone up in smoke. The loan matures in 2029 and repayment has not begun. Barely a year ago, the CEO was appearing in the press announcing they would turn a profit and even floating a stock market listing.

The pattern is nothing new: companies kept afloat by public money until they blow up. The underlying discussion is whether the creditor protection filing is the end of the road or a pause before a restructuring. Creditor protection guarantees nothing: there are precedents of airlines that vanished overnight.

Is it worth buying a Volotea ticket now?

There is no single answer. The service, according to those who have flown with them, is good, and the planes were full even at modest airports. The problem isn't the onboard experience, but the cost structure. Anyone with a flight booked for the coming months faces the classic uncertainty of these processes: everything may continue as normal, the route may be cancelled, or the company may disappear without warning.

The temptation to buy a cheap ticket for March exists, but the risk of being left looking like a fool weighs heavily. And it's no exaggeration: the industry has seen airlines cease operations overnight.

Low-cost tourism and the price of hotels

While some scrutinize the creditor protection filing through a financial lens, others frame it within a broader debate: that of low-cost tourism. Cheap flights made sense when reasonably priced hotels also existed. Now it's easy to find rooms at nearly €200 a night, and in high season at good hotels, €500. Even the Ibises, which years ago were the budget option par excellence, have raised prices relative to an ordinary worker's wage.

Some argue the less low-cost tourism reaches Spain, the better. On the other side is the argument that these routes connect mid-sized cities that would otherwise be cut off. The debate won't be settled by one airline's creditor protection filing.

What happens to the jobs and the public money

In a context of rising inflation and stagnant wages, the advice doing the rounds is clear: if you're thinking of changing jobs or quitting, don't. With prices soaring, keeping your job is the best way to weather whatever comes. The warning fits Volotea's situation: if the company enters restructuring, workers will be the first affected.

The other side is public money. The €200 million from SEPI came from all taxpayers and, to this day, have not been returned. Should the state bail out a loss-making airline again? Or is it better to let the market do its job? The answer depends on whether you prioritize the connectivity of mid-sized cities or budget discipline.

Given all this, the logical outcome would be consolidation in the low-cost sector and the disappearance of the least profitable routes. It still hasn't peine. Nobody can quite explain why.