Ukrainian carrier builds up Europe business to survive war
Business
Ukrainian carrier builds up Europe business to survive war
KYIV (Reuters) – Airline SkyUp has become Ukraine's largest air carrier during the war with Russia by building up its business in Europe to offset the domestic closure of civilian airspace that has lasted more than two years, the company's CEO has said.
Not a single commercial flight has carried passengers in or out of Ukraine since Russia launched its full-scale invasion in February 2022. The national flag carrier has declared itself insolvent and other airlines have suffered.
"The war started and we had to completely rebuild our model. In 2022 we already had a huge amount of obligations but a complete stop in revenues," CEO Dmytro Seroukhov told Reuters.
The airline, which has 10 planes and about 1,200 staff, pivoted its business model from charter and regular flights to focusing on supplying its aircraft, crews, maintenance and insurance to foreign operators, a model known in the industry as ACMI.
"Last year we continued to develop this model and, I think, we have established ourselves. This year we are already a full-fledged player."
He said ACMI accounts for about 70% of SkyUp's revenue, making it one of the 20 biggest such operators in Europe. They transported 1.5 million passengers in 2023, up from 1 million in 2022.
Before the invasion, the company set up in 2018 had been Ukraine's fastest growing airline and flew a record of more than 2.57 million passengers to over 50 destinations in 2021.
'SPECIAL OPERATION'
Transport infrastructure, including airports are regularly targeted by Russian missiles and drones, and the airspace closure is indefinite.
The Kyiv School of Economics estimates 19 airports and civilian airfields have been damaged with the transport sector taking $3.1 billion in damage as of June 2023.
SkyUp was luckier than other carriers as most of its planes were abroad when the war started. Only one plane was stranded in Kyiv's Boryspil airport and the company managed to retrieve it in April 2023.
It was "a special operation" involving hundreds of people, several Ukrainian ministries, the army and military intelligence, Seroukhov said.
EMPTY SKIES
The war left airlines with few options, and some collapsed, including Ukrainian International Airlines (UIA), the national flag carrier that was once the country's biggest airline.
A court opened a bankruptcy case in November 2023 into UIA and its debts were estimated at over 20.5 billion hryvnias ($540 million), according to state news agency Ukrinform.
Other smaller airlines are trying to follow SkyUp's example and find new business abroad.
Industry publication Avianews reported that small Ukrainian carrier Windrose set up a hub in neighbouring Moldova and operated flights for Moldovan carrier Flyone using two aircraft.
Another small carrier, Skyline Express Airline, said it launched operations from Poland and the Baltic countries last March.
Ukrainian officials say they want to partially reopen the airspace to help the economy.
Deputy Prime Minister Oleksandr Kubrakov said the government was consulting with European and US regulators.
"It is a complicated process but Ukraine is taking first formal steps."
Andriy Yermak, head of the presidential office, said authorities were working to open an airport but did not specify which.
Security is paramount for carriers, insurers, pilots and passengers, Seroukhov said.
When the airspace does eventually re-open, the aviation sector is likely to face severe staff shortages as some companies have lost their certificates and licenses, he said.
Millions of Ukrainians have fled and remain abroad.
"There will be a huge hunger for specialists. When the skies open we will absolutely lack people," Seroukhov said.
