By Isabelle de Gandt, based on an article by Wolfgang Riepl

1993

The company was founded by Freddy Van Gaver under the name “Vlaamse Luchttransportmaatschaappij”.

1996

VLM was sold to a Dutch businessman, Jaap Rosen Jacobson, for 4.83 million €. The target audience was at this time businessmen who wanted to fly to and from small, rapid and easy access airports.

2001

The name was changed into VLM Airlines.

2007

Jaap Rosen Jacobson sold VLM Airlines to the Air France – KLM alliance for 178 million €. The company failed to adapt to this huge and heavy structure.

2010

The brand name VLM Airlines disappeared and the company became a subcontractor for Cityjet, the regional daughter of Air France-KLM.

2012

The company was restructured. The owners booked a special depreciation of 168 million €. A new buyer was found in Germany, Intro Aviation. Air France KLM handed VLM over for free! A new CEO was appointed in the summer: Arthur White (ex EAT/DHL DFO then Managing Director).

2014

there was an increase in capital of 2.8 million € (after a previous one of 15 millions € in 2011). End of 2014, this was the comeback of the name “VLM Airlines”.
In April 2014, VLM Airlines received its fleet of 9 Fokker 50 – as a contribution in kind and worth 4.9 million €.

Air France KLM preferred to transfer it for free and still put money into it since the closure of VLM would have cost them even more, around 50 million € (as lay-off compensations for the employees, payouts, entire shutdown of the activities). The last years, VLM Airlines was losing money. The daughter company flew on behalf of Cityjet that bore all those losses.

In October 2014, Arthur White “bought” 80% of the shares also for free as Intro Aviation was at that moment busy with the restructuring of Cityjet.
Cityjet felt betrayed and wanted to stop immediately all the routes that VLM flew on their behalf. This for sure would have led to the unemployment of VLM staff in the short or medium term. Finally this didn’t happen but the dismantling occurred gradually.

Since November 2014, VLM’s turnover decreased by 80%. The major part of those flights had been captured by a competing airline, Stobart Air.
The English owner decided to increase the offer and launched 10 new scheduled destinations, on top of the 2 existing ones. There were at this time 4 flights from Liège to France and Italy.

Arthur White was convinced of his success and didn’t listen to people who had many years of experience in aviation. They were convinced that operating regular flights with Fokker 50, which were too small, too old and too slow, could not be profitable. The Fokker 50 was ideal for the business flights. Feasibility had never been assessed!

2015

In may 2015: first regular flights started from Liège, but were halted less than 6 weeks after the inaugural flight! This operation cost 2 million €. Considering this, plus the cost of the crew transport to Liège and you will quickly understand that cost consciousness and control were not the strongest assets of the top management.

Besides, Arthur White’s monthly remuneration rose to 25,000€ and allowed himself, as owner of the airline, a loan of 35,000€ paid by the company.

In the meantime, VLM struggled to find fresh money and a viable business model.

A plan B was sought with Fletch Air to operate flights with Fokker 50 from Caribbean Islands. Nothing came out of this plan, but costs related to the unsuccessful negotiations (flight tickets, hotels, lawyers fees…) were supported by VLM.

In December, VLM concluded a charter contract with a Boeing 747 for a Dutch tour operator, Sundio. VLM was going to be remunerated for the use of their operator licence. This should have been a no risk operation but VLM was again unlucky: the aircraft suffered from several technical problems and VLM, as owner of the operator licence, had to pay the compensations to the Sundio passengers (hotel costs, passenger financial compensations, aircraft replacement…). It cost VLM another 100,000 €.

2016

In March 2016, VLM started flights from Germany. Many thought that this could save the airline. Unfortunately, the debts of 2015 were too heavy.

On 22 June, the airline was declared bankrupt. In 2 years, the debt of the airline rose to 19.2 million €.

Mid September, an agreement was reached between the curators and SH Aviation for the takeover of the bankrupt VLM. It was the 6th owner of the company in 21 years. They wanted to relaunch operations by the end of December 2016.

In the meantime, curators are now checking if there have been withdrawals of assets before the disadvantageous transaction occurred.

BeCA legal analysis

The liquidators in bankruptcy will indeed examine the books for any suspect transfers in the preceding six months (‘in tempore suspecto’). However, mismanagement will not be examined as by definition almost all bankrupt companies have been badly managed. Filing for bankruptcy is not a crime. Rewriting history is not possible and poor managers are not sanctioned by law. Except of course if they are shareholders, and personally responsible for company financial assets.

BeCA conclusions

VLM’s bankruptcy was mainly due to mismanagement: with no long term strategic plan, without feasibility studies nor cost consciousness. Together with several repurchases by huge foreign companies where VLM represented a negligible share and were not properly integrated in order to be the priority niche to develop in the future.

References:

Wolfgang Riepl, “Kroniek van een aangekondigd faillissement: De brokkenpiloten achter VLMAirlines”, 17 November 2016, www.trends.be.
BeCA Industrial Working Group “Briefing on Bankruptcy”