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Debonair falls from grace
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October 1, 1999: 6:55 a.m. ET
Troubled U.K. airline under court supervision amid search for white knight
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LONDON (CNNfn) - The cut-throat competition in Europe's airline industry claimed another victim Friday as U.K.-based Debonair was placed under court supervision in a bid to stave off financial collapse.
Four-year-old Debonair is one of a new breed of carriers which have emerged to take on the industry giants following the deregulation of the region's skies during the 1990s.
The airline told passengers arriving at London's Luton airport that it had been placed under administration by Britain's High Court and that 14 aircraft - which fly to six destinations in Europe - had all been grounded.
The move is tantamount to a U.S. company filing for Chapter 11 bankruptcy - a procedure that buys a financially-distressed company some extra time to restructure or find a buyer before liquidation proceedings are initiated.
Debonair's flamboyant chairman, Franco Mancassola, was reported to be seeking a buyer for the carrier, though its route network and its high-cost fleet counted against a white knight emerging, suggested analysts.
Debonair made a pretax loss of 16.6 million pounds ($27.4 million) in the year to March 31, slightly worse than the year-earlier loss of 15.7 million pounds.
Debonair's plight is shared by London-based rival, AB Airlines, which announced Thursday that its operations and license had been suspended. AB went into administration in July, a move that culminated in the cancellation of all its flights earlier this month.
Industry maverick
Debonair is viewed as a maverick in the European sector and has never made a profit. Its strategy has raised eyebrows among analysts as it avoided the leisure passengers targeted by low-cost no-frills rivals such as easyJet and Ryanair (RYAAY).
Debonair offers a business class, a frequent flyer program and also operates joint flights with Swissair and Lufthansa - all features of traditional airlines that are generally eschewed by the low-cost carriers.
The strategy is similar to that adopted by the new PanAm, which launched a series of full-service flights in the United States before folding last year after two years of mounting losses.
Debonair shares were suspended Thursday at 77 pence on Easdaq, the pan-European electronics exchange. The stock was floated at 450 pence in July 1997.
Richard Branson's Virgin Express (VRGY) was said to be considering extending financial help to the ailing carrier. Virgin declined to comment on a rescue bid but was quick to seize the opportunity to pin the blame for Debonair's problems on British Airways (BAY).
Virgin and easyJet made a joint statement claiming that Debonair's difficulties confirmed their worst fears about the impact of Go, the low-cost carrier launched last year by BA.
The two rivals claim that BA is cross-subsidizing its low-cost unit to allow it to offer uneconomic fares and undercut competitors, an allegation denied by the larger carrier. 
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Debonair
Virgin Express
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