Airline Financial Difficulties: What are the options?

It has been a turbulent few weeks for the travel industry. Ryanair has reported falling profits, easyJet shareholders have approved a £5.7 billion takeover by Apollo Global Management, and several airlines are facing insolvency or restructuring proceedings. Meanwhile, the MV Odyssey residential cruise ship has been arrested in Singapore after its operator suspended operations amid mounting financial difficulties.

Although these businesses are in very different financial positions, the developments raise two important questions: why is the travel industry under so much pressure, and what options are available when rising costs threaten a company's future?

 Why are airlines facing financial difficulties?

The biggest immediate challenge is fuel. Rising oil prices, driven partly by geopolitical instability, have significantly increased operating costs across the aviation industry.

Ryanair's latest results illustrate the problem. Despite carrying 6% more passengers during the six months to September 2026, its profits fell by 15% to €2.15 billion. Operating costs increased by 10%, while average fares fell by 4%.

Airlines are particularly exposed because many of their costs, including aircraft leases, maintenance, staffing and airport charges, must be met regardless of passenger numbers. Competition also limits their ability to pass additional costs on to customers.

Fuel hedging can offer protection against price volatility, but as existing agreements expire, airlines may face substantially higher costs.For businesses already carrying significant debt or operating on narrow margins, these pressures can quickly become a threat to their financial viability.

What are airlines doing to stay afloat?

The response varies considerably depending on the financial position of each operator.

Ryanair, for example, is focusing on cost control. The airline is reviewing airport agreements, staffing arrangements and opportunities to improve efficiency, while moderating passenger growth to limit exposure to higher fuel prices.

easyJet is preparing for a change of ownership. On 11 November, shareholders approved Apollo's proposed £5.7 billion acquisition, although the transaction remains subject to regulatory approvals and court sanction. The deal has prompted questions from employee representatives about acquisition financing and longer-term financial resilience. easyJet is not undergoing an insolvency restructuring.

Volotea has sought creditor protection. The Spanish airline entered pre-insolvency proceedings in September following financial difficulties, including increased fuel costs and substantial emissions-related liabilities. In October, the English High Court recognised those proceedings and granted protective relief, helping the airline pursue restructuring negotiations while protecting essential aircraft arrangements.

airBaltic has entered Chapter 11 proceedings. The Latvian airline is using the US restructuring process to address its financial obligations while continuing to operate flights.

These examples demonstrate the range of responses available, from ordinary commercial adjustments to formal procedures designed to preserve a viable business.

What happens when restructuring is not enough?

Recent events also demonstrate the limits of rescue efforts.

US carrier Spirit Airlines ceased operations in May 2026 after repeated restructuring attempts failed to secure a sustainable future. The airline cited rising fuel prices, other financial pressures and a lack of additional funding.

Romanian airline AnimaWings entered insolvency proceedings in October and has suspended scheduled flights until at least 31 December 2026. Its difficulties reflect a combination of rising costs and operational problems affecting aircraft availability.

The MV Odyssey provides another important example. Its operator, Villa Vie Residences, suspended the vessel's residential cruise programme in late October, forcing more than 200 passengers to disembark in Cambodia.

The operator reported that monthly fuel expenses per cabin had increased from around $1,800 to as much as $6,000 -$8,000 in parts of Asia. Despite attempts to reduce operating costs and obtain additional funding, the voyage could not continue. The vessel was subsequently arrested in Singapore on 8 November following a creditor-related legal claim.

Although a ship arrest does not necessarily mean the operator is insolvent, the situation illustrates how financial difficulties can escalate when a business cannot meet its obligations and creditors seek enforcement against essential assets.

What restructuring options are available to struggling businesses?

The challenges facing airlines are not unique to aviation. Rising costs, reduced margins and existing financial commitments can affect companies in almost any sector.

Where financial pressures emerge, businesses may have several options:

- Operational restructuring: Reducing expenditure, renegotiating contracts or closing unprofitable parts of the business.

- Refinancing or new investment: Securing additional funding or restructuring existing debt to improve liquidity.

- Negotiating with creditors: Agreeing revised payment terms or other arrangements to manage outstanding liabilities.

- Formal restructuring: Using procedures such as a restructuring plan or administration, where appropriate, to protect or preserve a viable business.

- An orderly exit: Where recovery is no longer realistic, considering the appropriate insolvency process to bring operations to an end.

The right approach depends on whether the company is experiencing temporary cash-flow difficulties or more fundamental problems with its business model.

As financial difficulties become more serious, directors must also consider their legal duties, including when they are required to take creditors' interests into account. Seeking specialist advice at an early stage can help directors understand their responsibilities and assess the options available.

What does the future hold for airlines?

With fuel prices remaining volatile, operating costs under pressure and competition continuing to constrain fares, the coming months could prove challenging for airlines, particularly smaller operators with limited financial reserves or significant debt commitments.

Further consolidation, refinancing and restructuring activity may follow as airlines look to strengthen their financial positions. Those able to manage costs and maintain access to funding will be better placed to navigate the uncertainty, while others may face increasingly difficult decisions about their future.

For the wider business community, the lesson is clear: financial pressures do not automatically lead to insolvency, but the ability to respond before they become unmanageable can determine whether a business survives.

Isadore Goldman's specialist restructuring and insolvency lawyers advise businesses, directors, lenders and insolvency practitioners on financial difficulties, restructuring and insolvency procedures.