Air Moldova is Up for Sale

Air Moldova aircraft

Moldova, a small country nested between Romania and Ukraine, may not be among Europe's best known tourist destinations. Yet, it is home to a surprisingly dynamic domestic airline industry.

After the signature of an Open Skies treaty between Moldova and the EU, Air Moldova, the country's flag carrier, transitioned to a low cost, connecting hub model. Thus, in addition to serving, primarily, destinations with strong Moldovan diasporas, it emerged as a competitively priced alternative to fly between Western Europe (with Italy being particularly prominent) and further East, mainly Russia but also places like Cyprus and Dubai. 

(On a side note: had the chance to try out Air Moldova's product on a two-leg flight between Moscow and Barcelona via Chisinau and the impression was quite positive, perhaps because I did not have much expectation either. In addition to the airline experience, Chisinau airport turned out to be quite a modern and functional facility, built on a human-scale and with very reasonable prices. You can find the full Air Moldova flight review here)

This model was then replicated by a new Moldovan low cost airline, Fly One, started by former Air Moldova executives. The route networks of both airlines overlap to a very large degree.

Open skies opened up new opportunities for Air Moldova but also brought it more competition from foreign carriers as well. Wizz Air, the Eastern European LCC opened a based there in 2017 and the results must have been quite satisfactory because already this year it announced a major expansion of its Moldovan base, with a second Airbus A320 being based at Chisinau and 5 new destinations.

With at least 14 single-aisle airliners having Chisinau as home base, the Moldovan market starts to look rather crowded. Let's remember that Moldova's population is less than 3M people, with one of the lowest per head incomes in Europe.

Is there enough space for all?

In any case, Air Moldova has been put up for sale by the Moldovan government.

Privatization has been, allegedly, on the cards since at least 2008, and it was already expected in a previous round of privatizations in 2015, but it seems that the financial situation of the airline has made any further postponement unviable.

The move seems dictated by the need to re-capitalize the airline to ensure that is able to continue operating and enable it to compete in this fiercely contested market.

Air Moldova has been losing money the last few years. In 2017, losses of nearly US$7M in the first three quarters forced the government to pledge financial assistance to the tune of 75M Lei (US$4.5). 

Bidders have until 4th September to show their interest for the Moldovan carrier and it has been reported that at least a couple of investors have shown interest already. The catch is that the winner will have to assume the airline's debts, that run now at around US$70M.