Equair , an Ecuadorian airline, commenced its operations with a flight between Guayaquil and Quito in December 2021. Just a year and ten months later, the company announced the suspension of its operations due to significant financial losses. Equair had ambitious plans, offering “the best service for the price” and securing a 17% market share on key domestic routes. They had signed a USD 34 million investment contract with the Ministry of Production, aiming to execute it between 2021 and 2036.
Unfortunately, Equair’s financial performance was far from their aspirations. In their 2022 report to the Superintendency of Companies, the airline revealed a staggering loss percentage of 91%. Sales income for the year amounted to USD 18.8 million, but expenses reached USD 31.4 million, resulting in losses of USD 17.1 million and a negative equity of USD 2.5 million. A working capital shortfall of $7.5 million further compounded their financial woes.
Equair’s decision to suspend operations was primarily attributed to poor profitability, as indicated in their market analysis. Rising international fuel prices also played a role, with fuel costs accounting for a significant portion of their operating expenses.
This closure was unexpected, especially given that Equair had only recently expanded its operations to include flights to El Coca in August 2023. In response to the situation, the airline pledged to provide support and guidance to its over 200 employees. Equair also worked with LATAM Airlines Ecuador to relocate passengers who had purchased advance tickets, ensuring they could reach their destinations without additional costs.
As of October 1, 2023, LATAM had successfully relocated 2,000 Equair passengers on their flights, with plans to assist a total of 15,000 affected passengers. Equair’s brief journey serves as a reminder of the challenges faced by airlines in competitive markets, especially when dealing with factors like fluctuating fuel prices and tough economic conditions.