- Fast growth in 2008 may have more than the market could bear
Baboo, which serves 18 destinations from Geneva, ended 2008 with positive results, despite an unfavourable economic environment, claiming it was able to achieve strong growth thanks to a sound expansion strategy, strong management and the support of its main investor, the M1 Group.
The airline earned revenue of CHF56 million (USD52 million), an 87% improvement on its 2007 result and carried 295,000 passengers which was 75% more than in 200. However, the airline has not declared where this improved revenue and passenger carriage performance has left its bottom line.
This growth has seen delivery of three new aircraft in 2008 that tripled the airline’s seat capacity. Three 100-seat Embraer 190 jets were delivered in May and June 2008, increasing the fleet from two to five aircraft - and thus from 148 to 448 seats, a major development for an airline of this size. In addition, seven new destinations were added to the Baboo network, taking the total number of destinations to 18 (excluding charter flights). In response to this expansion, an intensive recruitment policy saw the airline reach a headcount of 200 at 31-Dec-08, as against 115 staff at 31-Dec-07.
How the recession extended its ugly face to Baboo
Earlier this year, Baboo said while the financial crisis and the increase in the cost of fuel had affected its business activity, the effect was less than that suffered by other airlines.
It attributed this to possessing an up-to-date fleet of new aircraft that consume less fuel, with its operations exclusively short-haul in nature and that its revenues are in earned in euros, rather than dollars. The airline stated that a recession can actually generate opportunities, with Baboo’s small size providing flexibility to encourage fast market reactions.
However, a more recent report states that Baboo has put 60% of its 200 staff onto “partial unemployment”, as the airline’s fast growth has now outstripped the passenger demand required to fill its seats.
The airline hopes to regain stability by Winter 2009/2010.
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