Greeking Out a Living: Can Aegean Airlines continue thriving despite the woes of its embattled home nation?

In 2015, Greece suffered yet another drop in GDP, shrinking this time by about 2%. This means the Greek economy today is more than 25% smaller than it was in 2008, a great depression if there ever was one. But the country’s airline? Defying logic, 2015 was somehow the third straight year of profits for Aegean Airlines—strong profits, in fact, despite flying from what’s arguably the developed world’s most troubled economy. Aegean remains a winner against all odds.

And no, it didn’t shrink itself to profitability. On the contrary, it has grown significantly larger every year, in one case by buying its rival Olympic (in 2013) but otherwise organically—last year it grew ASK capacity a stunning 20%, making it one of the fastest growing airlines in the entire world, never mind Europe. How is this possible?

In a call to discuss its 2015 results, the airline gave plenty of reminders about just how bad things were: another year of shrinking GDP, the Greek government’s imposition of capital controls, the closure of Greek banks during the peak summer season, a weak euro (which bloated costs), a jump in Greek airport fees, more negotiating brinkmanship with the E.U., a steep decline in inbound Russian tourists and—oh yeah—Ryanair’s decision to enter Athens in mid-2014, part of a major Greek growth push from Europe’s preeminent ultra-low-cost carrier.

Despite all of this, Aegean decided to expand its fleet by eight planes during the year, which might seem reckless considering the economic and competitive backdrop. But the expansion worked, producing a $76m annual net profit and a 10% operating margin. This was, in fact, a decline from 2014’s 12% operating margin, indicating at least some negative impact from the dreadful conditions it faced. But not much.

One secret to Aegean’s success is a low cost base. Impressively, its non-fuel unit cost of roughly €0.05 per available seat kilometer make its costs comparable with those of easyJet even though Aegean is a far smaller airline with thus fewer economies of scale. Moreover, it’s a full-service airline with business class seats, Star Alliance membership and even inflight meals for all passengers on international flights. Aegean’s unit costs were actually lower before it purchased Olympic, which shortened the group’s average stage length and introduced higher-CASK turboprop aircraft—today it flies 38 A321s, 8 A320s…

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