Brussels Airlines is in virtual bankruptcy, and a high-level group of experts is looking at how to save the airline in the best possible way.
The Belgian flag carrier owned at 100% by Lufthansa is in danger, said Belgian news channel LN24 on 2 April. The airline is in “virtual bankruptcy” due to the COVID-19 outbreak, according to an expert.
As Belgian financial newspaper L’Echo wrote on 1 April, a high-level group of experts has been created to examine what is the best solution to save the flag carrier, whose financial health was already poor before the crisis. Among the members of this group are Pierre Wunsch (Governor of the National Bank of Belgium), Koen Van Loo (Federal Participation and Investment Corporation) and Olivier Vanderijst (Regional Investment Corporation for Wallonia). The airline could be partially or totally be renationalised.
This group has been created due to the uncertainty over cash flow at Lufthansa, which is itself facing big difficulties due to the crisis. Therefore, it is very unlikely that the German flag carrier will come to the rescue of its Belgian subsidiary.
The company is in urgent needs of an estimated €200 million, but the necessary recapitalisation could push the tab to €290 million.
Brussels Airlines is essential to the Belgian economy. The airline employs directly 3,500 people and represents 40% of Brussels Airport traffic. Thousands of additional jobs depend on its survival at ground handling companies, MRO supplier Sabena Aerospace, air navigation services provider Skeyes, tour operators and many others.
“This airline has never reported anything. It’s all in the symbol. Care must be taken not to artificially keep alive a company that’s already in intensive care.” says an expert.
Financial mechanisms, such as loans convertible into capital or conditional lines of credit, are considered. Many sources say that state-owned Belfius Bank can help with the take-over by raising the necessary capital.