Brussels Airlines must reduce its costs by 8 to 12% to achieve satisfactory profitability, since the airline recorded a rather low profit last year, as reported in Belgian financial newspapers L’Echo and De Tijd this Thursday. Out of the 154 seat average of a Brussels Airlines flight, only one makes a profit; 27 are unsold and the other seats just cover costs.
The ambitious target is mentioned in an internal communication of which the newspapers managed to get a copy: “8% is the margin we need to be able to fund our current and planned investments (fleet renewal, seats, network expansion, people development, etc.).”
In the internal document devoted to the turnaround programme called “Reboot”, Brussels Airlines clearly explains to its staff the extent of the challenge ahead. With the exception of one seat per plane on average, revenues from the remaining seats are fully used to cover all costs.
With an EBIT target of 8% in 2022, CEO Christina Foerster is very ambitious. The average EBIT margin in the European aviation sector is 6%, although other network airlines of the Lufthansa Group (Lufthansa, SWISS) are well above that target and Aer Lingus managed to achieve a record 15% EBIT by completely transforming their business and brand in recent years.
The document does not mention any examples of concrete savings that could be implemented, although the company calls on all staff to feed ideas that could be turned into projects.
(EBIT = Earnings before interest and taxes)