Lufthansa could let Brussels Airlines go bankrupt

The Lufthansa Group could let its Belgian subsidiary Brussels Airlines be sold or go bankrupt if no rescue agreement is reached with the Belgian federal government, La Libre Belgique reported Thursday evening.

Citing several inside sources, the Belgian newspaper said that the German company is no longer excluding the option of dropping Brussels Airlines and letting it file for bankruptcy. After agreements had been found between Lufthansa and the governments of Austria, Switzerland and Germany (although Lufthansa’s main private shareholder could derail the deal at the 25 June General Meeting), Belgium remains the only country where discussions are still ongoing.

The Belgian government and Lufthansa have been negotiating a loan of 290 to 390 million euros. The government is willing to aid, but it wants guarantees on development of the Brussels hub, both in terms of operations and employment. However, Lufthansa is opposed to any government intervention.

Lufthansa CEO Carsten Spohr already threatened at the end of April to make Lufthansa insolvent rather than to receive aid from Germany against a blocking minority for the Government. He won and got a “silent” participation of the German state.

He might play a similar game in Belgium, although the situation is very different: Brussels Airlines will not be profitable enough to repay the loan of 290 to 390 million euros that Belgium could grant. For years, the Belgian subsidiary will not return any profit to Lufthansa.

Therefore, according to various sources (contradicted by Andreas Bartels, the head of communications for the German group), Lufthansa will no longer exclude dropping its Belgian subsidiary. If there is no social agreement between the management of Brussels Airlines and the unions, Lufthansa will let its Belgian subsidiary file for bankruptcy.

But Brussels Airlines remains important from a strategic point of view, in particular, to counter Air France/KLM on their home turf. Dropping Brussels Airlines would also mean for Lufthansa to give up its lucrative African flights.

The liberal union ACLVB does not expect the company to enter a wild adventure in the end. “We are not going to panic,” said union secretary Filip Lemberechts to Het Nieuwsblad. “Brussels Airlines has been dead and buried ten times in recent weeks.“

According to Lemberechts, the employees of Brussels Airlines deserve that the company has a future. “We have been negotiating every day for the past few weeks and they have been constructive,” he refers to the social dialogue. He thinks that a principle agreement can be reached in the coming days.

An internal source told La Libre Belgique that the management of Brussels Airlines should meet on Monday with its counterpart of the Lufthansa group, with a plan determining its future.

If the German rescue plan for Lufthansa is not validated on 25 June, the Group could go bankrupt, together with its Belgian subsidiary which will run out of cash at the end of the month.