[Opinion] Why businesses like Brussels Airlines are of strategic importance for Belgium

The current coronavirus pandemic is unprecedented in the world of aviation, most – if not all – commercial passenger airlines have been severely affected by a huge crisis. In Belgium, Brussels Airlines is asking the government for at least €200 million in support, plus probably €90 million for recapitalisation. Other Belgian aviation players, such as TUI fly Belgium, Air Belgium, Sabena Aerospace, Aviapartner and Swissport, would also request government aid.

Several European countries are considering the nationalisation of their flagship airline, notably France and Italy. Germany also mulls a nationalisation of Condor and state aid for Lufthansa.

Currently, the forum of aviation24.be is the subject of a fierce discussion for or against financial support for a company such as Brussels Airlines.

The opinion of member Inquirer prompted the editors to publish it on our main page:

I think many people here are unable to understand the fact some businesses are of strategic importance to our country’s economy and are arguing from the basis of the profitability of the company itself, whereas you really have to look beyond the individual balance sheet for such companies, especially in the current situation.

Simply put, the presence of a strategic company generates so many additional benefits to our country, that they are deemed indispensable to the smooth functioning of our country’s open economy and must be saved.

I’ve read how people argue about how much Brussels Airlines makes/loses a year and should thus not be saved, but forget about those few (tens of) millions either way in the present situation: it’s really of no importance whatsoever on a moment our country’s economy will shrink with about € 15 to 20 billion and every percentage point less contraction means hundreds of millions of money saved!

What is key is that because of the fact there’s a home-based airline operating a significant network at Brussels Airport (BRU), our country is far better connected with other places in Europe and elsewhere in the world, thus making Belgium a much more attractive place for businesses to conduct their activities in. Without such connectivity, I’d say good luck attracting the much needed foreign investment if you are virtually unreachable for years to come. Let’s be honest: nobody else (IAG, Ryanair, easyJet, another airline) is going to step in to replace Brussels Airlines anytime soon at BRU, so it’s either them or nothing at all.

Brussels Airlines has reportedly been labelled strategic by our government and the decision has thus been taken to bail it out: all that remains to be decided is the exact form under which this will be done.

My bet is it will be a combination of an extended loan to cover their losses during the initial phase of their start-up as soon as possible, with an equity investment in return for a minority share in the company: as such it allows our government to take a passive attitude in the daily running of the airline (without a commercial change with regards to code-sharing, alliance membership and Star Alliance joint ventures) and dispose of this public equity investment in due time, either for money or a minority share in Lufthansa proper.

Our chief editor added an important factor to consider:

 In one of its annual reviews of Belgian aviation, the National Bank of Belgium reported once that if a route from Belgium flown by a foreign airline gives a job to one Belgian employee, the same route operated by a Belgian airline gives work to 4 Belgian employees.

The Belgian government should keep that in mind when deciding where to allocate rescue money.

It now seems that the Belgian government has made the decision not to repeat the error of 2001, when it let Sabena go bankrupt after the 9/11 terror attacks in the US. Brussels Airlines is considered as strategic and will be saved. In which way? A loan, a nationalisation, a participation in the capital of either Brussels Airlines or its parent Lufthansa? Time will tell: follow the discussion in our forum.