The future of Brussels Airlines with Lufthansa

[Air Key West]

And you can also opt for a cynical scenario : LH does not want to invest in b.air now, because if their performance is bad or "so so" in the coming eighteen months, LH will only have to pay a modest amoung to Stevie D. and his buddies to acquire the remaining part of b.air, since the amount for the final "slice" will depend on the performance of the airline until (?) the Autumn of 2010. And for us, there may also be a benefit in a poor performance until 2010, since if LH has to pay fairly little to buy the rest of the airline, it will have more money available to invest in b.air (rather than giving that money to the investors). A bit cynical, I admit.

[BrightCedars]

And you can also opt for a cynical scenario : LH does not want to invest in b.air now, because if their performance is bad or "so so" in the coming eighteen months, LH will only have to pay a modest amoung to Stevie D. and his buddies to acquire the remaining part of b.air, since the amount for the final "slice" will depend on the performance of the airline until (?) the Autumn of 2010. And for us, there may also be a benefit in a poor performance until 2010, since if LH has to pay fairly little to buy the rest of the airline, it will have more money available to invest in b.air (rather than giving that money to the investors). A bit cynical, I admit.

At 200-250MLN for the remainder, I think LH is pretty covered against making too much gains at SN and having to pay a hefty premium for it. I'm confident they have no intentions of waiting and loosing opportunities.

[Air Key West]

Yes, indeed, this is the most plausible scenario. Probably all LH is actually waiting for is the green light from the EU Commission. There is no reason to believe they will turn down the take over, since they have accepted the acquisition of Martinair by KLM, recently. Once the EU green light is there, things will change a bit faster. Top managers have already announced the return of a Business class in Europe. The first step of probably many others.

[correctair]

Dear friends,

Some of you are jumping into conclusions without knowing some basic facts. Really a pitty.

- Brussels Airlines and Lufthansa have to wait EU competition approval before they can talk. All what is written here by many of you is just pure speculation not based on facts nor reality. Today the airlines can't even exchange their figures and are considered to be competitors. There are very strict internal guidelines regarding this and the entire management must respect it and is doing so. Huge EU fines are the result in case this not respected. Sorry to say, but this is the only truth. So far, only a partnership team has been composed. Only after EU green light the negotiations and projects can start.

- Do you really believe that the shareholders of the airline do not have a mechanism in place regarding the call option of Lufthansa and Brussels Airlines valuation that takes into account all elements and risks? Very naive, I have to say. And wrong. For those who want to know : it is mechanism of almost 40 pages including several guarantees, scenarios and triggers. It is in everybody's interest that the airline performs well and will grow.

- The Brussels Airlines management has an Africa expansion plan and a vision. But do you really think they are going to release it in the press before it is launched? You would give your competitors vere interesting information and an advantage of some months. It is like telling your football team tactics and composition one week before the game to your competitor. Therefore you say in the newspaper something and nothing at the same time. Frustrating for you to read, but from a tactical point of view the only way forward.

- You don't need a loan for an extra aircraft in case you sign a lease contract. You just pay the monthly lease rate to the lessor. That's all. Has Brussels Airlines the money to do so? Yes, dozens of other airlines with less cash do it. Why is Brussels Airlines waiting? Because waiting is in this market environment a strong advantage as lease prices go down every day. But believe me. They are preparing things. It is all in the kitchen but not yet on the table, that's all. 2009 will be exciting in that respect, believe me.

[Air Key West]

Again, I would like to remember all guest that his is a discussion forum, and when you say discussion it is discussion (implying a certain degree of speculation). Most of us are just exchanging ideas, discussing like you would do around a dinner table about politics or sports where everybody has his own ideas (wrong or right). But thanks to our stupid speculation, we occasionally get someone from inside who gives us a little bit more info

[Kapitein]

First and final warning for everybody: stay on topic.

[brussels airlines]

The European Commission has postponed their decision about Lufthansa buying Brussels Airlines till 26 January 2009. This because Lufthasa has made concessions to the European Commission that can be important for their investigation. No details were given about which concessions.

Press:

http://www.luchtvaartnieuws.nl/news/?ID=29141 (Dutch)

[HighInTheSky]

The European Commission has postponed their decision about Lufthansa buying Brussels Airlines till 26 January 2009. This because Lufthasa has made concessions to the European Commission that can be important for their investigation. No details were given about which concessions.

Press:

http://www.luchtvaartnieuws.nl/news/?ID=29141 (Dutch)

Let the guessing begin!

[itami]

Let the guessing begin!

Why don't you try by yourself first ?

[HighInTheSky]

Let the guessing begin!

Why don't you try by yourself first ?

Very good... My guess is that they are giving up slots to other companies (Easyjet?) in order to keep the market competitive.
I guess they wil have to show the EU as well that they have good intentions with SN, so the announcement of the move of the Africa ops to BRU?

Now Itami, what do you think?

[BrightCedars]

SN is and remains a minor player in the market and I don't see what concessions would be needed to guarantee the open internal market (I don't think Africa plays a role at all in this), where the monopoly overlap between LH and SN would be limited to Belgium-Germany. I guess giving up some slots or whatever to whoever new entrant would be interested in serving a Belgium-Germany city-pair should be fair enough. Of course within the greater framework of the LH group's present and future ownerships, that could also apply to routes to e.g. Switzerland and Austria.

[airazurxtror]

in "Le Soir" to-day, page 19 :
"The Eu authorities examine the possibility of monopoles if the two companies merge. That possibility exists on the routes which both companies fly at present. Thus, flights between Brussels and a (large) German town."

[sn26567]

Lufthansa will probably offer to abandon some slots at Brussels.

[BrightCedars]

Lufthansa will probably offer to abandon some slots at Brussels.

I would understand that if SN was dominant at BRU, but that isn't the case. What will be the share of LH group at BRU once they take SN onboard? I.e. currently couting LH, LX an SN together? Is that above 50%?

[HighInTheSky]

Lufthansa will probably offer to abandon some slots at Brussels.

I would understand that if SN was dominant at BRU, but that isn't the case. What will be the share of LH group at BRU once they take SN onboard? I.e. currently couting LH, LX an SN together? Is that above 50%?

SN is dominant in BRU, followed by LH. So i won't be surprised if they have more than 50%

[teddybAIR]

I don't think it is relevant to look at the dominance of the combination LH-SN on the brussels hub as a whole. Wat is more relevant is to look at the dominance of the partners on all individual city-pairs between germany and brussels. Why? Because that is ultimately what drives the prices. And the EC's concern is to guarantee enough competition as to keep the prices on a fair level which is inferior to the level that would be attained in a monopolistic or oligopolistic situation.

Best regards,
bAIR

[BrightCedars]

I don't think it is relevant to look at the dominance of the combination LH-SN on the brussels hub as a whole. Wat is more relevant is to look at the dominance of the partners on all individual city-pairs between germany and brussels. Why? Because that is ultimately what drives the prices. And the EC's concern is to guarantee enough competition as to keep the prices on a fair level which is inferior to the level that would be attained in a monopolistic or oligopolistic situation.

Well, after the fall of Sabena the German network of SN was a shadow of what it was before. LH had the opportunity to ply all routes at will without competition. Besides the odd Bremen flights, easyJet's Berlin low-cost link, and some routes where both SN and LH operate (SN operates little to FRA), it's been LH territory ever since. And even if concessions have to be given, I very much doubt there will be many players rushing in to start competing on the BE <> DE market against LH/SN.

[euroflyer]

As has been said correctly the EU will look only at a possible lack of competition on certain routes because of the take over. This could be the case mainly for BRU-FRA, BRU-MUC and BRU-TXL/SXF I would guess. LH/SN probably will have to offer slots which could enable a competitor to start a service here.

BRU-ZRH and BRU-GVA is operated in cooperation already today, so this should not be a problem? The future take over of OS or bmi should only play a role if those take overs are subject to future checks I guess.

[tolipanebas]

As expected, Brussels Airlines' FFP 'Privilege' will be replaced by LH's 'Miles & More' by the end of October this year.

[HighInTheSky]

As expected, Brussels Airlines' FFP 'Privilege' will be replaced by LH's 'Miles & More' by the end of October this year.

I'm pretty sure it will, but i didn't recieve any info on that... Is this confirmed?