Brussels Airlines' fleet renewal

[sn26567]

An interesting piece of news: Finnair will use Flybe for domestic feeder traffic. Three Flybe Q400s will be based in Helsinki to that effect.

See Finnair press release: viewtopic.php?f=31&t=42710

[cathay belgium]

Oops ...
So we can expect A320/A319 and some Embraers... ( tolipanebas )
and Finnair goes for NCB's solution.
Think NCB swopped from company and left SN for Finnair ..
1-1 ? Peace.. ( for now )
Conclusion:
So SN will go for an old Sabena fleet full of A32x and A330's and change the RJ for EMB170/190 ?
( Maybe they can lease a Q400NG so old SN did from Schreiner for the thin nearby routes..
Everybody happy ! )
CX-B

[Thomas_C]

The only thing I could say is, I (and I suppose most forum members) don't have time to read your "ingenious" ideas. Or I can say it in another way, most forum members don't want to waste time anymore to your posts. You are repeating the same things over and over again and you ignore arguments of other members or just cal their arguments blah-blah.

Indeed. I like briefly & to the point replies.

[diminbru]

Indeed. I like briefly & to the point replies.

exactly if I would want to read a book I'd go to the book store or the library

[tolipanebas]

Finnair goes for NCB's solution.
Think NCB swopped from company and left SN for Finnair ..

Seriously, AY is going to use Q400 on the domestic short haul flights; that's something completely different than let them do HEL-BRU with it, like some have proposed here....

[regi]

Finnair goes for NCB's solution.
Think NCB swopped from company and left SN for Finnair ..

Seriously, AY is going to use Q400 on the domestic short haul flights; that's something completely different than let them do HEL-BRU with it, like some have proposed here....

Hope they have strong landing gear - did somebody refer already to the SAS saga concerning Q400 for SN ?

[NCB]

Composée de 51 avions, celle-ci est l’une des plus vieilles d’Europe (13,2 ans d’âge moyen). L’idée est donc de la rajeunir d’ici 2012 ou 2013, tout en essayant de se concentrer au fur et à mesure sur un ou deux types d’appareils, contre trois aujourd’hui (Airbus, Boeing, Avro). Le départ des Boeing 737 dont dispose la compagnie, est attendu au plus tard en 2013. Les Avro, eux, devraient être redistribués sur les lignes régionales en Afrique ou rendus à leur propriétaire pour ceux qui arriveront en fin de leasing. Enfin, une étude, dont les résultats sont attendus avant la fin de l’année, doit déterminer les réels besoins en appareils de Brussels Airlines.

Ce que l’on sait, c’est qu’à la rentrée, cinq Avro RJ85, en fin de leasing, quitteront la flotte. Pour éviter de brûler les liquidités, proches de 230 millions d’euros, les dirigeants procéderont à un renouvellement au compte-gouttes en fonction des opportunités du marché.

Or, selon nos sources, les dirigeants de Brussels Airlines ont déjà arrêté leur choix sur deux Airbus en 2011. Le premier, un A320, devrait être opérationnel en avril 2011, tandis que le second, qui intégrera la flotte en principe en juin 2011, serait un A319 ou un A320. D’une valeur de 80 millions de dollars à l’achat, ils seront acquis par Brussels Airlines sur le marché du leasing ou dans le pool de son actionnaire minoritaire, la compagnie Lufthansa, si les avions répondent «aux besoins et aux prix du marché».

It states basically that SN will be replacing the short-haul fleet by 1 or 2 types. To avoid burning through its cash, SN will be proceding to a very cautious fleet renewal by taking market opportunities.
So we can store the A320/A319/CS100/E190/E170 theory into Pandora's box and focus on the opportunities that were mentionned with a 2 type fleet.

Having done some research over the past days, I switched towards a position that the CRJ would be a better option than E-Jets in SN's case.
The CRJ backlog is shrinking like never before and Lufthansa is a big customer of the type. Lower operating costs than E-Jets through less maintenance on a more mature aircraft, less weight (6% for CR9/E190; 23% for CR9/E190) and fuel burn (5% for CR7/E170; 17% for CR9/E190 with 8% less capacity), comparable comfort level but a tad noisier in the back and quieter to the front.
Cheaper to lease as Bombardier grows desperately low on orders for 2012 and beyond, ordered in CRJ700/900 Nextgen versions it would be the ideal replacement for the larger (but for SN too large) AVRO RJ 85/100.

[cnc]

problem with the CRJ is its cargo space. the avro's tend to get loaded with big cargo packets

[tolipanebas]

problem with the CRJ is its cargo space. the avro's tend to get loaded with big cargo packets

Not to mention it doesn't fit LH's very strict precondition SN needs to operate planes with more seats on average, not less...

Most of the Avro RJs will be replaced by planes slightly bigger than that, not smaller.

What that will be, remains to be seen: E-jets (from the LH order backlog), C-series or second hand Airbusses (possibly also through LH) or a combination of both as they go along?

The interesting question is: will there be room left for a handful of turboprops or not?

BTW, don't take this article as a good reference, it contains several factual errors, like the total plane count of the SN fleet, the date the first RJ will leave, as well as some other 'facts'... Looks to me the journalist has simply decided to add rumours and "internet facts" to a topic about SN operating Club Med charters next year, and frankly it shows int he quality of reporting!

[NCB]

(disclaimer: it's a long post, so if you are not interested, move along, don't read, don't comment, don't whine)

Did LH formulate that wish?

The reason it doesn't surprise me is that I've read a recent interview where the LH fleet co-exec was selling that the CS100 would outperform the B748I and A380 on overall performance and fuel burn per seat. This comment mirrors the brilliance of his incompetence, as no one should or could seriously compare aircraft with such different missions on performance. This goes way beyond claiming that the CS100 could fit into SN's fleet, it's a tragedy in 5 acts.
Obviously, he is wrong as the widebodies outperform the CS100 on speed, range, capacity, comfort and fuel burn per seat in the same configuration. I wouldn't fire the guy straight away but LH, please give him some additional training before letting him comment to the press.
That is the problem with nowadays executives at many airlines. They have an MBA, but don't know the ins and outs because they have no hands-on experience, they only listen to what they want to listen to and for the rest they know it all because they have a fancy job description and a nice tie to go with the suit and leather shoes.

LH has made many awful fleet decisions in the past. CRJ100/-200's, A340-200, A340-300, DC-10, BAe146, B748i, of which they have been the launch customer for CR1, A340, B748i and now the CS100.
The CS100 is a good aircraft for Swiss but it isn't the best aircraft it could get. If I were LX and LH, I would have pushed for a GTF powered E-jet or CRJ, that way LH also had an immediate solution for replacing its entire RJ fleet including subsidiaries like SN, LX, OS, BD. It would have been cheaper, more reliable, more cost-effective and they would have been one step ahead of the game as many competitors only recently completed their fleet renewals.
It's almost unconceivable that they ordered the CS100, which is a shrink of the CS300.

In the past, LH has been able to compensate its fleet deficiencies thanks to explosively high fares that they charge to the German traveller, the most lucrative outbound international travellers market. Despite the high fares, LH isn't shining on profitability, they seldomly make more money than LX, which brings us back to its fleet, product choices (no PTV on long-haul until recently, poor business class products on short-haul) and efficiency issues.

LH has been wrongly credited with the turn-around of LX, in reality it was very obvious that the LX management was doing a great job at reestablishing the former Crossair/Swissair into a viable airline long before LH came in. LH has not been able to turn around BD, it is now struggling with OS and LH Italy isn't panning out quite as planned.
I guess that they believed their own stories about them turning around LX...

This is no offense ment to Tolipanebas, but it is to say that it is healthy to take LH's wishes with a pinch of salt.

LH has already assigned all its E-jets, in fact I believe there are around 5 outstanding. It actually was a renegotiated order using deposits previously made by Crossair that later became Swiss (like DAT became SN Brussels). LH has made follow-up orders for 8 CR9's but no conversion of options on the E-Jets, which proves to me that LH likes the CRJ alot and given its recent CS100 order rather than a follow-up E195 order for LX, I think that they don't like the E-Jets at all and plan on using it as interim lift while the Avro's and old CRJ's get replaced by NextGen's or where it doesn't stand in the way (like Air Dolomiti).

If you want my opinion, there will be no follow-up orders for E-Jets within the LH Regional fleet. For the previous order, I believe that LX made huge deposits on the aircraft as launch customer and once LH took over, paying off the balance and receiving the aircraft was cheaper than to cancel the order.

But I still think that SN's board will push for E-Jets and that it wouldn't be a very wise decision down the line. If you want my opinion, it's like a French car, it's a lemon. I know engineers who work on it and they don't like them at all.

[cnc]

LH has made many awful fleet decisions in the past. CRJ100/-200's, A340-200, A340-300, DC-10, BAe146, B748i, of which they have been the launch customer for CR1, A340, B748i and now the CS100.

all of these types have had or still have a specific place and function in LH's operations so i wouldn't say they are awfull fleet decisions if you keep in mind which types of aircraft where available at that time.

[tolipanebas]

Did LH formulate that wish?

You can question my opinion, but not my sources...

his comment mirrors the brilliance of his incompetence

That is the problem with nowadays executives at many airlines. They have an MBA, but don't know the ins and outs because they have no hands-on experience, they only listen to what they want to listen to and for the rest they know it all because they have a fancy job description and a nice tie to go with the suit and leather shoes.

We're not going to judge people who can't defend themselves, but just a sample:
LH's CEO for instance is a licenced aerospace engineer, who has worked for Lufthansa technik for many years before moving to management....
http://investor-relations.lufthansa.com ... 09-7-e.pdf
No hands-on experience, right?

LH has been wrongly credited with the turn-around of LX, in reality it was very obvious that the LX management was doing a great job at reestablishing the former Crossair/Swissair into a viable airline long before LH came in.

LX was close to collapse prior to the LH take-over, selling slots at LHR to BA for instance to get some urgently needed cash to stay in the air....

The successful LX integration in LH is a textbook example in many M&A courses for MBAs nowadays.

LH has not been able to turn around BD, it is now struggling with OS and LH Italy isn't panning out quite as planned.

Just how long are LH owning BD and OS again?


What is YOUR on-hand experience in aviation, if I may ask?

One day you want SN to operate the most comfortable planes possible with a large dedicated premium cabin in Europe, the next day you want them to get Q400s, then a few day later you change your mind to CRJs and in both of these cases you'd have to shoehorn in pax to make it work.

Theoretically there's a case to be made for almost every modern plane to replace the AVRO and 737 fleet with, but you must do so in a comprehensive and coherent way, fitting a long term strategy and business plan, yet none of the ideas you've proposed so far, has shown me you understand SN's revenue sources, let alone to have a long term vision. The only thing I see is an appetite for adventurous new concepts, many of which are guaranteed revenue destroyers even, regardless the low CASM they could offer.

It's good to remember profitablity comes not from having the lowest CASM, but from having the widest spread between CASM and revenue, so better be able to generate sufficient revenues with the planes you'd order, meaning sufficiently large to take all the pax, luggage and cargo you expect to have, not just this year, but over the next decade...

[NCB]

Just how long are LH owning BD and OS again?

10 years for BD until LH has run BD into the ground.
Strangely, it took LH less than a year to make a failling Swiss profitable but the same magic doesn't work for OS, does it? You need to check your facts because I have been through LX's balance sheets and I know what I am writing.

About the fleet, you can make 3000 combinations of aircraft types.
The question you should ask yourself is: is SN supposed to become a private jet airline that competes against LCC's or must it become a strong international airline that is number 1 in the links between Europe and Africa?

In that optic, yes, for the record, I maintain the position that I would put about 15 A319/A320 with auxiliary tanks and winglets on 80% of SN's actual destinations point to point non-stop during the night, use them during the day in the same configuration with the more friendly business class on short-haul and use Q400NG to operate feeders, high frequency service and with a decent business class to places where an A319 is too much aircraft. No high-yield routes beyond one hour with Q400NG, only leisure ones in fair competition with Ryanair.

Then, with earned money and market share in Africa (which would be larger than AF), start upgrading Q400NG routes to A319/A320NEO, upgrade A319/A320 African routes to A321NEO with auxiliary tanks and where justified, to B787/A332/A333. Add more B787/A332's to operate destinations in Africa out of reach of the A321 NEO and to open up new routes in the lucrative market of South America.

It is the most obvious thing to do. Why waste money on big Cseries when you can't even fill RJ's to half and why keep operating to Africa with A333's hopping around the place with prehistoric idea's of adding more A333's to hop around to more places, while competitors are gearing up and establishing strong one-stop hubs with better frequencies and easy connections, at much lower fares.
It's easier to say than to do, but without a sound strategy there is no future for the airline. And don't count on the shareholders to make that strategy, the only strategy for most of them is to make LH pay as much as they can and get out of SN. Nothing wrong with that, I would do the same.

One last thing about your famous source. What does your source think about you publishing all these matters? I bet you the source wouldn't like it too much. So the source either doesn't surf on forums like this one, or isn't directly connected to you, or you are the source.

It's good to remember profitablity comes not from having the lowest CASM, but from having the widest spread between CASM and revenue, so better be able to generate sufficient revenues with the planes you'd order, meaning sufficiently large to take all the pax, luggage and cargo you expect to have, not just this year, but over the next decade...

Ok, so let's see.
The bigger the aircraft, the lower the RASM because though the revenue potential is the same, you have more seats and hence seat-miles to divided it to. CASM doesn't decrease by much because of higher capital cost. Yield = RASM - CASM. Lower RASM and same CASM = lower yields. Disaster.
What's so hard for you to understand? You have a BRU-LHR that you need to sell. You have 3000 passengers who would fly at 0,01 cent, 110 passengers who would fly at 100€ and 90 passengers who would fly at 140€.
You don't need to match the capacity to the fare (unless you can swap between aircraft but then your planning was not good), you need to match the fare to the capacity.

[RoMax]

Just how long are LH owning BD and OS again?

10 years for BD until LH has run BD into the ground.
Strangely, it took LH less than a year to make a failling Swiss profitable but the same magic doesn't work for OS, does it? You need to check your facts because I have been through LX's balance sheets and I know what I am writing.

They have taken over OS past year. Still in a very difficult period for aviation (especially in Europe where aviation is recovering very slow). But since LH took over OS, pax numbers are booming, loadfactors rising (an exemple of May 2010: pax numbers +23.5%, load factor + 5.1%, capacity + 0.9% and YTD numbers January-May: pax +12.1%, capacity + 0.7%, load factor +4.0% (up to 73.6%)). That's all way above European average. I suppose they are doing a bad job? Getting positive financial results takes more time, you can't turn an airline with enormous losses into profit in only a few months when we are still in a crisis. LH has never said they will turn OS into profit in 2010, maybe in 2011.
When they took full control over LX, there was no big worldwide financial crisis, OS/BD is another story.

[NCB]

Interesting numbers.
3 comments, here.

There are always 2 sides to a story. Lufthansa and Austrian were both operating heavily between Austria and Germany and between Austria and Switzerland. If Lufthansa and OS consolidated capacity and LH gave up a few of its frequencies to Austria, it would result in the numbers for Austrian to go up as you showed but go figure for LH. So we need to get the full picture before deciding if LH is doing a good job and if pax numbers are really booming.
I bet you, if you combine the LH and OS numbers, there wouldn't be much of a difference since last year.

Second, you are comparing the May numbers to last year's May numbers. Last year's May, the airline was on the edge of bankruptcy, and I don't know about you but I don't book with an airline that is about to go down. So now that the airline's future is secured, passengers of whom many probably migrated to LH and to many other airlines, are coming back which is natural, no Lufthansa magic.

In fact, if you take a look at the May 2009 numbers compared with the May 2008 numbers, OS had -10.5% on pax, -10.9% on capacity and -4.6% on load factors.

Third, you need to look at yields. I mean I can start an airline today that flies 100% full all the time, but am I going to make any money? Unless we get a full picture of yields, the traffic and load factor numbers don't mean much.

Basically I'm sorry, no offence, though your analysis is interesting on the surface, if you dig only slightly deeper, it's not holding anymore.
You are trying to fight a war that you can't win and it's your choice. I will be glad to respond, just don't get upset about it.

[RoMax]

Second, you are comparing the May numbers to last year's May numbers. Last year's May, the airline was on the edge of bankruptcy, and I don't know about you but I don't book with an airline that is about to go down. So now that the airline's future is secured, passengers of whom many probably migrated to LH and to many other airlines, are coming back which is natural, no Lufthansa magic.

In fact, if you take a look at the May 2009 numbers compared with the May 2008 numbers, OS had -10.5% on pax, -10.9% on capacity and -4.6% on load factors.

Without LH (or another big airline group), Austrian maybe wouldn't exist anymore today or still at the edge of bankruptcy. LH changed the whole strategy of OS and it is working.
Maybe you should also compare the numbers of other European carriers from May 2009 and May 2008. The first months of summer 2008 were the best months ever in aviation, spring 2009 was one of the worst moments of the crisis. You should compare May 2010 with May 2008.

Third, you need to look at yields. I mean I can start an airline today that flies 100% full all the time, but am I going to make any money? Unless we get a full picture of yields, the traffic and load factor numbers don't mean much.

I aggree with you that we have to look at the yields, but I don't have any information about that. But I've the financial results of OS in the first half of 2010:

Austrian Airlines achieved a result from operating activities of minus 67 million euros in the first half-year of 2010. This meant the carrier succeeded in reducing its operating loss by 28.3 percent compared to the previous year (first half-year of 2009: minus 93.5 million euros). The extensive measures aimed at restructuring the company and reducing the cost base gradually began to bite in the first half-year. These effects will continue increasing in the course of the second half-year. That is the same for the new, active market strategy. The total revenues from operating activities rose by 6 percent to 1,024.9 million euros in the first half-year of 2010 (2009: 969.4 million euros) despite losses due to airspace closures.

Austrian Airlines is striving to reduce its costs for the full-year 2010 by around 250 million euros, and to significantly stimulate its turnover. The aim is to achieve a positive cash-flow (free cash-flow before one-off effects) and to significantly reduce the operating loss compared to the previous year. The members of the Austrian Airlines Executive Board, Andreas Bierwirth and Peter Malanik, said the following: “Our measures are taking effect. We are moving in the right direction, but we have not yet reached our goal. We cannot afford to let up now, and must continue to implement our restructuring programme as consistently as before.”

And to end, the "Austrian Next Generation" plan to restructure the airline (a plan worked out by LH):

1. The new, active market strategy in European traffic: Austrian remains a network carrier offering high quality. We will continue to offer first-class service with good catering and high levels of reliability and punctuality – Austrian remains Austrian. We are increasing quality in the areas where it is relevant: we are improving our flight capacity by increasing the number of flights we offer on key routes with high passenger volume, and by using larger aircraft. We are now producing this relevant quality more cheaply, which enables us to offer more attractive prices.

2. Costs-side restructuring: We are increasing our competitiveness by massively reducing our costs. We are creating new processes and streamlining the company. We will reduce the number of people we employ to around 6,000 full-time posts by the end of 2010. We are reducing supplier prices. We are reducing our wage costs by implementing measures agreed with the Works Councils and negotiating reform of the collective agreement rules in an effort to increase productivity.

3. Synergies with Lufthansa: we are collaborating on a targeted basis with sister units in the Lufthansa Group in order to realise synergies. As a result, we are merging our Sales units with Lufthansa and using joint sales tools. We are implementing a similar concept in the field of Ground Operations. In Purchasing, we are using the market strength of the Lufthansa Group, and increasing our purchasing power.

Pleas stop saying that the restructuring plan for OS isn't working. If you still think that, you have a problem and not OS, LH or SN.

[NCB]

Without LH (or another big airline group), Austrian maybe wouldn't exist anymore today or still at the edge of bankruptcy. LH changed the whole strategy of OS and it is working.

Now, the first sentence is 100% correct. I have strong doubts about the second sentence, it's too early to tell.
Until now, LH has done little. Only some minor obvious reshuffling in the fleet, grounding inefficient aircraft, and bringing back the confidence of the passenger so that they book again, reducing cost and increasing revenue.

The big work still remains to be done and it will take several years before OS will start to see the light at the end of the tunnel. It is yet unknown if OS will ever reach that level, though, because all the cost cutting and revenue increasing measures could hit a wall, because you can't endlessly reduce cost and you can't endlessly increase revenue. Same for BD, Lufthansa has been reducing BD's cost and revenues since 5 years but now they are tearing the company apart for its assets as it seems that they will not succeed in the attempt of restructuring it.

LH's only succes story so far is LX, but LX's succes is credited too much to Lufthansa, because although LX was making losses and growing short on equity, their losses were being reduced by dozens of percents annually until it almost reached break-even just before LH came in. The same trend continued and the first year of ownership of LH, LX was profitable for the first time, before even LH had the chance to implement anything.
Jaaa, wir habben es geschaft, said LH, but in reality, LX's management did everything themselves.

[RoMax]

Isn't it normal that it takes a lot of time to return an airline to profit. LX was a model senario, everyting went well. But it's not always like that. It's for sure, OS started his long way to profit. But of course this takes time, LH isn't God or something.

But about LX's management, yes they did very much by themself, BUT when LH took control over LX they changed almost the whole management. Many of the new members of the LX management were/are ex-LH people. A big part of the LX management before LH took control, was still a rest of the Swissair/Crossair management, they weren't the best managers ever and LH knew this, so they replaced them.

[regi]

Strange that we still don't read a explanation with figures by NCB about a connection Brussels-Lille by turbo props.
I gave some very simple figures in distance. The reply was shifting African passengers from CDG to Brussels.
But no numbers.

If this is a feasable operation, than SN should use its huge future fleet of Q400NG to connect Wevelgem with Brussels as well. And Oostende + Liège, why not? Same distances. Some of these connections existed ( in the past when highways were almost not existing and a trip from the one side of Belgium to the other side costed a full day driving along provincial roads )

So please, NCB, just about Lille, what did the facts and figures of your feasability study show? Tell us please. You raised it, not me.

And I did read your long posting and you start again about using narrow bodies to Africa.
Hello there, other members, did it escape your attention ?

[NCB]

Ok regi, since you ask for it.

Suppose that I am a passenger generating in Lille. Today I have the following options:

A: Take a 30 minutes TGV ride right into the airport of CDG from Lille Europe station
B: Take a 2 hour drive to BRU with a taxi or own car, using the car park. Make it 3 hours during rush hours.

If I don't own a car, or I don't want to pay an expensive taxi ride, or I don't want to pay the expensive parking at the airport, or I am worried about my car being vandalised at the airport parking, or I don't feel like spending 2 hours going to the airport or coming back from a long trip from Hong Kong, or if I am worried to get stuck in a traffic jam or have the car break down, or I am an elderly person who likes a smooth trip, then I will chose option A.

This rules out option B for 99,9% of the passengers generating from Lille, a 1.5 million people catchement area or the entire Nord-Pas-de-Calais region for 4 million inhabitants.

Now if you have option:
C: Take a 15 minutes flight to BRU from Lille Airport with the Q400NG and not need to carry around the suitcases
then you get a very different picture. Even better with 2 or 3 daily frequencies.

You're welcome.