Brussels Airlines future and financial perspective

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Air Key West
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Re: Brussels airlines future and financial perspective

Post by Air Key West »

teddybAIR wrote:Article on Flightlevel mentioning that Lufthansa does not plan to buy the remaining 55% stake in brussels airlines in FY2014
As mentioned before, my prediction is that LH will not buy at all the remaining 55 % of shares they can acquire.
The other shareholders made the mistake to give LH till 2017 to exercice their option.
Unless LH's new CEO changes LH's strategy towards SN and asks LH to inject money into b.air so that it can develop its long haul operations and operate new fuel efficient aircraft very soon, b.air will never become profitable and will probably disappear. The new b.air strategy which is being developed to thwart FR at BRU is doomed to fail. Believe me or not. The airline desperately needs investment from (any) of its shareholders to remain competitive on the African market, seize new opportunities and get NEW aircraft that cost less in fuel consumption. Sine qua non (indispensable) conditions to remain alive.

FWIW, just do like I do, whenever I can, I don't fly LH/LX/OS/4U.
I don't care having lost my Miles&More Senator status. Im' now at FTL/Silver level. I enjoy "Flying Blue Silver status" which offers much better privileges for Silver members, btw.
For me it's a question of principle. You don't have to follow my example, of course. Just a suggestion (difficult to follow, I realize, if your company has a corporate contract with LH and/or its subsidiaries).
In favor of quality air travel.

HighInTheSky
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Re: Brussels airlines future and financial perspective

Post by HighInTheSky »

Air Key West wrote: FWIW, just do like I do, whenever I can, I don't fly LH/LX/OS/4U.
I don't care having lost my Miles&More Senator status. Im' now at FTL/Silver level. I enjoy "Flying Blue Silver status" which offers much better privileges for Silver members, btw.
For me it's a question of principle. You don't have to follow my example, of course. Just a suggestion (difficult to follow, I realize, if your company has a corporate contract with LH and/or its subsidiaries).
And this helps in what way exactly? :roll:

Flanker2
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Re: Brussels airlines future and financial perspective

Post by Flanker2 »

That's a heck number of aristocrats and Business people!!! In the millions!! Flanker, watch what you say..you don't make sense!
at 99 EU intra europe flights (if u book in advance) .. b.pas (they're still selling btw) if you happen to work in BRU and your family lives elsewhere.. and I can go on and on... The absolute majority of SN PAX flies b.light.
Neither Aristocrats, nor Business. The only thing the government should do is lower taxes, and social security contributions. Add to that the amount of tax people pay here (the highest in the world for single people with a job, earning an average salary).. SN will either have to move elsewhere, or go under.. It can not compete with the ME3, TK, and the likes.. let alone Irish based European airlines.. LH doesn't have the magic wand, for those counting on LH to save the day, at the end of the day?
It's a good excuse but not good enough.
KL operates in as tax-unfriendly an environment as SN, yet they seem to be doing very well.
Also, what is the actual tax disadvantage for the airline? Maybe 20 millions a year in social contributions.
Personal taxes don't make a difference because that's where the employees are being screwed, not the airline.
If LH invest in SN, by adding another 10 widebodies and lucrative destinations such as LX's, then SN can do well.

Yet now you seem to be coming to the realisation what I feared since 2009... LH may not invest any further into SN. They passed for 4 years in a row, now they have only 3 out of 7 chances remaining.

Even if LH buys the remaining shares, the future will remain uncertain.

They said for many years that DHL would never move EAT to Germany.
Yet it happened anyway.

convair
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Re: Brussels airlines future and financial perspective

Post by convair »

Put yourself in LH's shoes for a moment. Why would they buy the remaining shares now and not keep all their "options" open untill they are really ready to go ahead? Unless they would be willing to invest more heavily in SN right now, which they don't seem ready for at this moment. Instead, they merely help keeping it afloat by injecting a few millions. This way they also keep management and personnel under pressure.

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RoMax
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Re: Brussels airlines future and financial perspective

Post by RoMax »

convair wrote:Put yourself in LH's shoes for a moment. Why would they buy the remaining shares now and not keep all their "options" open untill they are really ready to go ahead? Unless they would be willing to invest more heavily in SN right now, which they don't seem ready for at this moment. Instead, they merely help keeping it afloat by injecting a few millions. This way they also keep management and personnel under pressure.
I fully agree with this.

Flanker2
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Re: Brussels airlines future and financial perspective

Post by Flanker2 »

Yes, in the meanwhile SN is being challenged in all its markets, which will last until the bottom falls off.
And then we get another Sabena and the same people who defend SN/LH here will be complaining the most about it.

Sorry but for me LH has had its chance. Time to move on and look for a real partner or risk fading away.
If LH has bought SN for the only purpose of limiting its growth, then for me that's internal competition, as much as TK going to Africa as an alliance partner.

This begs the question: would SN have been better or worse without LH?

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RoMax
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Re: Brussels airlines future and financial perspective

Post by RoMax »

We can complain as much as we want, but be realistic. Look at SN. Which strategic, operational and financial partner could be found to invest hundreds of millions in the expansion/investment some here propose? I could think of some, but none of them are long term and reliable partners which could give SN a long term future, instead only a short failing project. As if ANY investor is going to 'give' SN the resources to fund a long haul expansion of 10 new long haul aircraft on the short term...

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lumumba
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Re: Brussels airlines future and financial perspective

Post by lumumba »

RoMax wrote:We can complain as much as we want, but be realistic. Look at SN. Which strategic, operational and financial partner could be found to invest hundreds of millions in the expansion/investment some here propose? I could think of some, but none of them are long term and reliable partners which could give SN a long term future, instead only a short failing project. As if ANY investor is going to 'give' SN the resources to fund a long haul expansion of 10 new long haul aircraft on the short term...
That's not true look to Air Berlin or Alitalia SN has a lot to give to an airline out of the EU!
SN has no choice that to grow if not it will desappear and with an airline that has all to win to do so it can work.
Hasta la victoria siempre.

tey
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Re: Brussels airlines future and financial perspective

Post by tey »

SN 100% LH or not, it doesn't matter at all... See what happened to BMI: 100% LH, but they sold it off anyway.
Even if you are part of the LH group, it doesn't mean that you are on the safe side! If you don't perform or are unable to change...

Look at it another way, right now SN has LH support but they can still make some choices independently...
If I was SN CEO, I would be rather happy with the current situation.

And something else:
LH Group now has several airlines in it's portfolio with rather lower operating costs per passenger than LH itself. I assume LH will try to tackle this first before SN/LX/OS/4U become a treath to LH employees itself.

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RoMax
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Re: Brussels airlines future and financial perspective

Post by RoMax »

lumumba wrote: That's not true look to Air Berlin or Alitalia SN has a lot to give to an airline out of the EU!
SN has no choice that to grow if not it will desappear and with an airline that has all to win to do so it can work.
Growth yes, but what some here propose is outrageous. Not even a rich group as Etihad will give SN that much resources.
And btw, comparing AB (the second largest airline in the largest country and largest economy of Europe) or AZ (also one of the biggest countries in Europe with a very significant economy) with SN which is stuck between the majors of Europe with only a minor niche in Africa... I'm not that optimistic about other/new investors in SN. 5-6 years ago, yes, but not anymore, too much happened in the European skies over these years.

b720
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Re: Brussels airlines future and financial perspective

Post by b720 »

It is true, LH oul HIV invested in SN s long haul operations. I do not understand
Why they have not. Maybe we should get EY on board?

convair
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Re: Brussels airlines future and financial perspective

Post by convair »

I'm not too sure if LH management itself knows whether it will exercice the opton. Anyway the new CEO will need to be involved and he needs at least a year to think about it (or even to "seem" to think about it). But my guess is they won't exercise before 2016.
In the meantime LH is preventing any of its competitors to take over/control/develop SN, and that merely costs them of a few millions (partly offset by LH Technik's profit on maintenance and refurbishing of SN's Airbuses).

Well done isn't it?

FlightMate
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Re: Brussels airlines future and financial perspective

Post by FlightMate »

I believe SN would have been a better investment for EY than AZ, for example.
Less of a behemoth, easier to implement changes, growth.

Too bad SN decided to afford another 3 years of takeover option to LH, but I suspect it was tied to a loan from LH, without which, they wouldn't have survived.

Flanker2
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Re: Brussels airlines future and financial perspective

Post by Flanker2 »

SN could have picked up as much capital and debt as they wanted on the Belgian or foreign stock markets.
Look at how many fools invested in the Bpost IPO.

Sure it costs money to be traded on a stock exchange, but it also gives you more marketing exposure and also helps you secure a loyal customer base among shareholders.

Especially in the current climate where anyone is buying anything at any price.

teddybAIR
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Re: Brussels airlines future and financial perspective

Post by teddybAIR »

lumumba wrote:SN has no choice that to grow if not it will desappear and with an airline that has all to win to do so it can work.
Excuse me? why do they have "no choice than to grow"? I would say they have no choice but to rationalise their business, turn profits and start funding that growth you apparently want so badly. That's what almost every other company out there has to do. LH is not a non-profit organisation, so you can expect them to want to have a return on their investment...unless you can give them that, chances are they don't use their options and back out in 2017.

So contrary to what you are saying, I would say that the priority is to at least become profitable...and that is unfortunately not only governed by the amount of routes you fly...so there's a lot of scenario's and not just growth for the sake of growth.

Air Key West
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Re: Brussels airlines future and financial perspective

Post by Air Key West »

HighInTheSky wrote:Air Key West wrote:FWIW, just do like I do, whenever I can, I don't fly LH/LX/OS/4U.I don't care having lost my Miles&More Senator status. Im' now at FTL/Silver level. I enjoy "Flying Blue Silver status" which offers much better privileges for Silver members, btw.For me it's a question of principle. You don't have to follow my example, of course. Just a suggestion (difficult to follow, I realize, if your company has a corporate contract with LH and/or its subsidiaries).And this helps in what way exactly?
As a customer, if you don't like the way a company behaves (and I'm not referring to airlines only), you have the option not to buy the company's products or services. If enough customers do it, the company will eventually feel it.

In addition, the level of services and comfort on European routes has gone down so much at LH/LX/OS that this is another reason to avoid them.
convair wrote:Put yourself in LH's shoes for a moment. Why would they buy the remaining shares now and not keep all their "options" open untill they are really ready to go ahead?
You're right. The other shareholders should not have accepted to extend the option to 2017. If this had not happened, b.air would have had to look for another partner or another "solution", or they would just have disappeared earlier.
teddybAIR wrote:I would say they have no choice but to rationalise their business
That has already been done to the maximum. At b.air there is no way of reducing costs further or to improve productivity (in the hope that this will make it possible to return to profitability).
In favor of quality air travel.

BrusselsAirlines
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Re: Brussels airlines future and financial perspective

Post by BrusselsAirlines »

I guess LH is in enough troubles itself.

Try to book a ticket via expedia, TK will do the same flight for 30% less, one of the gulf carriers will take you there at 50% less, at least.

It's just impossible to compete these guys, even if we would fly for free :)
Last edited by BrusselsAirlines on 11 May 2014, 06:13, edited 1 time in total.

Flanker2
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Re: Brussels airlines future and financial perspective

Post by Flanker2 »

What bugs me is why so many pax still book with such carriers.
They have basically nothing to offer, yet they charge crazy high prices and get away with it.

With the excuse of corporate contracts, supposedly smart business men are fooled into spending more for less. In my experience, no miles or corporate contracts can compensate for the savings you get by comparing.

So indeed, these airline's future doesn't really look promising.

Even more doubtful is AF/KL's future. I'm reading scary stuff about their 2013 results and even now that the economy is better, they will still fail to make a profit in 2014.
They have eaten a huge chunk out of their net assets last year with a nett loss of 1.6 billions.
The restructuring has cost them over 1.4 billion, which makes me wonder whether that was at all useful.

Flanker2
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Joined: 05 Dec 2012, 23:15

Re: Brussels airlines future and financial perspective

Post by Flanker2 »

We hear about VY having plans for BRU, we hear about FR "dropping bombs" over BRU, but we don't hear anything coming out of SN.

SN had a great start this year, but with VY joining the game now, I wonder whether they will sustain that. Also, TK will exercise more and more pressure.

So OK they're going to add A319/A320's and get rid of RJ100's, then what?
The fleet "expansion" we are seeing at SN, VY and FR are doing in a few months what it takes SN years and years to do.

IMO VY and FR will not stay happy with what they have now. This is just the first step of a major assault.

For me, SN should stop adding narrowbodies and focus on acquiring longhaul frames, while limiting the A319/A320's role to operating lucrative routes and feeding longhaul. With over 20 frames, they have enough to do that. It's worrysome to me that RJ100 replacement is taking priority over longhaul expansion, while that is the only lucrative and objectively sustainable and semi-reliable part of the business.

Sometimes SN makes me want to bang my head against a wall.
Just fly Beijing and Hong Kong with A332's. Instant oxygen for Africa ops, instant difficulties for TK who is still only getting a foothold into West Africa, plenty of O&D and plenty of Chinese package tourists to fill the seats in the beginning. Money is tight, but apparently there's enough for A320's, so...
Oh and who gives a d*mn about what LH thinks about that, they don't seem to care anyway.

Passenger
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Re: Brussels airlines future and financial perspective

Post by Passenger »

What bugs me is why so many pax still book with such carriers. They have basically nothing to offer, yet they charge crazy high prices and get away with it. With the excuse of corporate contracts, supposedly smart business men are fooled into spending more for less. In my experience, no miles or corporate contracts can compensate for the savings you get by comparing.
These "supposedly smart business men" are actually very smart. They do compare, and surprisingly to some here, these business men see that Brussels Airlines many times is cheaper (or equal price) then the self declared cheapest airline.

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