Brussels Airlines future and financial perspective

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Flanker2
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Joined: 05 Dec 2012, 23:15

Re: Brussels airlines future and financial perspective

Post by Flanker2 »

I guess someone has been walking in the wrong corridor... :lol: :lol: :lol:

But as a 767 pilot I doubt that is an SN corridor...
To be honest, 15 millions is 5 days worth of revenue at the scale of SN. So 15 millions in difference can come from anywhere. I personally also thought that they would book around 40 million in losses before subsidies. I was wrong by 15 millions versus their operational result.

In addition, the operational result was -25 millions plus subsidies, so you can't say that we were too far off for people who don't have any hard data to go on, any sales revenue progression. I'm sure that you can forgive me for a 1.5% margin of error given all the variables?

For 2015, I think that 10-20 million in profits should be easy to achieve. But again, I don't have data on how much fuel and currency they have hedged. If none of that is hedged, they should easily achieve 50 millions in profits, providing they don't waste 30 millions on "investments" like a new FFP program, the markets stay stable and oil prices don't go up.

This new FFP program is giving me mixed feelings. They merged their previous FFP Privilege into the less "fancy" M&M and now they want their independence back. In one way I think that it's a waste of money, but in another way I think that there is an opportunity to make this successful if they apply the right conditions and the right perks.
For intra-EU travel, but also Africa, if they can offer low entry thresholds into a medium-tier ("Bronze status") which offers free lounge access with every SN ticketed flight to/from and via BRU and some smooth status matching into that tier, they could win a lot of frequent flyers.

Last but not least, I want to highlight that Asia will be paramount to SN's Africa growth but also stability in the future. I think that a codeshare with Air China and pulling them into BRU is very important. I think that on routes like Beijing, Air China can perform better than if SN try it by themselves. They can achieve a good amount of transfer traffic to Africa but also attract many Chinese package tour groups.

Also, to/from Tokyo, I think that they would be baffled by the amount of high-yield transfer pax and cargo they will be able to achieve to Africa. But this flight could be done by SN themselves or with NH/JL. NH is focussing on transpacific growth, so I don't think that they would consider it a priority. Perhaps SN should consider a full scale codeshare with JL even if it pisses off LH? I think that JL and its government shareholding would be more motivated to honour a direct link with the capital of Europe and they will have excess aircraft starting next year. It's not unheard of, as JL has major codeshares with non-alliance members like AF, AZ, SQ, TG, KE and even EK, which must really piss off BA.
And if SN is able to get close to a deal with JL, perhaps they could make NH change their mind?

In all these cases, SN will have to take the initiative.

Inquirer
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Joined: 14 Feb 2012, 14:30

Re: Brussels airlines future and financial perspective

Post by Inquirer »

Flanker2 wrote: I was wrong by 15 millions versus their operational result.
(...)
so you can't say that we were too far off for people who don't have any hard data to go on, any sales revenue progression. I'm sure that you can forgive me for a 1.5% margin of error given all the variables?
FWIW-
I seem to remember you also predicted a 200M euro loss at some point around this time a year ago , so it's not like your estimation for 2014 was a hard figure to start with; it has been pretty much a story of moving the goal post back and forth on an almost continuous basis, but it really doesn't matter: the main lesson to take home is that it is useles to try to look smart with estimations of detailed financial guidance if you don't have any data to go by, like you say yourself.
As such, it's fairly amazing to see how you do exactly the same for this year, once more?!
Wouldn't do that if I were you: more than a trend you really can't hint at without any access to data, which is why I've personally always limited myself to doing just that, based on a reading of all the circumstantial evidence: it's fairly safe to say they clearly are on the right track, something which was already vaguely clear around spring last year, became quite obvious after the summer and is now also confirmed by hard figures.

In fact, I am a little bit disappointed they have kept a €4M net loss on their books for 2014: for a company with a turnover of €1,2BN, it's not impossible to work that away to a nice black zero through some financial engineering. I suppose they have some sort of an internal/technical advantage to officially stay just below break even for 1 more year, but in reality, they can be said to be a company turned around already today.

As to your appreciation a 1,5% margin miscalculation is entirely forgivable, I can only try to imagine the reaction of shareholders when a real airline CEO comes to tell he's off by that much at the end of the year, in a business with profit margins sometimes smaller than the margin of error you seem to qualify as forgivable: it's basically saying this business isn't managable at all then. Not exactly very convincing, is it?

As to their new FFP: my uneducated bet is they are going to go the path of Germanwings, having their own very rewarding FFP (boomerang) for the loyal/local customers, or alternatively for the occasional/foreign passengers, still offer M&M.

In fact, much of what they have been doing the past year seems to be trying to modify all sorts of low cost features from Germanwings/Easyjet/vueling in order to integrate them into a more tradidional airlines and ironically it seems Austrian, SWISS, and Lufthansa are then copy-pasting from Brussels Airlines again.
I am sure you've noticed too how all 3 have annouced they will soon go to a 3 class economy product on Europe too, very similar to that of Brussels Airlines?
I am increasingly having the impression that Brussels airlines is Lufthansa's test lab to see exactly how they can combine a low cost product of Germanwings with a traditional network airline like Lufthansa/SWISS without hurting their core business. If that's the case, and given the success they have with it, it's fairly safe to say Lufthansa are going to be pleased with all they see at BRU.
Last edited by Inquirer on 13 Mar 2015, 11:37, edited 1 time in total.

shockcooling
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Re: Brussels airlines future and financial perspective

Post by shockcooling »

Inquirer wrote:ironically it seems Austrian, SWISS, and Lufthansa are then copy-pasting from Brussels Airlines again.
I am sure you've noticed too how all 3 have annouced they will soon go to a 3 class economy product on Europe too, very similar to that of Brussels Airlines?
Indeed they even didn't try to be original... Light, Classic and Flex :D that's so 2007-ish

Flanker2
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Joined: 05 Dec 2012, 23:15

Re: Brussels airlines future and financial perspective

Post by Flanker2 »

In fact, I am a little bit disappointed they have kept a €4M net loss on their books for 2014: for a company with a turnover of €1,2BN, it's not impossible to work that away to a nice black zero through some financial engineering. I suppose they have some sort of an internal/technical advantage to officially stay just below break even for 1 more year, but in reality, they can be said to be a company turned around already today.


I think that the "financial engineering" as you call it has already been applied within the margins of possible to get to the 4M net loss. Like you say, it's a small margin on such revenues, but it's important to show at least on paper that they are not stagnating. :lol:
IMO it's also good sense, I would have done the same BTW. Hence, don't think that I don't take my 1.5% error margin without a pinch of salt :lol:

I mostly appreciate that Gustin has done a great effort to learn the ins and outs of this industry and is finally starting to manage the airline as a company that he understands and can actually manage. This hasn't always been the case and the learning curve has costed SN some money. Not the least because he didn't have any industry knowledge, but mostly because IMO several of his advisors/postholders were/are not up tot the task and he didn't know better than to listen to them. Now he seems to know better and I appreciate that this could turn SN around, despite increasing threats in all their markets.

Like gustin says, it's still too early for euphoria. There's still a long way to go to become a stable player in the aviation market.

So my outlook goes from D- to C :D

Inquirer
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Re: Brussels airlines future and financial perspective

Post by Inquirer »

I don't think too much engineering has been done already, because think about it for a minute: if everybody is expecting say -15 to -20, and you end up at -10, why try to make a -4 from it?
Doesn't buy you anything really, so better keep it as is. It generally keeps the auditors happy too. ;)
Not everybody is as eager to absolutely be seen as vindicated as some around here, you know?

Lysexpat
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Re: Brussels airlines future and financial perspective

Post by Lysexpat »

Well if you see that, according De TIJD, LH used engineering to make a 700 mio net loss look like a net profit of 55mio, one can imagine that the same has been done at SN.

Inquirer
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Joined: 14 Feb 2012, 14:30

Re: Brussels airlines future and financial perspective

Post by Inquirer »

Lysexpat wrote:Well if you see that, according De TIJD, LH used engineering to make a 700 mio net loss look like a net profit of 55mio, one can imagine that the same has been done at SN.

Ooooh, careful, lysexpat, because you are mixing up a whole lot of different concepts till the cocktail is undrinkable.

LH is notorious for it's complicated financial reporting, often mixing local German accounting standards with International standards in one single report to the point that they themselves have now embarked on a project to streamline it as it's getting increasingly incomprehensible as their company turns ever more international.

I am not going to embark on a detailed difference refresher course of the many accounting standards you can use as an airline in Europe (try Wikipedia if you want to know more about IFRS, GAAP and it's many local versions, often leading to very different appreciations of the same result as you can see demonstrated here side-by-side and which not surprisingly thus also make it difficult to compare net results from different airlines even), but you clearly completely misunderstood their report, that's a given.

Let me summarize it for you: under one accounting standard used by them -the German local GAAP-, they had to book huge provisions for future pension obligations in one go this year due to lower than expected interest rates on the pension plans, which explains the 'loss' under that German standard, whereas under the other standard - IFRS- they don't have to book the very same provisions in one time.
That very basically explains the huge difference between the 2 results, so no engineering whatsoever, just a different standard to book future obligations under.

Financial engineering can shift a one or two tenth of a percentage left or right, it can not shift the result by this kind of percentage margins like you seem to think, not unless you do it like 'L&H', of course. :D

Anyway, all of this can maybe be discussed much better in the topic about Lufthansa's result, which I have opened yesterday? Or are we going to have another go at the claim 'they are just coocking their books'?
I remember we had the same discussion last year too. One can't keep cooking books forever, you know, because in the end those books would have no relation with the business itself any longer. (see L&H).

sean1982
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Re: Brussels airlines future and financial perspective

Post by sean1982 »

Inquirer, Can you please drop that superior tone and stop acting like you're the SN CEO? Why do you think you always know better in every topic? :shock:
Last edited by sean1982 on 14 Mar 2015, 11:06, edited 1 time in total.

Passenger
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Re: Brussels airlines future and financial perspective

Post by Passenger »

sean1982 wrote:Can you please drop that superior tone and stop acting like you're the SN CEO? Why do you think you always know better in every topic?
As if Flanker2 will listen to this wise advise...

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tolipanebas
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Re: Brussels airlines future and financial perspective

Post by tolipanebas »

Statistics for March are out and as has now become usual, they show an explosive growth vs last year, accelerating on last month's double digit growth figures even.

Pax: +14.7%, to 563,365
paxLF: + 2.3%, to 69.1%

ASK: +2.9%
RSK: + 6.3%

Flanker2
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Joined: 05 Dec 2012, 23:15

Re: Brussels airlines future and financial perspective

Post by Flanker2 »

Good job on pax, RSK stable growth, in line with projections of profits in 2015.
Still, while pax growth is significant, RSK growth is relatively stable and can swing revenues to the wrong side if yields aren't the same or higher.

Also going forward, SN really needs to step it up a notch on the pax LF.

My personal projection remains steady at 50 million profit in 2015.
I hope that LH keep their word next spring.

Bel33
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Re: Brussels airlines future and financial perspective

Post by Bel33 »

Again great month for SN!
SN sales strategy is paying and the product is adopted by the traveller...
It's definitively time to increase the long haul fleet... probably during the next 2 years?
More pax in transit = more profitable passengers economically ...
It's sometimes important to be to trust and optimistic!

Inquirer
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Re: Brussels airlines future and financial perspective

Post by Inquirer »

I posted a link to a source in the topic about BRU's monthly figures: it might indeed be more appropriate here, although on the other hand, this topic does cover a bit too much at once: maybe it's time for a "Brussels Airlines in 2015" topic too?

What is interesting to see in these figures is that they are growing faster than the airport now that the low cost bonanza has halted, so they are actually retaking marked share, based on last month figures! :o

Definitely a trend to monitor, but given neither vueling, easyjet nor ryanair have added much new routes to their timetable from BRU this summer, it's not improbable to say this trend is going to be confirmed over the next few months indeed. Definitely an unexpected evolution of the market!

Flanker2
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Re: Brussels airlines future and financial perspective

Post by Flanker2 »

Vueling only opened their BRU base in May 2014.
So you'll have to wait until June traffic numbers to really have a meaningful comparison.
IAG’s no-frills Spanish carrier Vueling is to launch a new base at Brussels from May 2014 with seven new routes from the Belgian capital.
http://buyingbusinesstravel.com/news/07 ... e-brussels

But even so, your conclusion is true, as BRU should have grown much faster considering the growth contributed by VY. Given SN's market share, the rest of the shorthaul market seems to have stagnated in March.

What is more meaningful though are the RSK's. A 6% growth is a stable number, but only at stable average fare.
Average fares are all but a stable variable, it's so easy to swift 6% either way. Higher pax and traffic is usually won on the back of lower fares, so it's not straight-forward pure profit.
Freight didn't do well but it contributes much less to the total.

Overall, one can say that these results offer stability and a secure financial base for a good profit in 2015.

Ryanair and Vueling are being too passive and letting SN catch its breath.
Perhaps they are adopting the vulture position and will look to seize opportunities when they present themselves, going by the economic cycles.
But vultures don't always get a meal...

Inquirer
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Re: Brussels airlines future and financial perspective

Post by Inquirer »

You're right if course: I forgot vueling started its base later in the year, last year.
Nevertheless, the difference between the growth of Brussels Airlines and that of the Airport itself is much bigger than the vueling effect, so I think it's an interesting trend to look out for over the rest of the summer. I know this year the easter holidays were earlier than last year, but of course,they were so for all airlines.

As to your remark about the others being too passive.
If it would have been just one single competitor,I might have agreed to that reading, but I doubt you'd simultaneously see the same passivity displayed at several competitors at once?
What we rather see IMHO is the logical consequence from their financial departments sounding the alarm bell over revenues which aren't exactly as they'd expected them: it's why easyjet is cutting, vueling reshuffling and Ryanair hardly moving at all this summer. All 3 are well run airlines from a financial optimalisation point of view and so understandably none of them is very eager to expand in a market which isn't behaving as they had hoped it would: they prefer to take their chances elsewhere instead as resources are limited, especially those of low cost airlines with only a very small turn over, meaning they have not much free floating cash to play games with, in fact. They may be very ambitious to start and aggressive when things go as hoped, but they also have a relatively short breath when things aren't going so well.


brusselsairlinesfan
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Re: Brussels airlines future and financial perspective

Post by brusselsairlinesfan »

According to their latest press release, brussels airlines welcomed 652,532 passengers in April, 11.5 percent more than last year, thus continuing on its double digit growth path!

Being a "fan" of this company, I am very happy for them as I think they truly deserve it...

I must admit I was surprised with this performance, as I was expecting their growth trend to slow down a little bit. In fact, SAS and Finnair numbers for april are flat for example...

It would be interesting now to compare both SN & BRU PAX numbers for april. Just to see if SN is on the way to increase its market share at its own hub.

Anyway, go SN go!!!

Vincent, Paris (F)

Inquirer
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Re: Brussels airlines future and financial perspective

Post by Inquirer »

I can help you with a preliminary answer to that question of yours as I think it is indeed a very interesting trend indicator to watch and predict events with.

Last month, I already noticed they seemed to grow faster than the market in BRU even though the figures were more than a bit clouded by the fact vueling didn't operate so intensely from BRU yet last year, whereas ryanair started up their operations sooner and so its operations were included, meaning it only gave a very rough indication (at best), so April is the first month of the year were we can do a real back to back comparison.

BRU hasn't published its statistics yet, but they did give an indicative figure of a growth of 5.8% for April during their presentation of their annual report a week ago or so, so based on that unconfirmed figure, it seems that indeed the very initial trend is confirmed and Brussels Airlines are not only just continuing to grow very fast, they are even taking back a not insignificant market share from the others at BRU!
Definitely one of the many trend indicators to watch over the coming months.

BRU itself does seem to bet on them being their main growth source for the future as they have said to focus on becoming a true STAR hub and aiming for the kind of sustained growth they are now getting from Brussels Airlines for their future. Any other route is just a bonus, but not the aim, it seems.
BRU and its airline may finally have found each other, which can only be a good thing not just for the 2 parties itself, but also for the country and its economy, as the added value from hosting a hub on the region largely outweighs that of a similarly sized airport served with only loose flights, especially is predominantly operated by foreign airlines.
Last edited by Inquirer on 13 May 2015, 12:11, edited 1 time in total.

Boeing767copilot
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Re: Brussels airlines future and financial perspective

Post by Boeing767copilot »

Brussels Airport release:

Over 2 million passengers passed through Brussels Airport in April 2015, representing a growth of 5.8% compared with April last year. Air freight was also up by 6% compared with the same period last year. Passenger growth was in double figures all year, due mainly to the start of Vueling and Ryanair and the strong performance of other airlines. Brussels Airport is now returning to more normal, single-figure growth figures.
Passengers
In April 2015, 2,009,561 passengers passed through Brussels Airport, an increase of 5.8% compared with April last year. The strongest growth was recorded in the European network of Brussels Airlines and in the low-cost segment. Significant growth was also recorded on the long-haul destinations. The number of transfer passengers at our airport rose by almost 8% compared with April 2014 as a result of the development of Brussels Airlines and the Star Alliance partners.

nordikcam
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Re: Brussels airlines future and financial perspective

Post by nordikcam »

Good job for BRU and Brussels Airlines.
In Paris ( CDG + Orly ) : -1,6 % for april 2015 !

Source : http://www.air-journal.fr/2015-05-13-ae ... 44105.html

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