Interview of CEO Gustin: Brussels Airlines renamed Eurowings? ...and other topics

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LJ
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Re: Interview of CEO Gustin: Brussels Airlines renamed Eurowings? ...and other topics

Post by LJ »

Conti764 wrote:The real issue is getting rid of Lufthansa. I don't know if and how they could achieve this, only thing I could imagine is dissolving SN Airholding, take over the fleet and start with a 'new' company, with the support of IAG, Brussels Airport and other interested parties...
The can't as LH has the call option. Dissolving SN Airholding is probably impossible without LH as well as either LH excercises its option or probably has contractual guarantees that such a move cannot be done without approval from LH (I doubt that LH management is stupid that these provisions are not in place).
Conti764 wrote:But I can't imagine LH just getting rid of SN...
I can't imagine this as well given the money LH already invested in SN.
RoMax wrote:In terms of the loans, that wouldn't change much compared to the current situation (being a minority owned company), SN would just have to pay it back (and the new owner probably would need to give certain guarantees that they will be able to).
Usually at this level, each loan contains penalty provisions which make it unlikely that a loan can be repaid without the approval of both parties or paying a penalty. It's not like your ordinary loan to a SME or private houshold (which can be called muct easier).
Boavida wrote:Why SN and not OS or LX?
I would expect that OS would follow SN if LH dissovles the SN brand. The LX brand is a premium brand (they even have first class). Rebranding LX to Eurowings would mean forming a premium airline into a LCC and that's something LH Group isn't going to do (too much high premium traffic ex Switzerland).

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RoMax
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Re: Interview of CEO Gustin: Brussels Airlines renamed Eurowings? ...and other topics

Post by RoMax »

sn26567 wrote:Lufthansa has already its "Eye of Moscow" in SN's management: Lars Redeligx. Every time I had the opportunity to talk with him (the last time during the presentation of the Red Devils partnership), he seemed very much in line with all the decisions taken recently by SN. Therefore I doubt that there is really a difference of opinion between the LH and SN management teams. Lars Redeligx might be the best supporter of SN inside LH. Hence my opinion is that the rumours of an integration of SN into EW are there only to encourage SN to do even more savings. A threat, but not a goal!
I wouldn't see Lars Redeligx too much as an LH guy anymore. He came from Lufthansa yes, but he is the CCO of SN now and acts in favour of SN. That doesn't mean Carsten Spohr (and his team) agrees with him just because he came from LH helping to reorganise SN.

I'm still an outsider on this matter, but from what I know, there have already been some serious discussions between Gustin and Spohr about the future of SN (already last year) related to the Eurowings plans.

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RoMax
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Re: Interview of CEO Gustin: Brussels Airlines renamed Eurowings? ...and other topics

Post by RoMax »

LJ wrote:
Conti764 wrote:But I can't imagine LH just getting rid of SN...
I can't imagine this as well given the money LH already invested in SN.
I'm not saying it's likely (and I don't see it happening, and I don't think SN wants it either, even if they get absorbed in Eurowings), but Carsten Spohr literally said in October 2015 that they will decide in 2016 on whether taking over SN completely OR to 'terminate all involvment in the Belgian carrier'. An evaluation on how to integrate SN in the Lufthansa Group would be crucial in that decision according to Spohr.

Never exclude the extreme options. Look at what happened to bmi. Ok the situation was different (LH was in a way almost 'forced' to take over the carrier), but the invested hundreds of millions in it and eventually sold it (and partly dissovled it) with a big loss. What they 'invested' in SN is peanuts for a group like Lufthansa.

But again, that's not what I think will happen or should happen.

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Re: Interview of CEO Gustin: Brussels Airlines renamed Eurowings? ...and other topics

Post by LJ »

RoMax wrote:Never exclude the extreme options. Look at what happened to bmi. Ok the situation was different (LH was in a way almost 'forced' to take over the carrier), but the invested hundreds of millions in it and eventually sold it (and partly dissovled it) with a big loss. What they 'invested' in SN is peanuts for a group like Lufthansa.

But again, that's not what I think will happen or should happen.
If LH doesn't excercise its call option and gets rid off any involvement they currently have, it basically means that SN can't create value in its current, or future form (unless somebody [IAG] wants to pay so much that the value created by such a sale would outweigh any potential predicted profit in future). They had to get rid of BMI as it was a very big money loser. However, I assume that SN is in a much better shape than BMI.

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Conti764
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Re: Interview of CEO Gustin: Brussels Airlines renamed Eurowings? ...and other topics

Post by Conti764 »

sean1982 wrote:Buying themselves out of LH is no option with a new owner either cause that would mean having to leave star alliance and all their codeshares and associated profits. BRU has become a star hub so it wouldnt only impact SN but also the airport greatly. Exactly why you should never put your eggs in one basket ... and they did, again.
Switching alliances isn't that much of an issue, many airlines did it before. BRU will loose a lot of *A traffic, but Oneworld has some nice things to offer as well. I dare even say BRU would benefit themselves from an alliance switch. The closest OW-hub is highly congested LHR...

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Conti764
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Re: Interview of CEO Gustin: Brussels Airlines renamed Eurowings? ...and other topics

Post by Conti764 »

LJ wrote:
RoMax wrote:Never exclude the extreme options. Look at what happened to bmi. Ok the situation was different (LH was in a way almost 'forced' to take over the carrier), but the invested hundreds of millions in it and eventually sold it (and partly dissovled it) with a big loss. What they 'invested' in SN is peanuts for a group like Lufthansa.

But again, that's not what I think will happen or should happen.
If LH doesn't excercise its call option and gets rid off any involvement they currently have, it basically means that SN can't create value in its current, or future form (unless somebody [IAG] wants to pay so much that the value created by such a sale would outweigh any potential predicted profit in future). They had to get rid of BMI as it was a very big money loser. However, I assume that SN is in a much better shape than BMI.
I believe SN can mean much more for Oneworld/IAG than for Star Alliance/LH. A conveniently located and far from saturated hub in the hearth of Europe, a nice African network and possibly a reliever hub for LHR...

The other way around I believe OW has much more to offer to SN than Star Alliance... The most imprtant l/h airlines currently flying to BRU can be replaced one on one by OW-airlines... ANA/JAL, UA/AA and SN will have more freedom than with their German stepmother.

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Re: Interview of CEO Gustin: Brussels Airlines renamed Eurowings? ...and other topics

Post by sn26567 »

Conti764 wrote:The other way around I believe OW has much more to offer to SN than Star Alliance... The most imprtant l/h airlines currently flying to BRU can be replaced one on one by OW-airlines... ANA/JAL, UA/AA and SN will have more freedom than with their German stepmother.
I was also advocating OneWorld before SN decided to join Star. As a matter of fact, SN had already codeshares with a number of airlines currently in OW: AA, BA, Finnair (and its extensive Asian network), ...

If SN decided to switch alliances, it would not arrive in unknown territory.
André
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Conti764
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Re: Interview of CEO Gustin: Brussels Airlines renamed Eurowings? ...and other topics

Post by Conti764 »

sn26567 wrote:
Conti764 wrote:The other way around I believe OW has much more to offer to SN than Star Alliance... The most imprtant l/h airlines currently flying to BRU can be replaced one on one by OW-airlines... ANA/JAL, UA/AA and SN will have more freedom than with their German stepmother.
I was also advocating OneWorld before SN decided to join Star. As a matter of fact, SN had already codeshares with a number of airlines currently in OW: AA, BA, Finnair (and its extensive Asian network), ...

If SN decided to switch alliances, it would not arrive in unknown territory.
Fngers crossed that LH won't be exercising its option then... ;)

I'm convinced SN would be welcomed with open arms into Oneworld...

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Re: Interview of CEO Gustin: Brussels Airlines renamed Eurowings? ...and other topics

Post by MSS658 »

RoMax wrote:
MSS658 wrote:I wonder what the whole Eurowings thing is actually about..
While (in my opinion) it's sense-less to rebrand a whole airline (with a bit of a different philosophy than LH/OS/LX.... ) It would't harm at all to base a few CRJ900s to replace the existing Avro's that are phasing out.

SN could deploy those on routes that wouldn't have enough demand for the 319/320! Wouldn't it be cheaper then the current Flybe/Airpost Europe/bmi/Tryolean flights operating for SN ?
Eurowings is becoming an Airbus-only airline, the CRJ's are going (back) to Lufthansa CityLine (replacing the Embraers going to Austrian).

Didn't knew that, thanks!

Could it also be possible that LH is just planning to place a few A320s in BRU to do the "leisure" destinations out of BRU! Let's say BRU-TFS/SKG/ALC/AGP/DBV and so on and so on.....

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Re: Interview of CEO Gustin: Brussels Airlines renamed Eurowings? ...and other topics

Post by Flanker2 »

Well it's nice to see how luchtzak.be is unanimously in favor of a tie-up with IAG.
The biggest hurdle to achieve that will be LH itself indeed, who won't just give away SN to IAG. IAG would have to make a very sweet offer. But again, they recently paid a huge 1.4 billion EUR for Aer Lingus which is about the size of SN but with a healthier balance sheet. I can see LH letting go of SN for 500 million EUR including the LHR slots.

About synergies achievable with IAG, I can see BRU playing a major role as a new UK hub indeed. In fact, it makes sense for SN to become the hub for regional flights to/from regional airports across the U.K. which are underserved by BA but served quite well by Flybe et al.

On the transatlantic, it makes more sense for BA/AA to channel some of the through-traffic via BRU so they can use a slot for other destinations.

Also, IAG will definitely support SN's growth into Asia, which is a weak spot for BA.
AY seems to be the OW member in charge for EU-Asia traffic but their product is below standards and fails to convince. Also, while their hub is conveniently located for the airline itself, it is not for the passengers, as it splits a longhaul trip into two medium haul trips, leaving little rest time between meal services.
HEL is also very prone to overcrowding at peak hours, while BRU has a lot of space to offer for an afternoon departures wave, even though a solution needs to be found for connections with flights to/from Africa.

In terms of fleet, IB has a lot of Airbus widebody capacity that SN can make use of.
But even better, I see in IAG an eager investor who won't hesitate to give SN the equipment that it needs.

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Re: Interview of CEO Gustin: Brussels Airlines renamed Eurowings? ...and other topics

Post by Stij »

IMHO

LH invested in SN to protect their operations in FRA, same with OS and LX to protect MUC.
SN, OS and LX are allowed to grow as long as it doesn't harm LH in FRA and MUC.

This situation hasn't changed and so I believe they'll buy the remaining shares, just because they don't want an enemy hub close to their major hub.

ON IAG, The importance for AIG could be a major intra European hub, maybe with a specialization on Africa, but apart from that... To relieve LHR they have MAD for South America (and why not for Africa as well???), DUB for North America and HEL for the Far East.

Cheers,

Stij

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Re: Interview of CEO Gustin: Brussels Airlines renamed Eurowings? ...and other topics

Post by sean1982 »

SN doesnt have the right to opt out. LH has the right and first choice to buy the remaining shares (and dissolve the airline into EW if they wish to do so)

Only if LH decides not to buy, could IAG or another potential buyer take over if they wish to cover the loans that LH gave to SN

If LH opts out and no one wants to buy SN, its game over.

Inquirer
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Re: Interview of CEO Gustin: Brussels Airlines renamed Eurowings? ...and other topics

Post by Inquirer »

Meanwhile, has anybody already read the article which is now being discussed here, because without facts and figures, there's few to discuss, really.

Other than maybe it now seems a given that Lufthansa will thus indeed acquire them, which IMHO is a very positive evolution and a big vote of confidence in the future of their operations!
After all, some 2 years ago we were discussing the likeliness of them going out of business on the back of a multi million euro loss and the open competition which just started in full force at their home market; 2 years later and they have grown massively in size and are said to have become profitable to the point they are now a prime candidate for purchase even!

Let's look at it objectively: currently BRU airlines is running 2 very different types of operations under 1 single brand, which is a situation which is less than perfect (That does sound familiar, doesn't it, Sean?)
I understand the reason why they do it, but I can perfectly see why it could be a good idea to split the company up and integrate their current European operations into a pan-European Eurowings once the occasion presents itself: larger sale force, benefit of scale, smaller overhead, easier access to new markets, increased flexibility etc.
If they can somehow make their newly rebranded European operations from BRU codeshare with their remaining intercontinental operations, they actually do what others have long been discussing but are hesitating to do, i.e. intercontinental flights fed by a genuine low cost platform: one of their own! ;)

BRU might even be the ideal laboratory for such new set up: a unique occasion presents itself with intercontinental feed present from the US, Asia and Africa (also from partner airlines), it's large enough to get a meaningful idea of how it is going, yet not too big to risk the whole reputation of the group on it, and if successful, it may then be rolled out at other hubs too: say VIE or MUC. ;)
Not to mention BRU is a much more interesting platform and a true hub to offer connections from than Cologne or Stuttgart like Eurowings is currently (planning on) doing, so Lufthansa might even be persuaded to reconsider their orignial plans for intercontinental flights by Eurowings and move them to BRU.
I for one could well see both the rebranded Eurowings operations as well as Brussels Airlines (intercontinental) grow significantly if both operations run under their own brand, yet work together closely.

As to the courting of IAG: I think all too many people have a somewhat naive view of running a business.
IAG will make the same analysis as Lufthansa or anybody else of the situation at BRU and will likely come to roughly the same conclusions: what's there to prevent them from doing the same as Lufthansa, and integrate their European operations into Vueling for instance? It would make perfect sense too, but I am pretty confident Lufthansa has also seen the benefit and will do it themselves: the take over could mean big business for BRU if done correctly (huge potential for growth as a hub) and it's definitely not so good news for point to point competitors there.
Fingers crossed.

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Re: Interview of CEO Gustin: Brussels Airlines renamed Eurowings? ...and other topics

Post by sean1982 »

And that setup will lead to a huge loss of employment to the people in the back office of SN. The brand itself is not so much the problem, but the cost of supporting multiple companies with their own ops, management, HR, PR, etc ... When all of this can be scrapped and be centralised under one roof. The only thing that will remain belgian about SN will be the flight and Cabin crew (eventhough LH is allready sending german F/O's to SN)

As for an LCC feeding a L/H operation (unless that operation is also an LCC) I dont think that that is a good idea. Just look at some passenger reviews about SN who are very positive about the LH and extremly dissappointed about their connecting on the SH LCC. IAG is having the same problems with people connecting onto Vueling, Iberia express or aer lingus.

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Re: Interview of CEO Gustin: Brussels Airlines renamed Eurowings? ...and other topics

Post by Inquirer »

I'd say that depends where the consolidation from all the synergies is conducted?

I can imagine that under the theoretical example from above (purely fictitious BTW), additional employment could also be created in BRU which would otherwise be based elsewhere within the group in support of such operations. It doesn't need to be a one way road, especially not if the integration comes with an ambitious expansion combined, something which could be possible if you throw in the intercontinental flights too.

Besides, don't take it personally, but how big an overhead does ryanair employ in Belgium for the just over 7M passengers they have flown last year?
If an improved brand line up of the Lufthansa group in Belgium can lead BRU to take care of say 12M group passengers over the course of 2018 or so, I'd be confident to say their future operations here will directly employ far more people locally than your employer does, on top of the much less visible indirect employment generated by both.

Low cost to intercontinental connections will happen in future, just ask your own CEO.
He's eager to offer it, but nobody is biting at present, much to his disappointment, because it's one of the reasons he has come to main airports (and yet another one why he needs to change name there!) ;)
Currently, the product on European routes is different from that on intercontinental; a split operation under 2 different brands would make it more obvious and set customer expectations right, IMHO.
After a short transition period, I am sure its a winner. IAG is going to be very successful with vueling and their concept of a low cost hub at BCN; BRU might well be turned into the Lufthansa group's equivalent.
Which is also why I doubt IAG is a good partner: BRU would then be in internal competition with BCN!!!
Last edited by Inquirer on 04 Feb 2016, 15:43, edited 2 times in total.

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Re: Interview of CEO Gustin: Brussels Airlines renamed Eurowings? ...and other topics

Post by convair »

Stij wrote:
LH invested in SN to protect their operations in FRA, same with OS and LX to protect MUC.
SN, OS and LX are allowed to grow as long as it doesn't harm LH in FRA and MUC.

This situation hasn't changed and so I believe they'll buy the remaining shares, just because they don't want an enemy hub close to their major hub.
If LH's investment in SN was essentially a defensive one,then the Eurowings kind of scenario for the future of SN might indeed have been in their mind. However I believe the situation HAS changed with the recent success of SN's expansion policy in Europe. LH might be wondering now, helped by lobbying from SN management, if a more dynamic and tailor-made policy for SN might not be more appropriate after all and, in the end, more beneficial for the whole group.

And they could possibly implement such policy while keeping most of their original plan (if that is what it was) by carving out a PART (only) of SN's european operations (mostly but not exclusively the "holidays" activity), putting it under the Eurowings brand and leaving the main "legacy" activities within SN as they are now.

After all, this is what they are currently doing in Vienna where OS and Eurowings might be able to coexist as long as they are not targeting exactly the same market. What is working in Vienna could at least be tried in BRU.

So I don't believe LH will simply dissolve SN in Eurowings, unless they are keen to demonstrate "urbi et orbi" that they are plain stupid!

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Re: Interview of CEO Gustin: Brussels Airlines renamed Eurowings? ...and other topics

Post by sean1982 »

You must have very positive dreams inquirer :D

FR has no overhead in Belgium to support the ops here which is exactly the point. For LH to relocate EW overhead to BRU (with associated high belgian labour costs) when they have to whole setup ready to go in germany is just ridicule :D

If FR can run 105 million pax with a relativly small overhead in DUB, im sure SN back office can be ditched by LH for an 8 million pax ops.

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Re: Interview of CEO Gustin: Brussels Airlines renamed Eurowings? ...and other topics

Post by White Light »

sean1982 wrote:And that setup will lead to a huge loss of employment to the people in the back office of SN. The brand itself is not so much the problem, but the cost of supporting multiple companies with their own ops, management, HR, PR, etc ... When all of this can be scrapped and be centralised under one roof. The only thing that will remain belgian about SN will be the flight and Cabin crew (eventhough LH is allready sending german F/O's to SN)As for an LCC feeding a L/H operation (unless that operation is also an LCC) I dont think that that is a good idea. Just look at some passenger reviews about SN who are very positive about the LH and extremly dissappointed about their connecting on the SH LCC. IAG is having the same problems with people connecting onto Vueling, Iberia express or aer lingus.
I fully agree with sean on this one.
Pax who buy a long haul C ticket, expect to get C also on the intra-European connecting flights, or otherwise the price of the "C" ticket must be a lot cheaper than a C ticket from departure to arrival.
No C class in Europe for connecting l/h Business class pax will lead to these pax going to the competition (and also to LH, LX). So, no added value for SN.

Could it be that we start seeing similarities with the sabena/swissair case where, here the non LH shareholders just don't want to bother anymore with what will happen, more or less as the Belgian State as main shareholder said Amen ! to everything SR did ? In the current situation, it will not lead to the bankrupcy of brussels airlines, but to its dismantelling. I have been convinced for some time that LH would not let SN really grow outside Africa, but I had not expected this.

Anyway, LH (and consequently its Group members) is becoming a lousy airline, expecially in Europe, with a even smaller seat pitch (29") in economy class in the A320neo :evil:

On the other hand, didn't Gustin say "it's up to the client to choose between Brussels Airlines and Eurowings" ? What did he really mean by that ?

And before we continue speculating (although feeding an interesting discussion) :
Inquirer wrote:Meanwhile, has anybody already read the article which is now being discussed here, because without facts and figures, there's few to discuss, really.

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Re: Interview of CEO Gustin: Brussels Airlines renamed Eurowings? ...and other topics

Post by Inquirer »

sean1982 wrote: FR has no overhead in Belgium to support the ops here which is exactly the point. For LH to relocate EW overhead to BRU (with associated high belgian labour costs) when they have to whole setup ready to go in germany is just ridicule :D
Yet who's talking about relocating overhead from Germany to Belgium in the first place, ,other than you?

What I am saying is that one could think of integration and synergy scenarios which make economic sense and which generate a lot of direct employment on the operational side, sufficient to replace any reduction in the number of back office staff! ;)

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Re: Interview of CEO Gustin: Brussels Airlines renamed Eurowings? ...and other topics

Post by sean1982 »

From germany to Belgium? No one
From Belgium to germany ... Much cheaper for them. Why would you need ops here for 8 million pax when you have a support centre in germany who can do it all?
JAF doesnt have a flightplanning department for example. Its done in germany! FR runs its OPS with 8 people only! from DUB. For 320+ aircraft!

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