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

[Bel33]

There is an interview of SN Air Holding Chairman Etienne Davignon in "La Libre" on this Friday but the article is only available to subscribers. The summary says: Lufthansa will not enter force. Discussions are underway on the acquisition of Br A but the Belgian identity will remain well anchored. A portion of the 2015 profits of € 35 million will be distributed to employees of the company ... Someone does access to the entirety of the article?

[brasileiro]

ACTUALITÉ

Brussels Airlines va-t-elle devenir une compagnie low cost allemande ? Les spéculations vont bon train, suite à la possibilité d’un rachat total de la compagnie belge par Lufthansa. Etienne Davignon, le président de Brussels Airlines, nous explique les enjeux des négociations actuelles.

Où en sont vos discussions avec la compagnie allemande Lufthansa ?

Les gens ont parfois tendance à oublier. Il y a quelques années, Lufthansa est entrée dans le capital de Brussels Airlines à hauteur de 45 %. Dans le cadre de cet accord, Lufthansa a la possibilité d’acquérir les 55 % restants jusque dans le courant de l’année 2017. Le conseil d’administration de Brussels Airlines compte déjà trois administrateurs venus de Lufthansa. Il ne faut pas imaginer que les conversations entre nous débutent ! Ce qu’il y a de neuf, c’est que Lufthansa a décidé de créer une structure paneuropéenne nommée Eurowings. Nous sommes en train d’analyser les contours, l’efficacité, l’importance de ce concept attractif et ce que cela impliquerait pour Brussels Airlines.

Concrètement, les Allemands vont-ils racheter Brussels Airlines pour l’intégrer à Eurowings qui vise le low cost ?

Nous ne sommes pas face à une liste d’exigences de Lufthansa et si accord il y a sur un rachat, il se fera sur base d’un consensus. Lufthansa ne passera pas en force. Nous allons établir, ensemble, si les intérêts des uns et des autres se concilient. Lufthansa analyse ce que leur rapporterait une intégration de Brussels Airlines. De notre côté, nous analysons l’apport en termes de développement par rapport à nos atouts. L’avantage, c’est qu’on discute dans une situation un peu plus décontractée, vu nos bons résultats financiers (NdlR : voir ci contre). Si on ne trouve pas d’accord, on ne sera pas plus mal qu’actuellement. Au contraire, on aboutira à un accord uniquement s’il présente un avantage par rapport à la situation actuelle pour toutes les parties.

Vous parlez de discussions mais, théoriquement, Lufthansa a le droit de racheter Brussels Airlines sans l’accord des actionnaires belges…

C’est vrai que, selon nos accords, Lufthansa a le droit de racheter les parts des actionnaires belges (NdlR : dont les Régions bruxelloise et wallonne) sans que ces derniers puissent dire "non", puisque les Allemands ont un droit de préemption ("call"). Ils pourraient passer en force, mais ils nous ont assuré qu’ils ne le feraient pas. Et ce n’est pas pour mes beaux yeux. C’est du bon sens. Si vous voulez intégrer quelqu’un contre son gré, cela échoue toujours. Les Allemands ne vont pas prendre le risque de se trouver devant une opposition générale en Belgique, que ce soit de l’aéroport, des autorités… Cela ne serait pas les prémices idéales pour un mariage.

Avez-vous des tabous, des éléments non négociables dans ces discussions ?

Non, pas des tabous. Simplement des principes de réalité. L’avenir de Brussels Airlines doit se construire sur les acquis du modèle que nous avons construit aujourd’hui. Se joindre à un plus grand ensemble en amputant nos atouts serait absurde. Nous avons par exemple des compétences historiques en Afrique, où les Allemands ne sont pas très présents.

Le maintien de la marque Brussels Airlines fait-il partie de vos exigences ?

C’est une question de présentation commerciale où il faut à la fois trouver le maintien de ce qui fait notre caractéristique en Belgique et de ce qui répond à des préoccupations ailleurs. Une association de noms n’est pas impossible.

Brussels Airlines pourrait devenir Brussels Wings par exemple ?

On n’en est pas là… Il faut combiner les deux : l’avantage d’appartenir à un grand groupe et disposer, en tant que transporteur national, d’une marque locale très forte. Il y a quinze ans, quand nous avons lancé cette compagnie, les pessimistes nous disaient que nous allions crever dans les six mois, les optimistes dans les douze mois. Nous sommes passés par des situations compliquées dans un contexte d’accroissement de la concurrence, parfois déloyale. A l’époque, les conseillers nous disaient de reprendre la marque Sabena. Mais ce n’était pas le signe de renouveau que nous voulions donner. On a eu raison de changer de nom.

Pourquoi une identité belge vous semble à ce point importante ?

Ce n’est certainement pas par affection subjective, passéiste ou nostalgique. Brussels Airlines est notre "home carrier" : les Belges savent cela. En Belgique, Brussels Airlines est une marque reconnue, ce qui n’est pas le cas à New York. Il y a peut-être un peu d’affectif, mais la question est surtout factuelle.

Le personnel de Brussels Airlines a émis des inquiétudes par rapport à ce rachat. Ils craignent des délocalisations d’emplois en Allemagne ou des conditions de travail revues à la baisse. Que leur dites-vous ?

Ce que je vous ai déjà dit : nous ne sommes pas une compagnie en restructuration et nous n’avons pas d’intérêt d’entrer dans un ensemble plus grand si les caractéristiques qui ont fait notre réussite ne sont pas maintenues.

Si Lufthansa monte à 100 % dans Brussels Airlines, peut-on imaginer que le CEO devienne allemand ?

Non, pourquoi ? Nos résultats montrent que le CEO actuel (NdlR : Bernard Gustin) n’est pas un manche. Les Allemands n’ont pas fort réussi en Afrique. Pourquoi voudraient-ils essayer quelque chose qu’ils ne savent pas faire, alors que nous savons le faire ? Un peu de bon sens est important dans les affaires. On n’a aucun complexe d’infériorité à avoir.

Planchez-vous sur un plan B en cas d’échec des discussions avec Lufthansa ?

Je n’ai pas de plan B tant que je suis sur un plan A. A ce stade, rien ne prouve que c’est impossible mais rien ne permet d’affirmer qu’il y aura un accord. Je chercherais un plan B dans l’hypothèse où Lufthansa dit : "J’ai le droit et je le fais."

Brussels Airlines pourrait-elle survivre sans Lufthansa ?

Lufthansa nous a apporté beaucoup de choses. On aurait, par exemple, pas pu aller en Amérique du Nord tout seul. La relation entre les deux compagnies s’appuie déjà sur un certain nombre de synergies. Lorsque Brussels Airlines a eu des problèmes de cash, Lufthansa nous a aussi octroyé un prêt. La marque Lufthansa est évidemment plus puissante à l’étranger que Brussels Airlines, à l’exception de l’Afrique, ce qui est un héritage positif de la Sabena. Etre tout seul, c’est compliqué même si ce n’est pas dramatique. Mais être englobé dans un ensemble dans lequel nos atouts ne seraient pas reconnus serait plus compliqué encore.

"Plusieurs millions d’euros vont être reversés au personnel de Brussels Airlines"

Comment se porte Brussels Airlines aujourd’hui ?

Nous sommes passés par une situation difficile il y a trois ou quatre ans avec des pertes. A l’époque, nous avons conclu un accord avec l’ensemble des syndicats pour faire un plan de restructuration. Ce plan prévoyait pendant deux ans une hausse de la productivité et une réduction ou une non-augmentation des salaires. Cela a permis de maintenir les effectifs et d’éviter un plan social. Ce plan a réussi et nous avions annoncé que dès qu’il produirait des résultats positifs, une partie des bénéfices reviendrait au personnel. Ce sera chose faite.

Votre personnel doit donc s’attendre à recevoir un bonus ?

Plusieurs millions d’euros seront reversés à notre personnel, selon des modalités encore à définir. Le bénéfice total de Brussels Airlines devrait dépasser en 2015 les 35 millions d’euros (NdlR : en incluant les 19 millions d’aides octroyés par l’Etat belge et qui sont contestés par la Commission européenne). Il est important de construire cette confiance réciproque pour bâtir un avenir ensemble. Au-delà de la concurrence de Ryanair à Charleroi et à Bruxelles, l’expansion de Brussels Airlines a aussi été assurée. Nous avons augmenté significativement le nombre de passagers (NdlR : + 25 % en deux ans), modernisé notre flotte, développer nos liaisons vers les Etats-Unis. Nous allons aussi ouvrir une ligne vers Toronto, et poursuivre notre expansion en Afrique.

L’ouverture d’une ligne sur l’Inde est-elle prévue ?

C’est encore à l’étude. Une décision tombera avant la fin de cette année. Mais si on ne va pas en Inde, nous irons ailleurs. Nous ferons en tout cas un vol long courrier supplémentaire.

Ces bons résultats ne sont-ils pas gonflés par les prix du pétrole au plancher ? En Europe, peu de compagnies aériennes perdent de l’argent actuellement.

Avons-nous bénéficié de la baisse des prix du carburant ? Oui, mais pas davantage que nos concurrents. Or certains sont en perte. Cela démontre structurellement que notre stratégie - visant à proposer à notre clientèle des tarifs attractifs et des services supplémentaires par rapport au low cost - porte ses fruits. En 2015, l’ensemble de nos réseaux ont été bénéficiaires : l’Afrique, les Etats-Unis et l’Amérique du Nord. Notre visibilité a aussi augmenté : nous sommes le transporteur officiel des Diables Rouges et du Royal Sporting Club d’Anderlecht, par exemple. Notre avion peint aux couleurs de "Rackham le Rouge" a aussi connu un très grand succès et nous en préparons un autre de ce style.

Arrivez-vous désormais à avoir des prix aussi bas que des compagnies low cost telles que Ryanair ?

Il y a une catégorie de voyageurs pour lesquels le seul critère, c’est le prix : pour ceux-là, nous ne sommes pas compétitifs. Mais heureusement, il y a d’autres voyageurs qui acceptent de payer une différence de prix "raisonnable" en échange d’un autre type de services. Nous sommes une compagnie low fares, c’est-à-dire que nous sommes capables, pour une partie de notre offre, de proposer des tarifs comparables à ceux de nos concurrents low cost. Mais nous ne serons jamais une compagnie low cost, car nous n’aurons jamais une structure de coûts comparables à Ryanair ou easyJet, Mais là, il y a un point de discrimination aberrant entre nous.

A quoi pensez-vous ?

C’est évidemment cette situation étrange dans l’aérien liée à la sécurité sociale. Normalement, le travailleur paie la sécurité sociale dans le pays dans lequel il travaille. Ce n’est pas le cas du personnel navigant des compagnies comme Ryanair ou easyJet. C’est une distorsion évidente.

Récemment, un élu wallon a reproché à Brussels Airlines d’être trop flamande ? Est-ce le cas ?

On peut toujours dire tout et n’importe quoi. M. Gustin (NdlR : le CEO de Brussels Airlines) et moi-même avons beaucoup de qualités, mais nous ne sommes pas reconnus flamands par la communauté flamande. La Sabena était plus flamande que ne l’est Brussels Airlines. En fait, nos pilotes et notre management sont de plus en plus internationaux.

[travellover]

Etienne Davignon explains the issues in the current negociations and where there are discussions.

Conversations between SN and LH are in the core.
What's new is that Lufthansa has decided to create a pan-European structure named Eurowings.
We are currently analyzing the contours, the effectiveness, the importance of this attractive concept and what it would mean for Brussels Airlines.

Where are the discussions with the german Lufthansa?
Sometimes people tend to forget. There are a few years, Lufthansa has entered the capital of Brussels Airlines to 45%. Under this agreement, Lufthansa has the option to acquire the remaining 55% well into the year 2017. The Brussels Airlines' board of directors already has three administrators from Lufthansa. We must not imagine that the conversations between us begin! What's new is that Lufthansa has decided to create a pan-European structure named Eurowings. We are currently analyzing the contours, the effectiveness, the importance of this attractive concept and what it would mean for Brussels Airlines.

Will Lufthansa specifically buy Brussels Airlines to integrate it with Eurowings to target the low cost market ?
We are not facing a list of requirements and Lufthansa agreement if there is a takeover, it will be based on consensus. Lufthansa will not enter force. We will establish, together, if the interests of each other be reconciled. Lufthansa analysis that would bring them an integration of Brussels Airlines. For our part, we analyze the contribution in terms of development compared to our strengths. The advantage is that we discuss in a little more relaxed position, given our strong financial results (Editor's note: see below). If we do not find agreement, we will not be worse than today. On the contrary, lead to an agreement only if it has an advantage over the current situation for all parties.

You talk about discussions but theoretically Lufthansa has the right to buy Brussels Airlines without the agreement of the Belgian shareholders ...
It is true that, according to our agreements, Lufthansa is entitled to buy the shares of Belgian shareholders (Editor's note: which Brussels and Walloon Regions) without that they can say "no" because the Germans have a right of first refusal ( "call"). They could push through, but they assured us they would not do it. And it's not for my beautiful eyes. It's common sense. If you want to integrate someone against his will, it always fails. The Germans will not take the risk to be faced widespread opposition in Belgium, be it airport, authorities ... This would not be the ideal premises for a wedding.

Do you have any taboos, non-negotiable elements in these discussions?
No, no taboos. Simply reality principles. The future of Brussels Airlines must build on the achievements of the model we have built today. Joining a larger set amputating our strengths would be absurd. We have such historical skills in Africa, where the Germans are not very present.

Maintaining brand Brussels Airlines is it part of your requirements?
It is a commercial matter of presentation where to find both the maintenance of what makes our characteristic in Belgium and which addresses concerns elsewhere. A name association is not impossible.

Brussels Airlines Brussels Wings could become such?
It is not there ... You have to combine the two: the advantage of belonging to a large group and have, as a national carrier, a strong local brand. There are fifteen, when we started this company, the pessimists were saying we were going to die in six months, optimists within twelve months. We went through complicated situations in a context of increased competition, sometimes unfair. At the time, the counselors told us to take Sabena brand. But it was not the sign of renewal that we wanted to. It was right to change its name.

Brussels Airlines or Brussels Wings ?
It is not there ... You have to combine both of them : the advantage of belonging to a large group and have, as a national carrier, a strong local brand.
About taking the Sabena brand : it is not the sign of renewal that we wanted to. It was right to change its name.

The staff of Brussels Airlines fear the relocation of jobs in Germany and working conditions lowered. What do you tell them?
I told you: we are not restructuring and we have no interest to enter a larger set if the characteristics that have made us successful are not maintained.

If Lufthansa up to 100% in Brussels Airlines, can we imagine that the CEO become German?
No why ? Our results show that the current CEO (Editor's note: Bernard Gustin) is not a handle. The Germans are not very successful in Africa. Why would they try something they do not know to do, then we can do it?

I would look for a B plan in the event that Lufthansa said: "I have the right and I do."
Lufthansa has brought us a lot. We could, for example, could not go in North America alone. The relationship between the two companies already relies on a number of synergies. When Brussels Airlines had cash problems, Lufthansa has also granted us a loan. The Lufthansa brand is obviously more powerful abroad as Brussels Airlines, with the exception of Africa, which is a positive legacy of Sabena. Being alone is complicated even if it is not dramatic. But be included in a set in which our assets are not recognized would be more complicated.

How is Brussels Airlines today.
We went through a difficult situation there are three or four years with losses. At the time, we concluded an agreement with all unions to a restructuring plan. The plan called for two years an increase in productivity and a reduction or no increase in wages. This helped maintain staffing and avoid a social plan. The plan was successful and we announced that soon it would produce positive results, some of the profits return to the staff. This will be done.

Your staff should expect to receive a bonus?
Several million euros will be donated to our staff, according to procedures yet to be defined. The total profit of Brussels Airlines in 2015 is expected to exceed 35 million euros (Editor's note: including 19 million in aid granted by the Belgian State and which are disputed by the European Commission). It is important to build this mutual trust to build a future together. Beyond the competition Ryanair in Charleroi and Brussels, expanding Brussels Airlines was also ensured. We have significantly increased the number of passengers (Editor's note: + 25% in two years), modernized our fleet, expand our routes to the United States. We will also open a line to Toronto, and continue our expansion in Africa.

Opening a line of India is still under study. A decision will be taken before the end of this year. But if you do not go to India, we will go elsewhere. We will in any case a long flight extra mail.

These good results are they not inflated by the oil price floor?
In Europe, few airlines are losing money now.Have we benefited from lower fuel prices? Yes, but no more than our competitors. Now some are losing. This demonstrates that our strategy structurally - to offer our customers attractive rates and additional services compared to low cost - bearing fruit. In 2015, all our networks were beneficiaries: Africa, the United States and North America. Our visibility has also increased: we are the official carrier of the Red Devils and the Royal Sporting Club Anderlecht, for example. Our plane painted in the colors of "Red Rackham" also had a great success and we are preparing another of this style.

Are you able now to have prices as low as the low cost airlines such as Ryanair?
There is a traveler category for which the only criterion is the price: for those, we're not competitive. But fortunately, there are other travelers willing to pay a price difference "reasonable" in exchange for another type of service. We are a low fares airline, is to say that we are able, for a part of our offer, offer similar prices to those of our low cost competitors. But we will never be a low cost airline, because we will never have a cost structure comparable to Ryanair or easyJet, but there it is a point of discrimination aberrant us.

What do you think ?
This is obviously the strange situation in the air linked to social security. Normally, the worker pays social security in the country in which he works. This is not the case aircrew companies like Ryanair or easyJet. This is an obvious distortion.

Recently, an elected Walloon criticized Brussels Airlines being too Flemish? Is that the case ?
One can always say everything and anything. Mr. Gustin (Editor's note: the CEO of Brussels Airlines) and I have a lot of qualities, but we are not recognized by Flemish Flemish community. Sabena was more Flemish than is Brussels Airlines. In fact, our drivers and our management are increasingly international.

[Flanker2]

Well this looks on paper like a warning shot and a demonstration of power from Belgium to LH. Bravo on Davignon if they stick with this plan.

However, nothing stops LH from implementing a gradual shift to Germany.
For instance, for Africa, if LH and the German government implement bilaterals with African countries in the background, they can shift all longhaul within months, and then there is nothing that the Belgian authorities can do to make life tough on LH.
LH will still be able to keep the FRA and MUC flights without problems and I don't see what Eurowings would be looking to take-over in BRU, as the shorthaul market in and out of BRU is already at saturation and not really profitable. I don't see why Eurowings would be interested in developping a BRU hub anyway. BRU is not really suitable for low-cost leisure shorthaul, considering the 30 EUR departure tax.
Considering this, it could be a maskerade to avoid social unrest until LH has paid the original shareholders and implemented whatever plan they wish to implement. This seems to be in line with a sudden sentiment of generosity towards the staff.

To be continued...

Interesting article though.
16 million profits in 2015 excluding the subsidies, despite all the growth and cheaper fuel.
If they grow another 10% this year, their profits will reach 25 millions perhaps?
I'm sorry but I'm disappointed.

This proves what we anticipated earlier. The significant traffic growth is won on the back of significantly lower yields, with the profits solely owed to lower operating cost (ie lower fuel cost).
Still, bravo on SN for staying engaged despite heavy LCC competition, that's no easy feet.

[b720]

Keep in mind that 16 mil. After creeping out from under zero... They were loss making..
I think that is an excellent result... This year profits will be larger..

[sean1982]

Are you able now to have prices as low as the low cost airlines such as Ryanair?
There is a traveler category for which the only criterion is the price: for those, we're not competitive. But fortunately, there are other travelers willing to pay a price difference "reasonable" in exchange for another type of service. We are a low fares airline, is to say that we are able, for a part of our offer, offer similar prices to those of our low cost competitors. But we will never be a low cost airline, because we will never have a cost structure comparable to Ryanair or easyJet, but there it is a point of discrimination aberrant us.

What do you think ?
This is obviously the strange situation in the air linked to social security. Normally, the worker pays social security in the country in which he works. This is not the case aircrew companies like Ryanair or easyJet. This is an obvious distortion.
.

Oh dear god. If he doesn't even know that according to the law ALL aircrew pay social security in the country where they are based, god knows what else he's just guessing on in this article.

[flightlover]

All NEW based crew do that indeed. But crew that got based before the regulations changed are still payed 'abroad'. As Ryanair has a lot of bases this will give them a huge advantage for as long as those old contracts are allowed.

[sean1982]

All NEW based crew do that indeed. But crew that got based before the regulations changed are still payed 'abroad'. As Ryanair has a lot of bases this will give them a huge advantage for as long as those old contracts are allowed.

With the high turn over at FR and also the fact that any small change to a contract makes that the NEW rules are in force my ducated guess is that 5% of the crew is still on "old contracts". A change means: change of rank, change of base, ....

Also, Davignon still didnt lose the calimero attitude apparently. Now its FR, in a few years it will be emirates. Kinda pathetic.

[Poiu]

Keep in mind that 16 mil. After creeping out from under zero... They were loss making..
I think that is an excellent result... This year profits will be larger..

This means that without historic low oil prices and a soft winter the result would have been dark red.
Worrying to say the least!

[Poiu]

All NEW based crew do that indeed. But crew that got based before the regulations changed are still payed 'abroad'. As Ryanair has a lot of bases this will give them a huge advantage for as long as those old contracts are allowed.

You seem to forget that for 10 years SN has been exempted from paying a big part of the Belgian social security for its crews. They were even allowed to deduct a pension contribution from the salaries and keep it for themselves instead of transferring it to the special pension fund for aircrew. This lead to the withdrawal of that fund due to lack of money....

[convair]

yesterday:

... according to the law ALL aircrew pay social security in the country where they are based...

today:

With the high turn over at FR and also the fact that any small change to a contract makes that the NEW rules are in force my ducated guess is that 5% of the crew is still on "old contracts". A change means: change of rank, change of base, ....

No comment!

[Poiu]

yesterday:

... according to the law ALL aircrew pay social security in the country where they are based...

today:

With the high turn over at FR and also the fact that any small change to a contract makes that the NEW rules are in force my ducated guess is that 5% of the crew is still on "old contracts". A change means: change of rank, change of base, ....

No comment!

Your point being???
If you want to be pedantic: since 2012 crew are paying social security in the country in which they are based. Those employed before 2012 have grandfather rights till 2022. As soon as a minor change (upgrade, base change, change of address, mariage,...) occurs you loose your grandfather rights. So Sean estimates 5% of FR crews based in Belgium has grandfather rights.

[sn26567]

ACTUALITÉ

Welcome to Luchtzak, brasileiro!

[White Light]

Why do some members of this forum systematically turn interesting discussions into boring acid SN vs. FR discussions, sometines boardering on insults ?

However...

I don't see what Eurowings would be looking to take-over in BRU, as the shorthaul market in and out of BRU is already at saturation

Well this looks on paper like a warning shot and a demonstration of power from Belgium to LH. Bravo on Davignon if they stick with this plan.

it could be a maskerade to avoid social unrest until LH has paid the original shareholders and implemented whatever plan they wish to implement

That's my feeling, too. The current non-LH shareholders want to get rid of their "baby" "coûte que coûte", just like the Belgian State wanted to get rid of Sabena "coûte que coûte". This time there will be no bankrupcy, but once LH has acquired full control of the airline by buying the remaining shares, LH can do whatever it wants. As to industrial action (for instance, strikes), LH has shown it can cope with it in Germany (so, why not in Belgium ?)

[Homo Aeroportus]

.... As to industrial action (for instance, strikes), LH has shown it can cope with it in Germany (so, why not in Belgium ?)

Say again.


H.A.

[White Light]

LH can cope with industrial actions because it has the financial strength which makes it possible to loose a lot of money because of such actions without major repercussions for the airline's balance sheet (it will stay in the black). SN cannot afford it. If SN is 100 % LH, if the employees strike, it will of course be bad for brussels arilines's image (if it is still called brussels airlines), but it will not jeopardize LH's survival.

[sn-remember]

Well after some information gathering, it seems EW are not incompatible as a full service airline ..
So if the business development LH envisions at BRU for EW ex Sn is worth the the image and brand change, LH's proposal should be considered positively me thinks ... Maybe Davignon is one war too late, which would'nt be a surprise given his record in the aviation business ...

[brusselsairlinesfan]

Really hope that they will keep the brussels airlines brand alltogether with the belgian identity that SN is working on (succesfully) for some time!