Lufthansa buys the remaining 55% of Brussels Airlines

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Didymus
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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by Didymus »

I think that's a gross exaggeration. In Milan for instance, it is the most visible airline brand, surpassing even Alitalia. The logo is on many of the shuttle buses between Malpensa and the central station and it used to be on every single tray at the Malpensa security check.

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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by sn-remember »

1. The assertion LH group has too many hubs or that Europe's airline's market needs consolidation around a few hubs is just that .. an assertion.
2. The assertion LH group will give priority to germany bcs it's ... german is also that ... an assertion.
3. The assertion there is an american model and that if so, it should be copy/pasted is also just a (double) assertion.
4. The assertion that the intercontinental ntwk in bru (or vie) although small is unsignificant (meaning it can be transposed) is again arguable.
..
I want to know what the interlining agreement between EW and other star members is/will be .. You just add interlining facilities to ensure a seamless connection in bru , vie, or whatever and there you have it ... the wings of Europe are NOT the wings of germany. Spohr is a dangerous man if he confuses that ...
Last edited by sn-remember on 29 Sep 2016, 16:32, edited 5 times in total.

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Conti764
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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by Conti764 »

Klausenburg wrote:
Boavida wrote:
Ansett wrote: My bet is that the following compromise will be achieved (but for how long ?) : all of SN's European operations will be integrated into EW. All SN long-haul operations will continue to operate as Brussels Airlines.
So that would reduce Brussels Airlines to an tiny airline with 9 (long haul) aircraft and only a handful of routes... What's the point of this?
The point would be exactly to not loose the African market while arrangements and agreements can be achieved by the German government in order to move the flights to FRA/MUC. This might take years. But at least DLH don't loose them to concurrence. When all the African destinations now operate from BRU will be operated from FRA/MUC, it will be mission acomplished for SN. The Belgian airline won't be needed at all. Meanwhile, European operations will be taken care of by the new EW base on BRU, which will be more or less the kind of base Ryanair or Vueling have there. Therefore, the end of BRU as a hub maybe won't come now, but in a few years. Which doesn't mean that the pax numbers won't continue to grow. But for long-haul, everything will be routed via FRA/MUC...

Also, because the exemple of Austrian was given, I don't belive there will still be any Austrian as separate entity in 10 years max, or any hub in VIE. Which, I repeat, won't mean that the number of pax won't grow any more there... Lufthansa will consolidate its hubs sooner or later and won't continue with 5 of them by any means...

Also, I seriously doubt that any long-haul flight operated by EW from CGN will be moved to BRU, because, you know...Germany.
What good would this serve? The only thing LH cares about is making money (logically). If BRU and/or SN can contribute to that goal, LH will make use of it. And as they have proven last year, the company can make money, even as a de facto independent carrier. Now imagine somebody really investing in it. Even this year, after the 22/03 attacks, SN bounced back fairly quick and is now posting growth figures again.

SN even has a better profit/revenue ratio than KL, on par with the LH Group in general, below LX but above OS...

The only reason why we are uncertain of SN's fate within the LH group is because of Carsten Spohr's extreme love for Eurowings. Rumours have it the supervisory board of LH doesn't entirely agree with him and they have deciding power, Spohr can only follow. And I for one strongly believe there is a future for SN in the LH Group alongside LH, LX and OS and EW... Although I must admit SN would have had an even brighter future within Oneworld, but that train passed long ago...

You seem to be too much centered around LH. With all due respect, but Brussels is not Bucharest and has, besides some major international headquarters, enough business potential to warrant at least a home carrier with international ties. And if no such home carrier is present, you can be pretty sure the gaps will be filled by foreign airlines. In your prediction, LH would hope to reroute pax via FRA/MUC to BRU, but why would anybody do so if a direct alternative is available? Besides, international flights do not only bring in more money than regional flights, they also bring a lot of prestige so you can place safe bets BRU would (again) shift focus from the LH Group to other potential partners, like they already did in the past when SN was far from a reliable partner on the longer term. So LH would have nothing to gain from degrading BRU to a regional airport and dissolve SN for its own so called benefit. Africa bound passengers would just be going to the competition in Paris and, to a lesser extend, Schiphol.

What I can imagine, however, is that LH will eventually transfer some lower profit European flights from SN to EW, while SN retains the better performing (business) destinations and long haul. SN is a strong brand in Africa and focus should be returned to the continent again, besides some more long haul to other destinations in the world.

To go even further, I would use BRU (either SN or EW long haul, depending on the profile of the destination) to compete against KL (AMS) and AF (CDG) and start offering flights to the overseas territories of those companies where they now have a near monopoly.
I don't know the rates, but I can imagine KL making quite some money on Aruba, Curacao, Bonaire, Paramaribo, Philipsburg where they are the only full service carrier to Europe (accept for Philipsburg, also flown by AF, but those eggs end up in the same basket), like AF makes quite some money on Point a Pitre, Port au Prince, Fort De France, Antananarivo,... again for the same reaon. The same goes even for BA, which has some destinations no one else in Europe flies to.
SN lacked the financial power and equipment to do such flights which bring a fair amount of risk with them, LH lacked capacity at FRA - closest hub to AMS and CDG to do so.
BRU has plenty of capacity, good connections to both The Netherlands and France with their big communities of overseas territories and former colonies, and a versatile home carrier. And contrary to KL, AF and BA, the LH Group soon will have a low cost long haul branch which could do flights SN can't run a profit on. Of course, this scenario could also be done from CGN, but why not give BRU a try. There is no real reason against it.

Most airlines in Europe are slowly evolving to a product SN already offers for years within Europe. Turn SN least profitable routes to EW, and let them fly to wherever they make money on. Retain and expand the long haul flying, together with medium haul flying to destinations which are known for being cash cows (TLV for instance).

I am not sure LH would just axe SN and transfer the ripe fruits to FRA/MUC since this takes years to do. And I am pretty sure BRU won't just sit around idle seeing how they are being degraded to a regional feeder airport for LH. I wouldn't be surprised BRU as a SN shareholder would go to court over the full acquisition of SN by LH unless they are given solid guarantees about future acitivities of the LH Group on BRU and then I am not only talking about some low cost airline.
Last edited by Conti764 on 29 Sep 2016, 16:09, edited 2 times in total.

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Conti764
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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by Conti764 »

Jetter wrote:
Boavida wrote:So that would reduce Brussels Airlines to an tiny airline with 9 (long haul) aircraft and only a handful of routes... What's the point of this?
In this thread it's often proclaimed the SN brand has value in Afrika. That could be the point of this, as the SN brand is hardly relevant in Europe (outside Belgium).
Accept for FR which has bases in about every country, every brand is hardly relevant outside their home market.

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Conti764
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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by Conti764 »

lumumba wrote:
Darjeeling wrote:The first rumour has it that IAD flights won't be reinstated after the winter stop for the S17 schedules.

UA sales staff in BRU have seemingly already been briefed accordingly and the decision comes straight from Germany... It's not necessarily a bad one because after all SN needs to focus on AFI in 2017.

Rwandair is also very close to sending their brand new A330s to BRU and CDG in 2017. The African market is booming and attracts a lot of competition. Air Canada is currently evaluating a couple of "Black" African destinations via Air Canada Rouge. On a side note, Alger will already be launched in 2017.

Interesting times ahead...
But I thought that IAD was doing very well with Brussels!!!

If I remember well they wanna fly year around but UNITED did not accept it !?!?
With the A++ Joint Venture it doesn't really matter who flies between BRU and IAD. If SN was not allowed to fly year round to IAD it means the traffic is not there to sustain two airlines each flying an airplane a day. If SN is to be 'forced' to axe IAD it might mean UA will simply ad capacity, either by sending bigger equipment year round or do two flights a day with smaller equipment, equipment SN can't offer. SN's smallest plane is the A332 with 276 pax, while UA might use a mix of planes (e.g. B772/E+B752 or 2xB763 or B763+B764) or one daily with the 77W... UA just has more options to tailor the flight around its potential.

It could mean two things for SN... Or LH is indeed steadily trimming down SN or SN is to shift focus to other, more urgent markets. Who knows...? Only time will tell.

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travellover
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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by travellover »

IF the option to kill the long haul market and the * hub becomes reality, is it totaly realistic because of the strong local demand for several routes ? FIH, KGL, ABJ, JFK and even NRT. More enlightments ?
Cheers

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Conti764
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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by Conti764 »

travellover wrote:IF the option to kill the long haul market and the * hub becomes reality, is it totaly realistic because of the strong local demand for several routes ? FIH, KGL, ABJ, JFK and even NRT. More enlightments ?
IF (indeed) it might happen, these gaps will be filled by others and LH gets zero from it...

Inquirer
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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by Inquirer »

If the Lufthansa group want to significantly increase the immediate operating costs of all those flights to Africa, while at the same time make them less attractive to the ethnic traffic making use of them, then by all means, they should move them to the German namesake part of the aviation group asap.
Otherwise, it's far better to keep them were they are, in Brussels.
Not so much because of any bilateral, contractual, legal or sentimental reason, but because of plain and simple financial reasons: the cost base of a Lufthansa (or a Swiss) isn't exactly favouring the concept of them absorbing (large parts of) the network of the entities they have bought into, is it?
If anything, the trend has been to spin off and outsource so as to get the job done cheaper.
I very much doubt Lufthansa can operate ethnic African flights on an even remotely similar cost basis than B.air currently does, which in the end will always be the most convincing argument to any manager. ;)
Nice scenario to play around with for sure for network managers on a dull afternoon, but as so often with conceptual ideas, it's immediately killed off by a quick look at the spreadsheet by the financial managers.

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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by Klausenburg »

The basic question is how many of the passengers on African routes are coming or going to/from Belgium and how many are coming/going elesewhere. If more passengers are just passing through BRU, then it means it is a succesful hub, but in the same time it means BRU can be easily changed with FRA. If it's the other way around then indeed BRU must be kept.

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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by Inquirer »

I think you miss the bottom line: unit cost, Klausenberg.
What connecting route is the cheapest, is an all important question missing from your analysis.
As said: lufthansa isn't particularly a low cost operation vs Brussels Airlines, so any route from any place in Africa to any place in Europe would most likely become significantly more expensive via FRA or MUC (and Lufthansa) than it currently is through BRU (and B.air).
Not a very smart move, I hope you can understand?
Last edited by Inquirer on 29 Sep 2016, 17:20, edited 1 time in total.

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Conti764
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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by Conti764 »

Again, why go through all the hassle if you already have an underused hub in a country with excisting bilaterals and an airline with a big brand recognition?

Klausenburg
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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by Klausenburg »

@Inquirer it could become indeed more expensive, but haw much more expensive, depends a lot on many issues.But the idea is if the sinergy of a way bigger hub could overcome those costs or not ? Or simply put, if DLH could gain more on African routes even with the growth of costs becouse of all the routes operetated at FRA that could possibly widen the market for them. Evidently what we are talking is theory, but I belive Lufthansa is calculating everything in order to take the best decission...Which might be to keep the African network in BRU or not...

@Conti764, it has a lot to do with the competition with ME3, Turkish and others. Lufthansa is not competing only with AF/KLM or IAG, but with these "new" players, on long-haul market. And a big hub, as opposite to more somaller hubs, can bring more passengers and more revenues due to the network effect.


-------------------

Realistically speaking I'm expecting a few long-haul routes to be kept in BRU. And IMO, Eurowings project is doomed to fail. Lufthansa doesn't understand to low-cost, and Carsten Spohr is no Alex Cruz. However, I'm expecting EW to be artificially grown, and more resources thrown into it, probably until Carsten Spohr will leave... But Ryanair, Easy Jet or even Vueling being afraid of EW...that's not going to happen.

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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by Flanker2 »

One of Spohr's greatest issues is the amount of staff SN employs:

Quick comparison:

SN: 3500 staff for 7,5 million passengers: 1 staff member for 2143 passengers.

FR: 10000 staff for 117000000: 1 staff member for 11700.

Spohr's has often said that the cost base for personal he wants to model eurowings on is the Ryanair model. SN has a lot of staff doing things that already exist within the LH group, so 2 people doing the same job. This is not going to last long as it is very uncompetitive, something I have warned off before.
I agree that FR will probably have better staff efficiency, but it's hard to quantify that in the way that you do it.
So what does FR's 10.000 include? Corporate staff of course, but what else? Crews even though they are mostly contractors?
FR outsources all their handling (except in DUB?), "customer service" and maintenance.

In addition, in a long haul operation which is 25% of SN's fleet, you need higher staff counts for the same amount of passengers, but the passengers are flying longer sectors and paying more.
So really what you want to compare is staff per RPM.

I think that a better measure of efficiency is revenue per staff, by omitting the portion of staff who fulfill roles that FR outsources.

FR will come ahead anyway, but it may not be as extreme as you suggest it to be.
ill do it.

LH can easily transpose the African network to FRA or MUC.
LH Passage is not a low-cost but if they think that it's lucrative enough, they can do it.
Under previous LH management, this could have been a very likely scenario, but under Spohr, I don't know.
I think that from a Spohr perspective, everything is about EW, so anything that doesn't support that could be considered background noise.
I think that Spohr would rather make life hard on AF-KLM by opening EW bases in AMS and ORY, LYS, NCE and such rater than waste his time on developping the small Africa operation of 6-7 aircraft.

Jetter
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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by Jetter »

Conti764 wrote:
travellover wrote:IF the option to kill the long haul market and the * hub becomes reality, is it totaly realistic because of the strong local demand for several routes ? FIH, KGL, ABJ, JFK and even NRT. More enlightments ?
IF (indeed) it might happen, these gaps will be filled by others and LH gets zero from it...
That's only an issue for Africa. LH has Joint Ventures in place with UA, AC, NH, SQ and soon CA. By having these partners fly to BRU they can match the current intercontinental destinations besides Afrika, and even expand to a much better coverage than SN offers now by by adding Singapore/Peking/Houston/Denver/Los Angeles/San Francisco i.e. All while sharing in revenue because of the JV's.

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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by LJ »

Conti764 wrote:To go even further, I would use BRU (either SN or EW long haul, depending on the profile of the destination) to compete against KL (AMS) and AF (CDG) and start offering flights to the overseas territories of those companies where they now have a near monopoly.
Though I agree that LH invests in SN to ensure thart AF/KL doesn't get too much power (hence why DL will never axe BRU completely), dreaming that they'll fly to the former Dutch and French colonies is something which won't happen. Yields are terrible for most of these destinations and one can only make money due to the volume. Moreover, there is ample competition already on these routes.
Conti764 wrote: What I can imagine, however, is that LH will eventually transfer some lower profit European flights from SN to EW, while SN retains the better performing (business) destinations and long haul. SN is a strong brand in Africa and focus should be returned to the continent again, besides some more long haul to other destinations in the world.
I don't think that this is the most plausible scenario (though I would say the majority of all European flights will be moved). The people thinking doomsday scenario's for SN do not realise that LH Group invested in SN a lot. However, I don't expect that this takeover is something most employees will benefit from.

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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by teddybAIR »


FR: 10000 staff for 117000000: 1 staff member for 11700.
Long haul? Cargo? Technics? Average ticket price?

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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by sn26567 »

Darjeeling wrote:The first rumour has it that IAD flights won't be reinstated after the winter stop for the S17 schedules.

UA sales staff in BRU have seemingly already been briefed accordingly and the decision comes straight from Germany... It's not necessarily a bad one because after all SN needs to focus on AFI in 2017...
Brussels Airlines strongly deny this rumor. After the annual winter stop, Brussels Airlines will resume its Washington IAD service (end of March 2017). Flights are open for sale and there is no intention to cancel the popular Washington service. SN even have increased our frequencies already this summer thanks to the growing demand.

 
André
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Klausenburg
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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by Klausenburg »

Brussels Airlines intégrée à Eurowings, mais pas avant 2018

La compagnie aérienne allemande Lufthansa veut rassembler au moins une partie de la flotte de sa filiale Brussels Airlines avec son entité à bas coûts Eurowings, a confirmé jeudi Karl Ulrich Garnadt, administrateur à Lufthansa et responsable pour Eurowings.

Il a ajouté au cours d'un briefing de presse que la situation allait être inchangée à Bruxelles au moins jusqu'en 2018.

Le conseil de surveillance de Lufthansa a donné son feu vert mercredi à la reprise totale de Brussels Airlines. L'objectif est d'arriver à un accord autour des modalités d'ici la fin de l'année avec les actionnaires belges, de manière à ce que Lufthansa puisse reprendre début 2017 les 55% d'actions qu'elle n'a pas encore en mains.

La compagnie belge sera ensuite intégrée à Eurowings, a confirmé jeudi M. Garnadt. Rien ne devrait toutefois changer avant 2018 et même une éventuelle appellation n'a pas encore été décidée. L'administrateur a ajouté que Brussels Airlines avait les coûts opérationnels les plus faibles au sein du groupe Lufthansa

Selon le directeur d'Eurowings, Jörg Beißel, au moins 38 des 49 appareils de Brussels Airlines conviendraient parfaitement au modèle Eurowings.

Ces avions, ajoutés aux 35 appareils qui seront loués auprès d'Air Berlin, permettront à Eurowings de considérablement renforcer sa flotte qui compte actuellement 90 appareils.

Le gouvernement négociera un ancrage belge

Par ailleurs, le gouvernement fédéral s'invitera à la table des négociations sur la reprise de la compagnie aérienne, a indiqué jeudi le Premier ministre Charles Michel en réponse à des questions à la Chambre. Il veillera à garantir "l'ancrage" belge, l'emploi et la présence en Belgique d'un "centre de décision", a-t-il indiqué.

Le moment est "délicat" eu égard au rôle de Bruxelles, au rôle de la Belgique, a admis le Premier ministre, mais il peut également constituer une "opportunité", celle du "renforcement du rôle de Bruxelles dans une grande compagnie".

M. Michel a également souligné que la politique aéroportuaire figurerait, à travers le volet mobilité, au coeur du pacte d'investissement qu'il défend, avec les entités fédérées.

Le gouvernement fédéral sera présent à la table des négociations à travers la société fédérale de participations et d'investissement (SFPI), qui détient des parts dans Brussels Airlines.
Source: http://trends.levif.be/economie/entrepr ... 56563.html

Jetter
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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by Jetter »

38 out of 49 planes would fit in the EW model according to LH. That means all A319's, A320's and Avro's go to EW. Which would leave SN with A330's and Dash8's, but that's an illogical combination.

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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by Bralo20 »

Guess if confirmed I see some of the shareholders declining the take over and taking it to court for a very long battle... And we all know how court cases go in Belgium, it's something that will go on for years to come...

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