Lufthansa buys the remaining 55% of Brussels Airlines

[travellover]

A summary from CAPA :
"Lufthansa's decision to take full control gives Brussels Airlines greater security and stability as a full member of the Lufthansa Group. It gives Lufthansa the opportunity for a step change in the scale of its low cost brand Eurowings (further boosted by the airberlin wet-lease agreement).

However, Brussels Airlines is a network airline (and an alliance member), while Eurowings is primarily (but not exclusively) a point-to-point airline. Furthermore, Brussels Airlines cannot be defined as low cost from a CASK point of view, even if its unit cost is below that of Eurowings. It should be said however that Brussels Airlines has managed to grow in the face of increased LCC competition in the past two years).

These discrepancies – in business model and in CASK levels – suggest that Lufthansa's vision of Eurowings is not that of the kind of LCC with which it increasingly competes in Europe. Perhaps it is more a pragmatic recognition of the limitations on how far it can take the LCC model. Perhaps, too, it will only integrate part of Brussels Airlines into Eurowings."

Expect further clarity of Lufthansa's thinking to emerge over coming weeks. It is quite probable that thinking is still evolving."
From http://centreforaviation.com/analysis/l ... ngs-304536

Indeed, my cent on it.

[Flanker2]

SN isn't "too big to fail", actions like these will likely lead to SN's demise in no time.

Well, if Spohr forces SN under EW, even if done in 2-3 years, there is your demise. Because when EW goes down, SN will be dragged down with it. I just don't see EW lasting more than 3 years from now. Does history ring a bell?

If that is the scenario, you might as well start with a cut-paste today rather than from zero in 2-3 years, no?
Also, just because LH would quit the table, it doesn't mean that the airline would go down and that there won't be other candidates.
In fact, with the current prospects of getting a yearly 80% ROI, the investors might as well invest in it themselves rather than to give it for LH to screw it up just for the sake of calming their emotions (yes, because EW is founded on emotions, not on a sound business plan).

SN26657, interesting about the dilution proposal, thanks for sharing.


In any case, if LH is interested to invest in SN, I don't see why it would be a problem for them to agree on keeping SN independent for another 10 years, just as they have done with OS and LX. All other plans are not acceptable and not the intent with which the first 45% stake was sold to them in the first place.
There is no discussion there.

[Passenger]

Well, if Spohr forces SN under EW, even if done in 2-3 years, there is your demise. Because when EW goes down, SN will be dragged down with it. I just don't see EW lasting more than 3 years from now. Does history ring a bell? If that is the scenario, you might as well start with a cut-paste today rather than from zero in 2-3 years, no? Also, just because LH would quit the table, it doesn't mean that the airline would go down and that there won't be other candidates. In fact, with the current prospects of getting a yearly 80% ROI, the investors might as well invest in it themselves rather than to give it for LH to screw it up just for the sake of calming their emotions (yes, because EW is founded on emotions, not on a sound business plan). SN26657, interesting about the dilution proposal, thanks for sharing. In any case, if LH is interested to invest in SN, I don't see why it would be a problem for them to agree on keeping SN independent for another 10 years, just as they have done with OS and LX. All other plans are not acceptable and not the intent with which the first 45% stake was sold to them in the first place. There is no discussion there.

You don't work in aviation, so why don't you accept the analysis from CAPA = non-SN external professionals, proven with facts and fictures, as kindly posted by sn-remember yesterday? Because CAPA contradicts almost all your statements? It's far from certain that Brussels Airlines will be integrated into Eurowings indeed, CAPA states.

Or perhaps you've just missed it, so let me repeat the link:
http://centreforaviation.com/analysis/l ... ngs-304536
And don't quote from that article only what you like, because their analysis also states other scenarios that they expect more likely.

Well, if Spohr forces SN under EW, even if done in 2-3 years, there is your demise. Because when EW goes down, SN will be dragged down with it.

When Ryanair and Easyjet (*) go bust because of the Brexit, Eurowings will rule the world. There is your remise.

(*) off course they won't, just like Eurowings won't.

[sn26567]

In an interview to Le Soir and La Libre Belgique this morning, Arnaud Feist, CEO of Brussels Airport which owns 4.2% of SN Airholding, says he is in favour of the integration of SN in the LH Group, but against its integration into EW. He cautions against the dismantling of SN and advises LH to leave some autonomous power of decision to SN. Not necessarily under the Brussels Airlines name, but if there is a name change, it should be commercially justified, because Brussels Airlines is a strong brand.

http://www.lalibre.be/economie/libre-en ... 1fc424f11d

[Passenger]

In an interview to Le Soir and La Libre Belgique this morning, Arnaud Feist, CE,O of Brussels Airport which owns 4.2% of SN Airholding, says he is in favour of the integration of SN in the LH Group, but against its integration into EW. He cautions against the dismantling of SN and advises LH to leave some autonomous power of decision to SN. Not necessarily under the Brussels Airlines name, but if there is a name change, it should be commercially justified, because Brussels Airlines is a strong brand.

Same interview in the Dutch press:
http://www.standaard.be/cnt/dmf20161003_02500059
and
http://www.hln.be/hln/nl/942/Economie/a ... ppij.dhtml

[convair]

A summary from CAPA :
"Lufthansa's decision to take full control gives Brussels Airlines greater security and stability as a full member of the Lufthansa Group. It gives Lufthansa the opportunity for a step change in the scale of its low cost brand Eurowings (further boosted by the airberlin wet-lease agreement).

However, Brussels Airlines is a network airline (and an alliance member), while Eurowings is primarily (but not exclusively) a point-to-point airline. Furthermore, Brussels Airlines cannot be defined as low cost from a CASK point of view, even if its unit cost is below that of Eurowings. It should be said however that Brussels Airlines has managed to grow in the face of increased LCC competition in the past two years).

These discrepancies – in business model and in CASK levels – suggest that Lufthansa's vision of Eurowings is not that of the kind of LCC with which it increasingly competes in Europe. Perhaps it is more a pragmatic recognition of the limitations on how far it can take the LCC model. Perhaps, too, it will only integrate part of Brussels Airlines into Eurowings."

Expect further clarity of Lufthansa's thinking to emerge over coming weeks. It is quite probable that thinking is still evolving."
From http://centreforaviation.com/analysis/l ... ngs-304536

Excellent and very interesting analysis by CAPA. Hope LH Board members read it!

In an interview to Le Soir and La Libre Belgique this morning, Arnaud Feist, CE,O of Brussels Airport which owns 4.2% of SN Airholding, says he is in favour of the integration of SN in the LH Group, but against its integration into EW. He cautions against the dismantling of SN and advises LH to leave some autonomous power of decision to SN. Not necessarily under the Brussels Airlines name, but if there is a name change, it should be commercially justified, because Brussels Airlines is a strong brand.

Same interview in the Dutch press:
http://www.standaard.be/cnt/dmf20161003_02500059
and
http://www.hln.be/hln/nl/942/Economie/a ... ppij.dhtml

And very clear-sighted statement by BRU's CEO IMHO.

[sn26567]

Arnaud Feist (a clever man and the right man in the right place) says a lot of other inresting things in his interview:

• Brussels Airport has invested a lot to become a Star Alliance hub. If SN becomes EW, it will just become a low-cost airport, which Feist refuses.
• 50% of the ANA passengers connect in BRU to/frim an SN flight. Hence the need for a home carrier and a hub ragher than an LCC airport.
• Feist wants SN to become similar to LX and OS within the LH Group. LH has no reason to refuse to the Belgians what they granted to the Swiss and the Austrians
• The customer appeal area of BRU (20 million inhabitants) is bigger than FRA, MUC, ZRH and VIE
• The price of 2.6 million euros is not important. There is a more important need for a guaranteed presence of a Belgian centre of decision within the LH Group
• Nobody wants a confrontation; LH and the Belgian shareholders need to find a common understanding
• Feist confirms that the Belgian government wished to asquire a blocking minority in SN, thus diluting the LH share.

[Yuqu12]

[*]Feist confirms that the Belgian government wished to asquire a blocking minority in SN, thus diluting the LH share.[/list]

Then the belgian government had to react when it was necessary and not when it is to late. But the government shouldn't forget that LH saved SN in 2008 because there was no money found in Belgium and be a little bit thankful for that (otherwise jobs would have been lost in the financial ciris). Strange thinking there at the government...

[Conti764]

[*]Feist confirms that the Belgian government wished to asquire a blocking minority in SN, thus diluting the LH share.[/list]

Then the belgian government had to react when it was necessary and not when it is to late. But the government shouldn't forget that LH saved SN in 2008 because there was no money found in Belgium and be a little bit thankful for that (otherwise jobs would have been lost in the financial ciris). Strange thinking there at the government...

Why being thankful for what is nothing else then a long term business investment? The only reason why LH bought SN in the first place was to make sure no competing alliance could develop a hub in its backyard. You already had AMS and CDG for ST, imagine BRU becoming an important hub for OW...

If they could have given SN a kick in the nutsack, they would have.

So no gratitude obliged imho...

[Conti764]

Arnaud Feist (a clever man and the right man in the right place) says a lot of other inresting things in his interview:

• Brussels Airport has invested a lot to become a Star Alliance hub. If SN becomes EW, it will just become a low-cost airport, which Feist refuses.
• 50% of the ANA passengers connect in BRU to/frim an SN flight. Hence the need for a home carrier and a hub ragher than an LCC airport.
• Feist wants SN to become similar to LX and OS within the LH Group. LH has no reason to refuse to the Belgians what they granted to the Swiss and the Austrians
• The customer appeal area of BRU (20 million inhabitants) is bigger than FRA, MUC, ZRH and VIE
• The price of 2.6 million euros is not important. There is a more important need for a guaranteed presence of a Belgian centre of decision within the LH Group
• Nobody wants a confrontation; LH and the Belgian shareholders need to find a common understanding
• Feist confirms that the Belgian government wished to asquire a blocking minority in SN, thus diluting the LH share.

All well, but now the million dollar question... What will Feist and BRU do if LH decides to fully integrate SN into EW and turn BRU into a low cost airport?

[Jetter]

All well, but now the million dollar question... What will Feist and BRU do if LH decides to fully integrate SN into EW and turn BRU into a low cost airport?

What can he do? EU-law states that the airport can't discriminate against specific EU-carriers. He could start legal procedures against LH as minor shareholder of SN. LH already has 45%, so they only need another 5% to fully control SN. The only realistic option to block SN's plans is if all other shareholders are united, Feist/BRU on his own have little influence.

[Passenger]

What will Feist and BRU do if LH decides to fully integrate SN into EW and turn BRU into a low cost airport?

Lufthansa won't. Passenger airport taxes at BRU are too high, compared to other possible low cost hubs. I don't know how the handling costs, parking fees etc. at BRU compare to other airports.

And if Lufthansa would move away the SN fleet to EW aircraft, another legacy carrier will take over the routes that Brussels Airlines used to do.

[convair]

And if Lufthansa would move away the SN fleet to EW aircraft, another legacy carrier will take over the routes that Brussels Airlines used to do.

....is doing.

[sn26567]

Lufthansa Executive Board member Karl Ulrich Garnadt says the German firm will take the whole of next year to study and consider its options insofar as the future of the Brussels Airlines brand is concerned.

"It will be 2018 until customers see any changes," he told Reuters last week.

Garnadt, who is also the Chief Officer of Eurowings, said Lufthansa's attention for the meantime would be focused on a forty plane wet-lease deal with Air Berlin, due to come into effect from late March of next year.

Source: ch-aviation

[Homo Aeroportus]

.... Passenger airport taxes at BRU are too high, compared to other possible low cost hubs. I don't know how the handling costs, parking fees etc. at BRU compare to other airports.
.

True BRU was never meant to be an LCC base and as such the charges and fees are higher than a typical LCC spot.
But when you compare it with other international A/Ps, BRU is very competitive.
It is usually difficult to make a full comparison between airports as some will be attractive on say landing fees but will be imaginative when it comes down to extras. Others are very open and detail all and any of these charges, fees and taxes.
EDDF/FRA is a interesting example. See : http://www.fraport.com/content/fraport/ ... 016-4c.pdf
They are also kind enough to give an on-line calculator : http://apps.fraport.de/airportcharges/m ... sp?lang=en

Enjoy,

H.A.

[Passenger]

And if Lufthansa would move away the SN fleet to EW aircraft, another legacy carrier will take over the routes that Brussels Airlines used to do.

....is doing.

I don't think Lufthansa will move the SN fleet to EW.

But if they would do so, then it's indeed "used to do" for Brussels Airlines, as one cannoy fly a route when the aircraft for that route are gone. Vueling has tried to operate flights without aircraft this summer, but they've failed every time.

[Boeing767copilot]

Carsten Spohr, de CEO van Lufthansa, sluit niet uit dat er jobs verdwijnen nadat zijn bedrijf het Belgische Brussels Airlines volledig heeft overgenomen. "In een sector als de onze bestaan geen jobgaranties." Hij geeft ook geen garantie dat de naam behouden blijft.
http://deredactie.be/permalink/1.2786502

[Passenger]

Carsten Spohr, de CEO van Lufthansa, sluit niet uit dat er jobs verdwijnen nadat zijn bedrijf het Belgische Brussels Airlines volledig heeft overgenomen. "In een sector als de onze bestaan geen jobgaranties." Hij geeft ook geen garantie dat de naam behouden blijft.
http://deredactie.be/permalink/1.2786502

- Spohr contradicts Davignon's statement that no jobs will be lost, simply because there are no job guarantees in aviation. "Even in Germany, we don't offer that".

- Brussels Airlines will not disappear, but a partial integration into Eurowings is inevitable because Brussels Airlines is too small, both at home and in Europe.

- Integration will be finalized in 2017 and it will be a win-win for both.

- Brussels Airlines will remain Belgian ("Brussels Airlines will keep a Belgian element") because we understand the airline is loved by the Belgians and by Brussels Airport.

- We have invested into Brussels Airlines because of its Africa network. And we see a growth there.

- We don't know yet what to do with the name "Brussels Airlines", but a referral to Belgium is certain. If we change the name, we'll have to find a better one, and we will agree about this with the airline's management.

- Brussels Airlines market share at Brussels Airport is 1/3th of Lufthansa's market share at FRA, of Swiss' market fare at ZRH and of Austrian's market share at VIE.

- Spohr reminds to the three reasons why Lufthansa has invested in Brussels Airlines:
1. the Belgian home market
2. the Africa network
3. both, combined at a specific hub.

[sean1982]

Clearly Davignon has nothing to say anymore. Making contradiciting statements doesnt help in NOT pushing the already worried unions over the edge

[Stij]

- Brussels Airlines market share at Brussels Airport is 1/3th of Lufthansa's market share at FRA, of Swiss' market fare at ZRH and of Austrian's market share at VIE.

Impressive!

In 2015 SN had a marketshare in BRU of around 32% (7,5m/23,5m) (and it's increasing...)

So, if zhe Germans, zhe Swiss and zhe Austrians have a market share that's 3 times bigger, they're all at 96%... NOT!

Stij

P.S. Probably the journalist's mistake. not Spohr... he's not an idiot...