Brussels Airlines in 2020

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Deejay
Posts: 23
Joined: 06 Feb 2018, 09:20

Re: Brussels Airlines in 2020

Post by Deejay »

African destinations are part of the SN business model and help to finance the european operations as well.
I understand that this is the principle of a hub-network airline.

What I do not understand is why LX and OS can (could in the pre-corona era) fly to BKK for instance, and SN not,
AND, at the same time, Thai did start service to BRU,
they don't do this to loose money, don't they ?

does the availability of smaller two engines wide bodies and the end of the big 4engines change this business model ?
would that also be an opportunity for SN ?

shockcooling
Posts: 233
Joined: 25 Jan 2007, 17:18

Re: Brussels Airlines in 2020

Post by shockcooling »

Poiu wrote:
28 Apr 2020, 10:58
Conti764 wrote:
28 Apr 2020, 10:43
initially the question is not what's good for Belgium, but what's good for Brussels Airlines to survive this crisis and I think the African ops have proven to be paramount in the survival of Brussels Airlines.
Are they paramount?
African ops are not viable without connecting passengers, SN has 3 A320s a day flying to Paris to pick up connecting passengers to Africa. Profit must be wafer thin as these passengers only fly SN because they are cheaper than AF.
Do we need to spend hundreds of millions of taxpayers money to offer cheap travel between France and Africa?
If we think like that, oh boy. Where did all our taxpayers money went to like for everything? Do you find that all our taxpayers money is always well spent? Is the total amount of taxpayers money ever spent less than 290 million? I can start a list with gazillion things where I think my taxpayers money was not well spent, you want me to start?

Jetter
Posts: 474
Joined: 06 Nov 2015, 21:07

Re: Brussels Airlines in 2020

Post by Jetter »

shockcooling wrote:
28 Apr 2020, 11:15
Poiu wrote:
28 Apr 2020, 10:58
Conti764 wrote:
28 Apr 2020, 10:43
initially the question is not what's good for Belgium, but what's good for Brussels Airlines to survive this crisis and I think the African ops have proven to be paramount in the survival of Brussels Airlines.
Are they paramount?
African ops are not viable without connecting passengers, SN has 3 A320s a day flying to Paris to pick up connecting passengers to Africa. Profit must be wafer thin as these passengers only fly SN because they are cheaper than AF.
Do we need to spend hundreds of millions of taxpayers money to offer cheap travel between France and Africa?
If we think like that, oh boy. Where did all our taxpayers money went to like for everything? Do you find that all our taxpayers money is always well spent? Is the total amount of taxpayers money ever spent less than 290 million? I can start a list with gazillion things where I think my taxpayers money was not well spent, you want me to start?
You have a good point but the wrong solution. If taxpayer money isn’t well spend on other things the solution is to stop that spending, not to be easy going with additional spending. An even more gigantic state debt of Belgium will be the result otherwise.

Poiu
Posts: 832
Joined: 14 Nov 2015, 09:38

Re: Brussels Airlines in 2020

Post by Poiu »

shockcooling wrote:
28 Apr 2020, 11:15
If we think like that, oh boy. Where did all our taxpayers money went to like for everything? Do you find that all our taxpayers money is always well spent? Is the total amount of taxpayers money ever spent less than 290 million? I can start a list with gazillion things where I think my taxpayers money was not well spent, you want me to start?
Off topic and too political for this website, but it’s exactly this mentality of: we threw a lot of money away in the past, so let’s just continue, which caused our huge debt.
Spending is easy, but who is going to pay for this? Maybe we should answer this question first and only then decide in which bottomless pit we dump the money.
Last edited by Poiu on 28 Apr 2020, 11:53, edited 1 time in total.

larsV
Posts: 6
Joined: 13 Aug 2019, 03:46

Re: Brussels Airlines in 2020

Post by larsV »

Deejay wrote:
28 Apr 2020, 11:04
African destinations are part of the SN business model and help to finance the european operations as well.
I understand that this is the principle of a hub-network airline.

What I do not understand is why LX and OS can (could in the pre-corona era) fly to BKK for instance, and SN not,
AND, at the same time, Thai did start service to BRU,
they don't do this to loose money, don't they ?

does the availability of smaller two engines wide bodies and the end of the big 4engines change this business model ?
would that also be an opportunity for SN ?
I also never understood this. BRU is located in the heart of Europe and still nobody seems to be capable of building a decent network out of Brussels. Especially to Asia

User avatar
Conti764
Posts: 1753
Joined: 21 Sep 2007, 23:21

Re: Brussels Airlines in 2020

Post by Conti764 »

Poiu wrote:
28 Apr 2020, 10:58
Conti764 wrote:
28 Apr 2020, 10:43
initially the question is not what's good for Belgium, but what's good for Brussels Airlines to survive this crisis and I think the African ops have proven to be paramount in the survival of Brussels Airlines.
Are they paramount?
African ops are not viable without connecting passengers, SN has 3 A320s a day flying to Paris to pick up connecting passengers to Africa. Profit must be wafer thin as these passengers only fly SN because they are cheaper than AF.
Do we need to spend hundreds of millions of taxpayers money to offer cheap travel between France and Africa?
The African ops are what kept SN afloat all these years. So yes, they are paramount. What else do you suggest? Terminate SN and surrender whatever market at BRU to the competition?

crew1990
Posts: 1123
Joined: 29 Dec 2010, 21:46

Re: Brussels Airlines in 2020

Post by crew1990 »

larsV wrote:
28 Apr 2020, 11:45
Deejay wrote:
28 Apr 2020, 11:04
African destinations are part of the SN business model and help to finance the european operations as well.
I understand that this is the principle of a hub-network airline.

What I do not understand is why LX and OS can (could in the pre-corona era) fly to BKK for instance, and SN not,
AND, at the same time, Thai did start service to BRU,
they don't do this to loose money, don't they ?

does the availability of smaller two engines wide bodies and the end of the big 4engines change this business model ?
would that also be an opportunity for SN ?
I also never understood this. BRU is located in the heart of Europe and still nobody seems to be capable of building a decent network out of Brussels. Especially to Asia
Because BRU is also surrounded by the biggest player in Europe, British Airways, KLM, Air France and Lufthansa.

By the way Brussels Airlines with almost 100 of destinations is not that small neither. Mainly in term of Europan network

oldblueeyes
Posts: 74
Joined: 13 Apr 2020, 12:44

Re: Brussels Airlines in 2020

Post by oldblueeyes »

Poiu wrote:
28 Apr 2020, 09:52
longwings wrote:
28 Apr 2020, 08:20
A blocking minority in Brussels Airlines for €290m maybe, but in Lufthansa, he is delusional. Even if the price was right (and it is very far from), the German government would never allow it. They'd rather increase their own cash infusion by €290m to keep Belgium out
A blocking minority for 290 mio? :roll:
SN is probably worth less than one million today, Luftie paid 2.6 million for 55% in 2017, since then debts increased and for the moment there isn’t even cash left for refunds.
If the Belgian State provides a 290 million loan, that loan should be guaranteed by LH shares as it will be impossible for SN to pay back that loan.
Lufthansa paid the price they agreed in 2005 trough a put/call option with the ex shareholders. Not their failure if the former majority wasn't able to increase the valuation of the company.

Secondly, you have to think what the destintion of this money is.

From a pure business point of view, Lufthansa can fire 2/3 of the struture and re-start much smaller. On the other hand, if Belgium wants to keep a certain infrastructure of this industry alive trough the crisis, it is free to contribute, but that'S rather a subsidy - so rather subsidizing for a while "employment" rather than paying for unemplyoment.

And try to be realistic - sssome of the politicians are not. If Germany will subsidize 7-9bn, the Siwss government around 1,5 bn CHF, Austria i talking about mabye 800 mio, than even if converted into shares, the voting rights of Belgium would be worth nothing.

Let's come back to the facts - SN pre Covid wass only 3% of LH's passsenger traffic and unable to make money.

Jetter
Posts: 474
Joined: 06 Nov 2015, 21:07

Re: Brussels Airlines in 2020

Post by Jetter »

Conti764 wrote:
28 Apr 2020, 11:55
The African ops are what kept SN afloat all these years. So yes, they are paramount.
I’ve seen this mentioned a lot but do you have a source that the African destinations were profitable, and thus the rest of the destinations unprofitable given that SN didn’t make a profit over its lifetime?

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sn26567
Posts: 36819
Joined: 13 Feb 2003, 00:00
Location: Rosières/Rozieren, Belgium
Contact:

Re: Brussels Airlines in 2020

Post by sn26567 »

The German government is injecting 9 billion € into LH in exchange for a blocking minority and one or two seats in the Board. The same solution can apply to SN (at a smaller scale, of course).

https://www.aviation24.be/airlines/luft ... lufthansa/
André
ex Sabena #26567

nordikcam
Posts: 1067
Joined: 24 Aug 2008, 10:22
Location: Uccle

Re: Brussels Airlines in 2020

Post by nordikcam »

oldblueeyes wrote:
28 Apr 2020, 12:06
Let's come back to the facts - SN pre Covid wass only 3% of LH's passsenger traffic and unable to make money.
LH's supreme interest in SN was not SN itself but the fact of being able to control the non-presence of other operators at BRU

Duke
Posts: 266
Joined: 08 Feb 2005, 00:00

Re: Brussels Airlines in 2020

Post by Duke »

Swiss and Austrian are reconfiguring B777's into temporary freighters by removing part of the passenger seats, to operate cargo flights.
I guess this is a rather easy modification that can generate extra revenue as the aircraft are still costing money, even when they are stored at an airport, because they have to be maintained in storage.
Is Brussels Airlines planning to do the same with some of the A330's?
With a current shortage in cargo flights, the prices paid for those flights will go up, which makes those flights profitable, or at least, reduce the costs of not using the aircraft?
Or did I miss some points?

Regards,

Duke

oldblueeyes
Posts: 74
Joined: 13 Apr 2020, 12:44

Re: Brussels Airlines in 2020

Post by oldblueeyes »

nordikcam wrote:
28 Apr 2020, 12:23
oldblueeyes wrote:
28 Apr 2020, 12:06
Let's come back to the facts - SN pre Covid wass only 3% of LH's passsenger traffic and unable to make money.
LH's supreme interest in SN was not SN itself but the fact of being able to control the non-presence of other operators at BRU
Of course. And a management performing sufficiently that from one hand enough market share should be built to block enough other players, on the other hand weak enough to keep the valuation of the call rights low.

Maybe these opposite interests were the biggest issue accepted mutually in the past, but escalating lately.

User avatar
Conti764
Posts: 1753
Joined: 21 Sep 2007, 23:21

Re: Brussels Airlines in 2020

Post by Conti764 »

Jetter wrote:
28 Apr 2020, 12:07
Conti764 wrote:
28 Apr 2020, 11:55
The African ops are what kept SN afloat all these years. So yes, they are paramount.
I’ve seen this mentioned a lot but do you have a source that the African destinations were profitable, and thus the rest of the destinations unprofitable given that SN didn’t make a profit over its lifetime?
I don't have a source, but is has always been said the African ops were SN's bread and butter which also sounds quite logical given the fact SN's other markets are more competitive.

theeuropean
Posts: 203
Joined: 22 Dec 2009, 17:35

Re: Brussels Airlines in 2020

Post by theeuropean »

Some news about Spohr's position:

https://www.tagesschau.de/wirtschaft/lu ... e-101.html

I have tried to summarise from a google translation as I don't know German, but here is the gist of it:

Basically he saying he doesn't want to be told where to fly from by politicians. He also wants a bailout, but to be left to manage company. Finally, he would rather declare bankruptcy than accept terms from the bailouts.

My personal opinion: How can he actually expect a "no strings attached" to a bailout or a loan? If he wants to declare bankruptcy maybe it is easier then for the BE government to buy out SN for cheaper and continue operations? I think he is trying to play hardball but at the end of the day he doesn't have much choice is my opinion - bankruptcy who will start LH from scratch, probably only the DE government, I don't see investors piling money in soon to airlines.

LJ
Posts: 887
Joined: 14 Mar 2004, 00:00
Location: Heiloo NL

Re: Brussels Airlines in 2020

Post by LJ »

nordikcam wrote:
28 Apr 2020, 12:23
LH's supreme interest in SN was not SN itself but the fact of being able to control the non-presence of other operators at BRU
You can better say, LH needed to ensure that AF/KL didn't get control over Africa and BeNeLux or IAG getting too close to LH Group's main market (Germany). This is still true and is still the prime reason why LH Group needs SN.
oldblueeyes wrote:
28 Apr 2020, 13:33
Of course. And a management performing sufficiently that from one hand enough market share should be built to block enough other players, on the other hand weak enough to keep the valuation of the call rights low.
Ebola and the terrorist attack didn't help SN either. Or do you blame the management for that as well?

oldblueeyes wrote:
28 Apr 2020, 13:33
Maybe these opposite interests were the biggest issue accepted mutually in the past, but escalating lately.
Which opposite interests exist nowadays? Any EUR lost is an EUR lost on the LH Group P&L.

nordikcam
Posts: 1067
Joined: 24 Aug 2008, 10:22
Location: Uccle

Re: Brussels Airlines in 2020

Post by nordikcam »

LJ wrote:
28 Apr 2020, 15:55
nordikcam wrote:
28 Apr 2020, 12:23
LH's supreme interest in SN was not SN itself but the fact of being able to control the non-presence of other operators at BRU
You can better say, LH needed to ensure that AF/KL didn't get control over Africa and BeNeLux or IAG getting too close to LH Group's main market (Germany). This is still true and is still the prime reason why LH Group needs SN.
I agree. Beter said ;)

SR20
Posts: 495
Joined: 17 Apr 2017, 09:14

Re: Brussels Airlines in 2020

Post by SR20 »

SR20 wrote:
27 Apr 2020, 09:22
Tonight on LN24 : https://www.ln24.be/direct
Here is the full interview of Mr Davignon (french only) :

https://www.ln24.be/2020-04-28/50-minut ... e-davignon

Inquirer
Posts: 2085
Joined: 14 Feb 2012, 14:30

Re: Brussels Airlines in 2020

Post by Inquirer »

theeuropean wrote:
28 Apr 2020, 15:01
Some news about Spohr's position:

https://www.tagesschau.de/wirtschaft/lu ... e-101.html

I have tried to summarise from a google translation as I don't know German, but here is the gist of it:

Basically he saying he doesn't want to be told where to fly from by politicians. He also wants a bailout, but to be left to manage company. Finally, he would rather declare bankruptcy than accept terms from the bailouts.
A little background may be appropriate:

Like all airlines grounded at present, Lufthansa is facing a liquidity problem, caused by a significant imbalance between current daily revenues and remaining daily costs, one that can be filled up by having money provided by the government for instance. Such a deal would however come with conditions attached to it, something which is only logical of course, but some of those conditions Lufthansa may not like very much as they might interfere with their business strategy.

Luckily, Lufthansa is not an insolvent company and can turn several assets into liquidity as an alternative way of raising cash as has been pointed out in the past, so it's not that they don't have alternatives to a government loan, however this is a process likely to take some time.

What they are now contemplating is that to cover that timeframe, they could shield under a legal protection meganism, which would allow the current management to remain in power and not see a watering down of their shareholders, while they can cut any excess costs with approval of the court and free the money needed, all on their own, thus remaining loyal to their own strategy rather than having to take strategic imputs from others which may or may not make much sense.

It may not be the swiftest way to get the required cash in, and it would definitely make some headlines around the world, but it's not unheard of to do it this way. In fact, it's the 'normal' way to do it, with going to the government for money being the absolute exception, at least until a couple of weeks ago (unless you were Alitalia, where the government has been the lender of last resort for years already...)

If you're convinced your business strategy is sound, and you have the means to raise the required cash yourself, it would be foolish to sign up to any government bailout which risks breaking up your company.
Time will tell is this is just a negotiating tactic of theirs or a real plan, but it's definitely not so crazy as it may look at first!

Passenger
Posts: 6778
Joined: 06 Dec 2010, 20:54

Re: Brussels Airlines in 2020

Post by Passenger »

The Belgian state aid to Brussels Airlines was discussed in the Belgian Parliament today - in the Commission Finance of the Kamer der Volksvertegenwoordigers / Chambre des Réprésentants.

The provisional report of the meeting is already online:
https://www.dekamer.be/doc/CCRI/html/55/ic161x.html

I only copy/paste what minister De Croo said (he replied in Dutch and French, hence bilangual text):
...

01.18 Minister Alexander De Croo: Mevrouw de voorzitter, er zijn heel wat vragen, waarvoor dank. Wij zijn dus denkelijk vertrokken voor een nieuwe marathon. Ik zal mijn best doen, om mijn tempo onder controle te houden, waardoor de vertaling kan volgen.

...

De heer Vandenbroucke vroeg naar de financiële toestand van Brussels Airlines. Op 17 maart heeft Brussels Airlines een brief gestuurd aan de eerste minister met de vraag naar een overbruggingskrediet van 200 miljoen euro. Die vraag werd overgemaakt aan de Economic Risk Management Group. De subgroep grote ondernemingen binnen de ERMG besliste om een taskforce luchtvaart te creëren, geleid vanuit de FPIM, om alle vragen vanuit de sector te bundelen, te analyseren en aan de regering voor te leggen.

Un premier rapport sur Brussels Arlines a été envoyé le 7 avril 2020 à la cellule stratégique du premier ministre, à la mienne et à celle du ministre de l'Emploi, de l'Économie et des Consommateurs. Des contacts ont eu lieu entre la task force Transport européen et le management de Brussels Airlines les 5 et 10 avril pour analyser la demande de soutien et le business plan de Brussels Airlines. La demande d'aide est passée de 200 à 290 millions d'euros.

Le lundi 20 avril, la task force Transport européen et le nouveau coprésident du conseil d'administration de SN Airholding, Jan Smets, ont eu un échange.

Op 27 en 31 maart en op 3, 8, 15, 17 en 21 april zijn er ook calls geweest tussen FPIM en het management van Lufthansa en Brussels Airlines. Aan de taskforce luchtvaart is gevraagd om eerst een grondige analyse te maken van de steun aan vraag. De taskforce is daarover in gesprek met het management van Brussels Airlines en Lufthansa. Indien de regering op basis van die analyse beslist om steun te verlenen aan Brussels Airlines, zullen de voorwaarden waaronder dat zal moeten gebeuren, bepaald worden. Daarover zal een onderhandeling moeten plaatsvinden met Lufthansa, die voor 100 % eigenaar is van Brussels Airlines. Daarbij zal rekening moeten worden gehouden met aspecten als werkgelegenheid, klimaat en andere maatschappelijke doelstellingen.

Als er een financieringsbehoefte is, waarbij nu sprake is van 290 miljoen euro, dan lijkt het mij logisch dat die vraag niet enkel aan de Belgische overheid kan worden gesteld. Als er een vorm van financiering moet gebeuren, dan lijkt het mij logisch dat een deel van die financiering van andere instanties komt, bijvoorbeeld de huidige aandeelhouders van Lufthansa.

Het is voor de regering essentieel dat indien er hulp zou worden geboden, u hoort dat ik dat in de voorwaardelijke wijs zeg, de werkgelegenheid maximaal wordt beschermd en dat er een duidelijk toekomstperspectief wordt geboden aan Brussels Airlines om na de crisis opnieuw te kunnen groeien als homecarrier van België en een cruciale schakel te ontwikkelen van Brussel als internationale hub. De keuze van de instrumenten om steun te verlenen, indien dat gebeurt, zal in functie zijn van wat het meest is aangewezen en van de manier die ons de meeste garantie biedt dat die engagementen gerespecteerd kunnen worden.

Source (repeat): the provisional report of the meeting 28/04/2020:
https://www.dekamer.be/doc/CCRI/html/55/ic161x.html

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