Brussels Airlines future and financial perspective

[nordikcam]

Brussels Airlines wants to expand its flights to the USA for years into a full-fledge addition to the European and African activity, says CEO Bernard Gustin.

In an interview to De Tijd, the CEO of the airline explains that he would like "one or two destinations in the eastern US added to the programme of Brussels Airlines. The company has since 2012, after a long absence, another US offer.

If we have JFK and IAD...which cities could it be ? BOS and YUL ? But YUL is in Canada...not US...so ?

[RoMax]

I would say Boston and Chicago or maybe Newark as a second NYC connection. I would also say Houston, but that's not really eastcoast anymore, is it...

[nordikcam]

I would say Boston and Chicago or maybe Newark as a second NYC connection. I would also say Houston, but that's not really eastcoast anymore, is it...

Yes...I agree but I guess UA could open IAH in the future...not SN

[Inquirer]

Chicago might be a good guess: the United flight is often very full I hear from colleagues taking it, and isn't that also United's biggest hub? If United/Brussels fly twice daily on New York and Washington which are smaller hubs, surely the bigger one can do with an extra flight?
Ok, it's less of a tourist destination, but it's a route popular with people flying for work and that's what really earns most money, I should guess?

[sn-remember]

I don't see the business case for iah. SN offers no connectivity to the oil centers.
ORD is not the better place to transit through and I would say that the daily UA service covers well the (mostly O/D ?) trafic.
To participate to the guess exercise, I would see BOS and NYC (either a 2nd jfk or ewr) as posssible candidates.
At the same time increasing services to AFI in general and to eastaf in particular might prove beneficial.
Btw are they expecting additional A330's to support the move ?

[OO-ITR]

Chicago might be a good guess: the United flight is often very full I hear from colleagues taking it, and isn't that also United's biggest hub? If United/Brussels fly twice daily on New York and Washington which are smaller hubs, surely the bigger one can do with an extra flight?
Ok, it's less of a tourist destination, but it's a route popular with people flying for work and that's what really earns most money, I should guess?

I think ORD, EWR will be more difficult to open an additional route since UA is already operating these destinations. IAD is not exactly very succesfull...
If I recall ORD is downgraded this winter to an B767 (correct me if I am wrong), so not sure if this is the most profitable route for UA.
I don't understand why they don't open routes to the westcoast. Are they gonna wait again, like they did waiting several years to open JFK, so other carriers started up these routes.

My guess would be BOS and a destination in Canada. Not sure if BOS is big enough for the Brussels market and further development also depends on what Jet Airways will eventually do.

IAH could also be a possibility since it is an UA hub and has several connections to South America...Or they could swap an existing destination with UA and let UA fly IAH-BRU.

[RoMax]

I think ORD, EWR will be more difficult to open an additional route since UA is already operating these destinations. IAD is not exactly very succesfull...

IAD is only not working in the winter season, if it wouldn't be successful at all, they wouldn't relaunch it next year and use the capacity elsewhere as they'll do this winter.

If I recall ORD is downgraded this winter to an B767 (correct me if I am wrong), so not sure if this is the most profitable route for UA.

Winter is low season for the north trans-Atlantic market and UA can use 777 capacity more profitable on other routes that are in high season during the winter. Doesn't mean ORD is not doing well, on the contrary, they have a monopoly, they can keep prices up by lowering the capacity during the low season. IAD wasn't such a high capacity route for UA either, still SN is doing well on that route in the summer (not in the winter, true).

I still bet on ORD, besides BOS and a second NYC connection (in which case I would say EWR).

I would prefer YUL, but as SN talks about US destinations...

[convair]

BOS and ORD seem to me the most logical choices. ORD is good for connections to/from the West and BOS has no direct link to BRU.
In terms of fleet, I wouldn't be surprised to see LH allowing SN to add 2 or 3 A330s next year: it would be consistent with their recent statements on fleet renewal for the group, SN being seemingly more and more implicitly included in that concept.

[SN1234]

I tink BOS is a certainty, but for the second destination I guess Miami or Cincinatti.

[Flanker2]

I say: stop day-dreaming.
Have you guys read what is written there? Profit in 2015, 5% nett margin target by 2018.
5% nett margin by 2018? So what kind of profit are they targetting in 2015? 1%?

What does it mean? These are targets and illustrate that there is more downward risk than upward potential.

I don't see SN reducing its losses in 2014. According to my math, which has proven relatively accurate year after year, they will be the same if not slightly worse.
SN will see several millions evaporate in the next months, not so much on the revenue side, but on the cost side. Contributing factors: the 10% higher USD.

It's not by chance that FR, VY, VG and JAF have decided to attack SN simultaneously. If even small ones like VG are preparing to take benefit from SN's demise, then we know where SN stands.
I'm still wondering why FR has been so passive on the winter schedule. Surely they must be planning something big for the spring, the same way they did last year?

SN is a semi-government airline that doesn't take risks but is probably primarily considered an employment vehicle.
Unfortunately, airlines are the worst thing that you can run as a social non-profit. It's just too competitive, so it's not easy to keep such a vehicle running.

[FlightMate]

The good news for SN (and other airlines) is the fuel price.
If it remains where it is, they will be able to make profits sooner than later.

But that's a big IF.
And hopefully they haven't edged too much of their fuel bill at 110usd.

[DannyVDB]

Hi all,

One or two (new) destinations in the US would be great.

Don't know if that will happen soon though:
- Other airlines are decreasing capacity in the Europe-US market (e.g. AF/KL, DL - see information in several articles on CAPA), even if the decrease is modest (on the other hand Austrian increased capacity to the US last year which is the only reason they had a modest growth over the past 9 months - keeping in mind they lost pax to Eastern Europe, ME)
- The decision will be taken by LH,UA, AC, SN, ... together, not in isolation; if they think they can 'steal' some pax from Paris/Amsterdam/London in that way, they will do it, otherwise not
- There are no announcements yet of new airplanes, so these plans might rather be for 2015 or so

This said, I hope they will add destinations, their product is great (both un business and economy).

Personally I will not take flights (even SN) to transfer in the US or Canada unless there is no other option. I just hate that (sometimes 1h for border control, taking your luggage and checking it in again, high risk of missing connections). I prefer to transfer in FRA/MUC and fly to my destination but that is of course not always possible.

Cheers,
Danny

[Flanker2]

The good news for SN (and other airlines) is the fuel price.
If it remains where it is, they will be able to make profits sooner than later.

But that's a big IF.
And hopefully they haven't edged too much of their fuel bill at 110usd.

Fuel spot market prices have gone down significatnly the last months.

However, I think that we can factor fuel out for 2014 and a good part of 2015, due to hedges which should already be in place but also due to lag between market spot prices and pump prices. Also, while spot prices vary strongly, at the pump they are much less volatile as spot prices are mostly FOB and do not take all the other costs into account (transportation, storage, delivery, supplier margins, etc...)

The currency has a more immediate effect and it applies more broadly on the cost base, including but not limited to the fuel.

I don't know where the currency is going, but 1,25 EUR/USD or lower is not sustainable for European aviation, except for those airlines that did hedge their currency for the short and medium term.

[airazurxtror]

Gustin also reiterates aiming at profit in 2015. In 2013 the loss was curtailed from 90 to 21 million. It should be reduced further in 2014, only to re-establish positive numbers from next year. In 2018 he expects a net profit of 50 million euros.

We finally have figures :
- loss of 21 million euros in 2013
- loss of less than 21 million in 2014
- "positive numbers" in 2015
(Those are the three years with a subsidy of around 16 million each year - included but set aside until the EC ruling. If the ruling is positive for SN, OK - if not, too bad ....)
- doubtful subsidy in 2016 and 2017, no number given
- 50 million euro profit in 2018
We know what to expect, and will see if all goes accordingly.

[sn-remember]

In terms of fleet, I wouldn't be surprised to see LH allowing SN to add 2 or 3 A330s next year: it would be consistent with their recent statements on fleet renewal for the group, SN being seemingly more and more implicitly included in that concept.

Well I know TAM is already in the process of getting rid of their A332 fleet ... as the B787 continue to arrive.
I don't know their fate .. probably already found some buyer ..

- The decision will be taken by LH,UA, AC, SN, ... together, not in isolation; if they think they can 'steal' some pax from Paris/Amsterdam/London in that way, they will do it, otherwise not

There is more to it than just "stealing" pax ...
Bru needs to sell their case better to lh and Star.
It's arguably the most convenient entry point to Europe and Afi.

(sometimes 1h for border control, taking your luggage and checking it in again, high risk of missing connections). I prefer to transfer in FRA/MUC and fly to my destination but that is of course not always possible.

I can understand .. My brother (who works a lot with the US) tried connecting at Dub recently and was very pleased with the ewperience.. Immigration at dub was smooth and transfer in the Us a breeze.
Which brings the question : why not implement the same at bru ?

[RoMax]

I can understand .. My brother (who works a lot with the US) tried connecting at Dub recently and was very pleased with the ewperience.. Immigration at dub was smooth and transfer in the Us a breeze.
Which brings the question : why not implement the same at bru ?

US immigration services is not something that's easy to implement at a non-US airport... I heard the US wants to expand this service to other key-European airports, but at this point BRU is not significant enough compared to many other European hubs. Ireland has the advantage of their location. One thing that could help BRU persuade the US, is the fact that we have the EU and NATO headquarters.

[Conti764]

I can understand .. My brother (who works a lot with the US) tried connecting at Dub recently and was very pleased with the ewperience.. Immigration at dub was smooth and transfer in the Us a breeze.
Which brings the question : why not implement the same at bru ?

US immigration services is not something that's easy to implement at a non-US airport... I heard the US wants to expand this service to other key-European airports, but at this point BRU is not significant enough compared to many other European hubs. Ireland has the advantage of their location. One thing that could help BRU persuade the US, is the fact that we have the EU and NATO headquarters.

Then they'll have to re-install a US Outbound section at BRU which can only be entered after US bordercontrol. I don't know what the exact plans of tBAC are, but if I remember correctly, the (future?) A-pier West is to be dealing with international traffic. Given Star Alliances under-one-roof-policy, I'd imagine them centralizing all international *A traffic at A-pier West, resulting in two seperate 'US'-areas...

[Bel33]

Again an important growth for SN in october: mean + 18.5% (+100.000 pax) and European operations +21.5%
This growth has also led to an improvement of the passenger load factor in October, which increased by 4.4 percentage points!
Very good results when compared with other european operators.

[RoMax]

The full results can be found here:
http://press.brusselsairlines.com/186-p ... in-october

So as said an 18.5% growth (about 98,000 additional passengers) to a total of 624,794 and a 4.4 pct point loadfactor increase to 72.2%.
In Europe a growth of 21.5% and 6.5 pct point increase in loadfactor to 77.6%, this was the first full month with the new 4 ticket types.
In Africa a growth of 1.5% and a 0.8 pct point higher loadfactor. In the US a 4.5 pct point increase in loadfactor, but total pax numbers are said to remained stable.

Overal capacity growth (ASK - available seat kilometres) was 'just' 5.4%, but actual traffic (RPK - revenue passenger kilometres) rose with 12.3%. This is lower than the growth in pax numbers, because that growth was mainly in Europe, and short flights have lower impact on the RPK/ASK compared to long haul routes.

Cargo (freight-ton kilometres) increased with 4.7% and overall loadfactor of pax and cargo combined rose 4.1% to 62.8%

The growth rate in Europe is impressive to say the least, not only 21.5% growth in pax numbers, but also a loadfactor increase from 71.1% to 77.6%.

[FlightMate]

+21%

where do these passengers come from? Lufthansa? Adding capacity is not all, filling the seats is the real challenge.
well done!

any hints about any increase in revenue?