Lufthansa buys the remaining 55% of Brussels Airlines

[travellover]

What with the destinations? Is Lufthansa going to keep the African network of SN?

Why should the core of the network change much and isn't the african network the dowry of Brussels Airlines (as Lufthansa always considered itself )?

[Yuqu12]

I don't know, some sources said that SN would become the third low cost player on Brussels Airport to compete with Ryanair and Easyjet. But some other say Lufthansa keep things as they are for the moment. That is why I'm wondering what is most likely to happen.

[travellover]

Isn't FR proposing the alternative choice onboard, for 2 years, to a quality service for business travellers (for instance at BRU) ? An hybrid model like SN ...

[travellover]

Does pushing that option to that extreme make sense ?
And certainly why destroying AFI network ? (Not the aim of LH as they always said the contrary).
And SN or BRU Star Alliance feeding hub ?

[avroflyer_1]

I'm personally not really against the take over of LH, they have been a reliable partner for years and have opened doors for SN to develop which would further be enhanced in the future (think of perhaps new planes,...) .

At this time I don't really see any indications as to LH going to change SN into EW whatsoever , on the contrary EW and the entire LH group taking lessons from SN's approach Europe.

@Yuqu12 LH would be really stupid if they were to ditch SN's African network, that's one of the reasons that they are interested in SN and it remains the big revenue generator for SN too.

[Yuqu12]

@avroflyer_1 thanks for the answer. I think the best option is to wait until the 27th of april to know sure what LH is actually going to do. Hopefully they respect what SN stands for.

[travellover]

Wait and see April 27 and from that day.
Likely a strengthening for SN.

[Apuneger]

Interesting article by Reuters on the talks it is having with both SAS and Brussels Airlines to spread Eurowings: http://www.reuters.com/article/us-bruss ... SKCN0XA1I5

Best regards,
Ivan

[Boavida]

https://www.monarchie.be/nl/agenda/audience-3

Maybe somebody already knows...

I presume the king wanted to know if there will still be a Belgian flag on the planes and that the name stays the same...?

Anyway, can we expect some information about this (possible horror-scenario of a rebranding) on the 27th of april? Or about the future strategy, the future role they see for SN, the fleet renewal maybe? Or will it just be an announcement about the buyout and that's it?

[convair]

What I read here is a deeply rooted, almost paranoid fear and reluctance for change!

Well, we better get used to a changing world.

[travellover]

What I read here is a deeply rooted, almost paranoid fear and reluctance for change!
Well, we better get used to a changing world.

Not me anyway. These are good news IF confirmed. SN has now grown its roots up and they have learnt the rules. LH wanted them profitable, they reached that aim. The long haul fleet will reach the ten mark in the end of the year (nine now). The future in the group is an added value. The crisis following the attacks is acute and uncertain of course but LH believes in the market, the medium and the long term view. The current crisis illuminates the need for a larger group for SN inside certainly its characteristic will be taken into account with the * synergies growing up more and more.

[travellover]

Just my two cents

[convair]

What I read here is a deeply rooted, almost paranoid fear and reluctance for change!
Well, we better get used to a changing world.

Not me anyway. These are good news IF confirmed. SN has now grown its roots up and they have learnt the rules. LH wanted them profitable, they reached that aim. The long haul fleet will reach the ten mark in the end of the year (nine now). The future in the group is an added value. The crisis following the attacks is acute and uncertain of course but LH believes in the market, the medium and the long term view. The current crisis illuminates the need for a larger group for SN inside certainly its characteristic will be taken into account with the * synergies growing up more and more.

Very positive reaction and, in my view, correct analysis of the current situation. Let's be bold and voluntarist!

[Flanker2]

Since the LH take-over is as good as a done deal, I will give my 2 cents:

1. Africa is here to stay, at least a few years. Hence, longhaul will probably stay under Brussels Airlines AOC since it requires Belgian traffic rights.
a. For the realists: branding can progressively change into Eurowings or Lufthansa Passage and this would be a prelude for a hub move to FRA or MUC. Of course, progressively, to avoid social unrest.
b. For the dreamers: LH can also decide to develop and invest in SN as a separate longhaul brand. What incentive they have to do so, I'm not sure. The market is not so big out of BRU and longhaul is already well covered from the other LH hubs. Are they going to send presents to BRU? New routes to Asia like LX?
c. Status quo is unlikely since above 80$ a barrel, SN can't be profitable no matter if shorthaul is done by themselves or Eurowings. LH wqill opt for a. or b. with time.

2. Shorthaul will partially go under Eurowings within a short period of time. Initially probably a handful of destinations, then a dozen, then before you know it most of it. Belgian crews will be retained initially, but progressively replaced by German cadets from the Lufthansa cadet pool.
This is already unfolding at OS.

3. The back-office will see cuts very soon.


Let's say that LH has a 300 million budget to spend in an airline. Give me a reason why they would spend it in BRU for SN to grow instead of Eurowings or even Passage in MUC or FRA.

There are ways to make SN very profitable by growing longhaul. But every such way is likely to work at least as well out of their other existing hubs.

Personally I will be convinced that SN will become another LX, if I see LH add at least 5 widebodies within 2-3 years, retaining the SN brand across the board for both short and longhaul.
As for their Eurowings project, it's a mess already operationally, and soon financially too. If SN gets absorbed into that, well good luck.

That kind of fiasco is unusual even for third-world airlines, and it is potentially disastrous for Eurowings and its parent, Lufthansa.

Lufthansa has to fix the problem because Eurowings forms the core of the most radical restructuring in Lufthansa’s history. The aim is threefold: To keep budget rivals at bay; to create a platform for cooperation with or buy other airlines; and to exert pressure on Lufthansa’s unionized employees to accept cuts in labor costs that are crucial to future of Europe’s largest airline.

As long as Lufthansa workers refuse cost cuts – which they are doing – there won’t be new hires or new planes; all of the growth will take place in low-budget Eurowings. Lufthansa wants to make Eurowings the third-biggest budget airline, after Ryanair and Easyjet.

https://global.handelsblatt.com/edition ... -eurowings


I'm not pro nor anti LH take-over, this is a fair and neutral forecast IMO.

SN is much better organised than EW, with a hub and a structure. Investing in it to build a second LX makes more sense. In fact, SN could benefit from more longhaul routes to make shorthaul more sustainable, especially to/from Asia. In fact, if my name was Carsten Spohr, I would look into repositioning some of those longhauls from DUS to BRU. Sure, it takes more work to build a second LX, but that's where the money is.

However, LH is running around all over the place with this Eurowings here and Eurowings there, but no matter how you look at it, it's a mess. They want to run longhaul point to point, which is something of an amateur bid to replicate what the tour operators and holiday charters are doing, but without having a sales network for it.
They were better off continuing those routes out of FRA or MUC where they at least had some decent feeding. Or if that really didn't work out into profits, just give up on them.

Conclusion: I really wonder how much LH is going to pay for the remaining 55% of SN. If it's cheap, like less than 100 millions, don't expect too rosy a future.

[lumumba]

Since the LH take-over is as good as a done deal, I will give my 2 cents:

1. Africa is here to stay, at least a few years. Hence, longhaul will probably stay under Brussels Airlines AOC since it requires Belgian traffic rights.
a. For the realists: branding can progressively change into Eurowings or Lufthansa Passage and this would be a prelude for a hub move to FRA or MUC. Of course, progressively, to avoid social unrest.
b. For the dreamers: LH can also decide to develop and invest in SN as a separate longhaul brand. What incentive they have to do so, I'm not sure. The market is not so big out of BRU and longhaul is already well covered from the other LH hubs. Are they going to send presents to BRU? New routes to Asia like LX?
c. Status quo is unlikely since above 80$ a barrel, SN can't be profitable no matter if shorthaul is done by themselves or Eurowings. LH wqill opt for a. or b. with time.

2. Shorthaul will partially go under Eurowings within a short period of time. Initially probably a handful of destinations, then a dozen, then before you know it most of it. Belgian crews will be retained initially, but progressively replaced by German cadets from the Lufthansa cadet pool.
This is already unfolding at OS.

3. The back-office will see cuts very soon.


Let's say that LH has a 300 million budget to spend in an airline. Give me a reason why they would spend it in BRU for SN to grow instead of Eurowings or even Passage in MUC or FRA.

There are ways to make SN very profitable by growing longhaul. But every such way is likely to work at least as well out of their other existing hubs.

Personally I will be convinced that SN will become another LX, if I see LH add at least 5 widebodies within 2-3 years, retaining the SN brand across the board for both short and longhaul.
As for their Eurowings project, it's a mess already operationally, and soon financially too. If SN gets absorbed into that, well good luck.

That kind of fiasco is unusual even for third-world airlines, and it is potentially disastrous for Eurowings and its parent, Lufthansa.

Lufthansa has to fix the problem because Eurowings forms the core of the most radical restructuring in Lufthansa’s history. The aim is threefold: To keep budget rivals at bay; to create a platform for cooperation with or buy other airlines; and to exert pressure on Lufthansa’s unionized employees to accept cuts in labor costs that are crucial to future of Europe’s largest airline.

As long as Lufthansa workers refuse cost cuts – which they are doing – there won’t be new hires or new planes; all of the growth will take place in low-budget Eurowings. Lufthansa wants to make Eurowings the third-biggest budget airline, after Ryanair and Easyjet.

https://global.handelsblatt.com/edition ... -eurowings


I'm not pro nor anti LH take-over, this is a fair and neutral forecast IMO.

SN is much better organised than EW, with a hub and a structure. Investing in it to build a second LX makes more sense. In fact, SN could benefit from more longhaul routes to make shorthaul more sustainable, especially to/from Asia. In fact, if my name was Carsten Spohr, I would look into repositioning some of those longhauls from DUS to BRU. Sure, it takes more work to build a second LX, but that's where the money is.

However, LH is running around all over the place with this Eurowings here and Eurowings there, but no matter how you look at it, it's a mess. They want to run longhaul point to point, which is something of an amateur bid to replicate what the tour operators and holiday charters are doing, but without having a sales network for it.
They were better off continuing those routes out of FRA or MUC where they at least had some decent feeding. Or if that really didn't work out into profits, just give up on them.

Conclusion: I really wonder how much LH is going to pay for the remaining 55% of SN. If it's cheap, like less than 100 millions, don't expect too rosy a future.

The price has nothing to do with the future it could even be the opposite.
It depends more on the contract but it's a private company so let's see.
But for sure they are also interested in the hub of Brussels and the most important is profitability and you can't blame them...
If Brussels Airlines make money there will be no problem to develop Brussels.

[Conti764]

The only reason why LH bought SN in the first place was to protect its backyard, not having a OW(?) - hub too close, on top of two ST-hubs...

If LH indeed would gradually shift longhaul to FRA of MUC as you seem to expect, what's to stop BRU to ultimately get in bed with OW to create a centrally located hub, thus LH having a competitors hub nearby?

I still believe SN had a bigger role to play in OW - which eventually might have led to even more favourible circumstances for BRU, but I doubt LH would take the risk to loose BRU to the competition.

[DannyVDB]

Everyone is adding two cents, so we will become very rich soon

My two cents:

I think the best strategy for both SN/LH and Eurowings is to have both SN and Eurowings at BRU, and not concentrate evrything in e.g. FRA/MUC. Why?

1. LH said when taking over the 45% (don't have the source anymore, it was in a PPT) that BRU as such is very useful to organise travel flows of the LH-group. E.g. it is more logic to use BRU for pax coming from Goteborg going to Bilbao than FRA/MUC. This will never change! Already LH is using SN for this purpose (hence the higher number of transfer pax).

2. Africa. Technically speaking they can transfer everything to FRA/MUC, but why would they do that: a) already Douala/Yaounde were transferred, b) not only technicalities are at stake, but also knowledge/history/language of many of these countries/destinations, and SN is good/better at that and c) there is still an important difference between Belgium and Germany/Switzerland/Austria: Belgium has quite a big African community.

3. I think it is very logic and even a good idea to put some of the European flights, and some of long haul destinations not under the SN brand but under Eurowings: e.g. SN will never be able to start themselves destinations such as Miami or Mombasa (they tried the latter) or ... Eurowings would be able to do that, or at least some of them. The same applies to some of the European destinations.

4. SN has the same quality as LX, LH and OS, so I don't see it disappear since there is a public for that. I have also observed that in fact the 4 brands or coming closer and closer together (comparable business class, comparable lounges, same pricing structure ...). In fact I think that the LH-group took over some of the inventions of SN such as economy-flex, even if they call it differently.

Danny

[LJ]

In fact, if my name was Carsten Spohr, I would look into repositioning some of those longhauls from DUS to BRU. Sure, it takes more work to build a second LX, but that's where the money is.

They're moving those flights to CGN or letting other Star airlines dp the flying. From a strategic point of view it isn't wise to move the long haul from CGN/DUS to BRU as this would create a hole in which Norwegian can jump into. The last thing LH wants is Norwegian having a (long haul) hub at the airport closest to its main market FRA. The same would apply for the oher airlines competing in this market (I think BA and AF/KL would be very pleased if LH would remove some long hal from DUS).

Personally I will be convinced that SN will become another LX

It won't as there is a very big difference between LX (which is in a high yield market) and SN which is in a much lower yield market. My take on this is that long haul expansion will go to Eurowings and other Star airlines except for Africa. You won't see F-class at SN...

If LH indeed would gradually shift longhaul to FRA of MUC as you seem to expect, what's to stop BRU to ultimately get in bed with OW to create a centrally located hub, thus LH having a competitors hub nearby?

I doubt that LH would do that. As you correctly point out, LH doesn't want non-star competition at BRU. As such they'll have to provide the business passengers the main long haul destinations (from an O&D point of view) or otherwise risk the passengers defecting to another alliance. As such JFK and African destinations are probably safe (as there is no other Star airline which can provide these services).

4. SN has the same quality as LX, LH and OS, so I don't see it disappear since there is a public for that. I have also observed that in fact the 4 brands or coming closer and closer together (comparable business class, comparable lounges, same pricing structure ...). In fact I think that the LH-group took over some of the inventions of SN such as economy-flex, even if they call it differently.

AFAIK the current SN fare structure was already used at Germanwings before SN introduced this. The same for LOOP, which is almost identical to Boomerang (which was first). Moreover, I wouldn't place my bet on the OS brand being there in years time. LH Group is now changing everything but the OS brand at OS. You can bet that when this operation has been finalised, they'll gradually will remove the brand "Austrian" from the market. The same will happen for SN, but tehre they'll have to start the whole process.

[convair]

Conclusion: I really wonder how much LH is going to pay for the remaining 55% of SN. If it's cheap, like less than 100 millions, don't expect too rosy a future.

The price has nothing to do with the future it could even be the opposite.

I agree with lumumba on this one. I never saw the price or the price formula on which the remaining 55 % will have to be paid, so we can't draw any conclusion from whatever the price will be paid.

For the future of SN within the LH group, a few basic principles have to be considered:

1. LH Group will treat SN as part of the LH Group; this may seem obvious but all implications of that fact are not always taken into account on this forum.

2. LH Group market is not limited to German pax, it is basically the European pax (in general, not forgetting to a lesser extent maybe, the worldwide pax).

3. BRU is now one of the hubs of the LH Group, like FRA (of course the main one), MUC, ZRH, VIE (and maybe later CPH if they take over SAS). As such it will be used to maximize profit for the Group.

4. SN basically has 2 customer bases: business and leasure, with different expectations, although sometimes overlapping. They will try to keep and grow both types. Business pax are, generally, more "legacy airlines" oriented, hence the NEED to keep the SN brand. For leisure pax, the name is of no importance, except they might have a slight preference for a well-known one (meaning big one with a good reputation); Eurowings could progressively become that brand.

5. As said by Danny hereabove (his point number 2), SN has an excellent reputation and is well established in Africa. LH Group will continue, and even increase, its taking advantage of that.

To summarize, I see SN continue for Afi, USA/Canada and a few more business pax oriented l/h destinations, and for an important number of mainly business pax oriented Europe destinations.

Some new l/h destinations for leisure pax will be created under Eurowings brand. A number of mostly leisure pax European destinations (new ones first) will progressively (2 to 3 years) go under the Eurowings brand.

[Boavida]

Well, IF the European routes will go to the Eurowings brand and SN keeps the African and N-American routes, I see no arguments against a namechange to Sabena. Sabena is still an 'institution' in Africa and also in the US the Sabena brand is much (much!) more known than Brussels Airlines.

Because let's be honest: what's the point of keeping the Brussels Airlines brand if the company will be dismantled like this (all EU flights to EW)...