Lufthansa buys the remaining 55% of Brussels Airlines

[Yuqu12]

I like the idea of Sabena!!!!

[convair]

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)...

If you're referring to my post just above yours, I'm afraid you misread me. I think a good number (maybe the majority) of the EU flghts (mostly the business ones) will remain SN.

I like the Sabena idea, but only for Afi; are you sure the name is still so well-known in the US? In the EU, Sabena is probably little known among today's business generation.

[Airbus330lover]

Are you sure about 27 april ?

[galaxy]

I see no arguments against a namechange to Sabena.

Sabena sounds nostalgic, in the first place for the former employees of the company, but it is not a good idea in my opinion. Outsiders will always make the link with the bankrupt company. Why not Belgium airlines or SN Belgica .

[lumumba]

If there is no reason to change let's keep Brussels Airlines!!!!!

[sn26567]

If there is no reason to change let's keep Brussels Airlines!!!!!

I think I mentioned elsewhere that the name Brussels has a bad connotation after the terror attacks. And Lufthansa has bought the domain names BrusselsWings.be and BrusselsWings.com on Internet...

But I am the first one to prefer keeping the current name (or Sabena by nostalgia) !

[lumumba]

If there is no reason to change let's keep Brussels Airlines!!!!!

I think I mentioned elsewhere that the name Brussels has a bad connotation after the terror attacks. And Lufthansa has bought the domain names BrusselsWings.be and BrusselsWings.com on Internet...

But I am the first one to prefer keeping the current name (or Sabena by nostalgia) !

Ok but I think we have to be proud of Brussels Airlines and Brussels in general let's keep it and be strong!

[flightlover]

Brussels airlines is (was) on track to become a well known brand in Africa, US and the EU.
In Africa they made a good impression during the ebola outbreak. And by linking their name to high profile events (Tomorrowland, Bike for Africa) and well known other brands (Tintin, the Red Devils, Magritte...) they are getting quite a lot of 'free' publicity in their key markets.

In a way I would even state that if LH is thinking about erasing the Brussels Airlines brand, they better do it soon or will be somewhat forced to maintain it for a big part of the operation.

[Flanker2]

Some of you are saying that the price has nothing to do with the strategy after the take-over.
By itself, it's true, but combined with the fact that LH had the call options until next year, the price can be a very good way to understand what LH is planning to do with SN.

If LH is taking over SN without waiting despite a high cost, it could mean that LH is going to invest seriously into SN. You don't throw that much money just to have a status-quo.
If LH is taking over SN without waiting at a low cost (despite opportunities to do the same the previous years), chances are big that LH will not invest much into SN.

I set 100 million as a reasonable benchmark between high and low cost, considering the previously paid 55 millions.

[Freken]

I think I mentioned elsewhere that the name Brussels has a bad connotation after the terror attacks. And Lufthansa has bought the domain names BrusselsWings.be and BrusselsWings.com on Internet...

A simple WHOIS check reveals that they were bought in June 2014! I don't believe that signifies something..

[saratoga]

I am wondering what is going to happen concerning recruitment for pilots: all pilots now coming from Lufthansa school and the ability/requirement to speak fluently german?????

I hold my breath.

[sn26567]

I am wondering what is going to happen concerning recruitment for pilots: all pilots now coming from Lufthansa school and the ability/requirement to speak fluently german??

That would be stupid. "Think globally, act locally"!

[convair]

Some of you are saying that the price has nothing to do with the strategy after the take-over.
By itself, it's true, but combined with the fact that LH had the call options until next year, the price can be a very good way to understand what LH is planning to do with SN.

If LH is taking over SN without waiting despite a high cost, it could mean that LH is going to invest seriously into SN. You don't throw that much money just to have a status-quo.
If LH is taking over SN without waiting at a low cost (despite opportunities to do the same the previous years), chances are big that LH will not invest much into SN.

I set 100 million as a reasonable benchmark between high and low cost, considering the previously paid 55 millions.

We don't know what are the exact conditions (financial and other) of the option they got when they bought the 45%; we don't know what was SN's book value at that time; we don't know if there were other potential buyers; we don't know how eager the shareholders were to get rid of part of their initial investment, and, hence, the premium (if any) paid by LH to secure the option; we don't know what was the business plan on which LH decided to buy their first 45%, etc..., so we can only have a very approximate guess.

The Reuters article referred to earlier (page 2 in this thread) by Apuneger gives 65 million for the 45% and a total cost for LH of upto 250 million, "depending on performance". Your 100 million for the remaining 55% seem to be in the ballpark. However, I expect that their loan of 100 million (now only 80 if the reported recent re-imbursement is correct) will come as a deduction of the purchase price and be erased from SN's books.
What is more important, however, is the fact that they are (yet to be confirmed) exercising their option now. They could have waited 1 (or maybe 2-some people indicate 2018 as deadline-) more year(s) and maybe buy the remaining shares at a discount, given the expected fall of SN's profit (if not a loss) this year and next year after the terrorists' attack on BRU. This can only mean they have a plan for immediate positive action for SN, and that plan can only mean expansion/investment.

I am wondering what is going to happen concerning recruitment for pilots: all pilots now coming from Lufthansa school and the ability/requirement to speak fluently german??

That would be stupid. "Think globally, act locally"!

Absolutely! I very much doubt all the pilots in the LH group speak german!

[Conti764]

If there is no reason to change let's keep Brussels Airlines!!!!!

I think I mentioned elsewhere that the name Brussels has a bad connotation after the terror attacks. And Lufthansa has bought the domain names BrusselsWings.be and BrusselsWings.com on Internet...

But I am the first one to prefer keeping the current name (or Sabena by nostalgia) !

No you're not...

But LH buying a domain name doesn't need to mean something...

[LJ]

What is more important, however, is the fact that they are (yet to be confirmed) exercising their option now. They could have waited 1 (or maybe 2-some people indicate 2018 as deadline-) more year(s) and maybe buy the remaining shares at a discount, given the expected fall of SN's profit (if not a loss) this year and next year after the terrorists' attack on BRU. This can only mean they have a plan for immediate positive action for SN, and that plan can only mean expansion/investment.

Or it can mean they feel they now have a chance to restructure SN. I agree that LH feels it now needs to be fully in control of SN, but you cannot conclude from LH's actions that it's all good news for the current employees and/or SN. In the end, it's easier to restructure a company if you're fully in control than when you have other shareholders which do not have to agree with you.

[convair]

I disagree:
1. They will always have a chance to restructure SN, as restructuring is always a possibility nowadays. Now is not better nor worse than any time.
2. It's more confortable to request it when you're the minority shareholder, prior to a fuller commitment.
3. They did it already, though indirectly, when they stated they were waiting for SN to exit red figures prior to exercising their option.

It doesn't mean there will be no redundancies but they will not transfer SN's office to Germany! But I still believe expanding the business will (should) be their first priority.

[Flanker2]

What is more important, however, is the fact that they are (yet to be confirmed) exercising their option now. They could have waited 1 (or maybe 2-some people indicate 2018 as deadline-) more year(s) and maybe buy the remaining shares at a discount, given the expected fall of SN's profit (if not a loss) this year and next year after the terrorists' attack on BRU. This can only mean they have a plan for immediate positive action for SN, and that plan can only mean expansion/investment.

Or it can mean they feel they now have a chance to restructure SN. I agree that LH feels it now needs to be fully in control of SN, but you cannot conclude from LH's actions that it's all good news for the current employees and/or SN. In the end, it's easier to restructure a company if you're fully in control than when you have other shareholders which do not have to agree with you.

This is exactly my point.
If they buy it cheap and fast, it's for restructuring or fractioning, if it's expensive and fast, it's for investment to add BRU as a 5th hub. If the price they pay now is closer to 200 millions it will definitely be the latter, but if it's like 60 millions, it's pennies that will be used to boost their Eurowings program.

The 100 million loan stays on SN's books even after the full take-over. On LH's consolidated balance this is and remains a zero operation, ie minus 100 millions in cash plus 100 millions of loans given out.
So it can't be used to buy-out the other shareholders. The cash will have to come out of LH's balance sheet and the difference with SN's net worth will either be boooked as loss or goodwill.


Also, the main reason why a progressive transfer of SN's Africa routes to FRA/MUC/ZRH won't leave a void in BRU that for instance IAG can come in and take advantage of by establishing a new carrier: market size.
The African routes are thin niche markets and they won't be able to absorb so much capacity.
In addition, LH will have the advantage of having an established customer basis and running operation, which is the whole complexity of Africa operations.

I think that a switch to a Sabena name would facilitate such a move to FRA/MUC, as they will keep the customer base while running the operation under another company. Running Brussels Airlines out of FRA/MUC doesn't make much sense.
Remember that if anything, the attacks have given LH a viability test.

[convair]

The 100 million loan stays on SN's books even after the full take-over. On LH's consolidated balance this is and remains a zero operation, ie minus 100 millions in cash plus 100 millions of loans given out.
So it can't be used to buy-out the other shareholders. The cash will have to come out of LH's balance sheet and the difference with SN's net worth will either be boooked as loss or goodwill.

You're right about that of course. Well done!

But I stick to the rest of my post.

[Passenger]

It's funny to read that people know how many millions Lufthansa will pay, without having seen the actual contract, the annual account 2015 and/or the consolidated balance 2015 from Brussels Airlines and/or SN Airholding.

It's even more funny how people think that a re-introduction of Sabena as brand name is a good idea. "Sabena" is such a stupid idea that I don't react to it, except this: it gives an indication of the very young age of those suggesting it.

[Poiu]

What is more important, however, is the fact that they are (yet to be confirmed) exercising their option now. They could have waited 1 (or maybe 2-some people indicate 2018 as deadline-) more year(s) and maybe buy the remaining shares at a discount, given the expected fall of SN's profit (if not a loss) this year and next year after the terrorists' attack on BRU. This can only mean they have a plan for immediate positive action for SN, and that plan can only mean expansion/investment.

Or it can mean they feel they now have a chance to restructure SN. I agree that LH feels it now needs to be fully in control of SN, but you cannot conclude from LH's actions that it's all good news for the current employees and/or SN. In the end, it's easier to restructure a company if you're fully in control than when you have other shareholders which do not have to agree with you.

Or they have to buy now, because they know SN Is close to the edge and they don't want to take the risk of loosing the valuable Africa network.
Lufty wants SN to survive and become successful, which is good news, but once they fully own SN the cost cutting will start and office staff will be the first victims.