Increased profit for SN Brussels Airlines in 2004

maximenaeyaert · Post by **maximenaeyaert** » 17 Mar 2005, 16:23

I heard on the news that they made a profit of 1 million euro's in 2004, less than expected (high fuel prises) but not bad at all.
greets max

Post by **luchtzak** » 17 Mar 2005, 16:28

Full press-release available here: https://www.aviation24.be/article8055.html

Dutch: https://www.aviation24.be/modules.php?name ... d=8055#506

French: https://www.aviation24.be/modules.php?name ... d=8055#507

Post by **speedbird1** » 17 Mar 2005, 16:40

So what are SN's plans for the future? Do they have any, or are they just going to stand still for a few more years?

Emirates

Post by **luchtzak** » 17 Mar 2005, 16:55

Emirates wrote:So what are SN's plans for the future? Do they have any, or are they just going to stand still for a few more years?

Quoting Mr. Kuijpers in the press-release:

Outlook

“I am looking forward to an exciting 2005 for our aviation group now consisting of Virgin Express and SN Brussels Airlines”, says the Executive Chairman Rob Kuijpers. “I am sure that our group will meet the expectations of the shareholders, employees and clients.”

Post by **speedbird1** » 17 Mar 2005, 17:06

Ok. So for those of us who aren't shareholders or employees? Yes I am a client but I'm not sure if my expectations are the same as others.

Emirates

maximenaeyaert · Post by **maximenaeyaert** » 17 Mar 2005, 18:52

well i hope SN will lease those 747's and will expand their network in Africa and open a new route to China (already discussed in other topic's), and maybe some new codeshares and little expansion european network?
Maybe SN will become a part of BA or other investors and those anyone knows when the leasing contract of those avro's end?
greets max

Allnipponairways · Post by **Allnipponairways** » 18 Mar 2005, 07:00

Go snba ... Go and congratulations with the profit ..

greets

Post by **sn26567** » 18 Mar 2005, 09:32

Just for the record:

SN BA wanted to issue its results only next Tuesday. However, some figures were leaked to Le Soir last Wednesday, which compelled SN management to accelerate the publication of its results to yesterday (Thursday).

This caused some irritation within the board, because information was only available to these board members. Who is the traitor?

Another remark: the profit is well below the expectations of 2.5 million euros. The devaluation of the dollar vis-à-vis the euro has compelled SN to enact a provision of 10 million euros for its fleet, the value of its aircraft is indeed expressed in dollars whereas the bookkeeping is in euros... In fact the operating profit was close to 10 or 11 million euros.

A final comment: Rob Kuijpers announced that the merger with Virgin Express would become effective mid-April. He also confirmed the discussions with Hainan Airlines.

tolipanebas · Post by **tolipanebas** » 18 Mar 2005, 09:59

Come on, this scenario was well known by many and already predicted 2 weeks ago! It was very naieve of Mr. Kuypers to believe it could have been kept in the dark for so lang. Maybe a late managerial lesson for him: he should bring the news about his high profile airline if and when it happens, not when he wants to build big good news show around it. Luckily for him, SN is not stock listed, or such a blunder might have very big liability consequences....

https://www.aviation24.be/posts9441-highlight.html

Don't forget that apart from the management and the board at SN, the accounts also need to be cleared by an auditor too, which immediately means 50+ or so people are insiders: way too much to keep specatular things out of the press for long...

BTW, The initial leak was not in 'Le soir' at all, it was the financial newspaper 'De Tijd' which broke the ice: can it be a suprise since this newpaper is said to have very good contacts with many managers, auditors and insiders in all sectors?

sn-remember · Post by **sn-remember** » 18 Mar 2005, 10:01

So Africa saved the day !
Go snba, go to Africa where your roots are
go snba go to Africa where your future lies
And not with a lean additional aircraft every 3 years please !!!
Baby you must grow !
Grow in Africa
now !

tolipanebas · Post by **tolipanebas** » 18 Mar 2005, 10:15

SN remember-

SN will soon open a bank account on which all those who say it has to get more planes quickly can donate some millions to pre-finance their expansion.

Avro · Post by **Avro** » 18 Mar 2005, 11:37

Nice to see they made some profit.

As I already said the biggest problmem for SN is that they don't have enough financial captial to support an aggressive expansion.

They really need a strong partner (for example BA) which could help them to grow.
If they don't find a partner like that in the coming years, SN will continue to grow very slowely like they do right now.

Chris

sn-remember · Post by **sn-remember** » 19 Mar 2005, 11:11

at Avro:

They really need a strong partner (for example BA) which could help them to grow

We know what sn needs (or think we know).
Do we know what ba needs ?
Don't forget a good marriage is the meeting point of 2 complementary needs

at Avro and Tolipanebas:
Cash alone is still not enough:
Cash yes but also management skills (what to do whith cash) and business vision ("see" the future)
On the cash issue, a few questions if you don't mind :

1. How is it that in this country it's so difficult to raise money on a private airlines development project ?
It was possible for Swiss (with reluctance I conceide but they found the money)
It is possible for numerous companies in Europe that are constantly being created/developped eg:
Vueling, Air Madrid in Spain, Air Berlin (some 100 aircraft expected in no time

) in Germany, bmi in UK just to name a few.

2. sn found the money to buy vx (Virgin Express) hoping to achieve there better results than M. Branson...
Do you think this investment was a top priority for the Co survival ?
With that same money, a bigger expansion to Africa was feasable, with possible success at hand and a bigger chance of survival (my opinion)

3. Airlines must think about replacing their ageing fleet too.
It's part of the business. How is this looked for in the present published result?

4. at tolipanebas;

bank account on which all those who say it has to get more planes quickly can donate

This is meant to be a joke... but did you know that the royal dutch family has for a long time during its history supported the dutch flag Co ?
We have wealthy Royals too ... I don't know ?

HorsePower · Post by **HorsePower** » 19 Mar 2005, 12:48

sn-remember wrote:2. sn found the money to buy vx (Virgin Express) hoping to achieve there better results than M. Branson...

VX didn't cost anything (not yet!) to SN since they haven't bought them but merged with them!

Regards

Seb.

tolipanebas · Post by **tolipanebas** » 19 Mar 2005, 14:51

How is it that in this country it's so difficult to raise money on a private airlines development project ?

Because let's face it: right now putting your money in aviation is not really a very good investment is it? Since you've raised the example of SWISS yourself: how much have its shareholders lost over the last few years? Do you think they will ever see their all money back? And what about the more profitable airlines: LH, BA, AF.... even they can't offer spectacular returns on investment. If you have money to invest, you better do so in much safer sectors.

It is possible for numerous companies in Europe that are constantly being created/developped

Don't be blinded by that. It's really very easy to set up an airline with hardly a handful of money, but they you have to make profits from your first day on, since you have no reserve to pay the start up costs from. Most new companies are set up like that, very much relying on a strong marketing campaign (something which apparently is working on you, because you are blinded by their appearance and ingoring to look behind their facade) and the hope they have found a very luctrative nich somewhere. How many of those start up airlines are there every year in Europe? And how many still exist after a few years? 10%? 5%? VG Airlines, Vbird are perfect examples of this from our countries.
In this perspective, SN is doing extremely well, don't you think.

SN found the money to buy Virgin Express, hoping to achieve there better results than M. Branson...

As has already been said, SN didn't pay a single euro for Virgin Express, they even got a pack of money from Sir Richard to take it over! It was a 'desperate' offer from him which SN cound't refuse, frankly. Hence the fact it now takes so long to integrate VEX. No risk for them whatsoever an at no real cost.

Do you think this investment was a top priority for the survival?

Indeed not, SN didn't need VEX and now that the have got it after all, they don't really know what to do with it at first sight: VEX is loosing money as it is, it is competing with SN head on on most of its routes and they don't have the money nor the intention to let VEX grow, so probably they will either orientate VEX on routes which are of no importance to SN, or let it bleed to dead slowly....

Airlines must think about replacing their ageing fleet too. How is this looked for in the present published result?

At present, the fleet of SN has an average age of 7 years so they can go on with the same fleet for the next 10 years without any real problem (gradually phase out the BAe146 maybe, but that's it). What is the average age of the fleet of KL? AF? BA? I don't think SN are in need of a fleet change anytime soon and frankly that is very good news for them, because at present, the AVRO RJ is all they can afford as backbone of their European fleet! What plane are you proposing BTW? Did you know the leasing rates on 1 avro are 4 times less (roughly 85.000 euro/month) than that on 1 EMB170 (300.000euro/month)? (Prices are as quoted by Mr. E. van Innis, CFO at SN) Can you imagine what that would do to their costs?
Let's do the calculation:
imagine they replace their 26 Avro's by 22 EMB170s/190s (note the smaller number to compensate for their slightly higher efficiency): that would mean the leasing costs would go up from 2,2 million euro/month to 6,6 million euro/month, an increase of 4,4 million euro/month!!!
On the savings side: let's estimate the average fuel bill for the Avro fleet at SN: 26planes X 8hr/days X 2000l/hr x 0,4euro/liter = 100.000 euro a day or 3 million a month. Note that even if the EMB170/190 flies on thin air, it is still not making good for the increase in leasing costs!!!! And the expected fuel savings of an EMB170/190 are of 10 to 15 percent only!!!!
So in total that means a more cost of almost 4,O million euro a month or 48 million euro a year and SN made a profit of 1 million euro this year....
NOw, to put it even more bluntly: SN transports roughly 250.000 pax a month, so since the return on investment is not going to come from fuel savings (nor from maintenance cutbacks, believe me, I can prove you that to) it means every pax ought to be willing to pay 30 euro per ticket more, simply to fund the fleetchange... I don't think you will find many pax willing to do so! Starting to see a bit clearer why the Avro RJs are going to be around for a LOOOOONG time?

sn-remember · Post by **sn-remember** » 19 Mar 2005, 18:35

Just finished reading your long reply thank you for it tolipanebas, very interesting reading.
I never suggested snba should change its current fleet now (indeed as you say it's a blessing it can keep it for quite a time)

Sure the investment in Swiss was not profitable from the point of view of the immediate and blunt cash return. I mentionned the Swiss example because they managed to find the cash that eventually led them to the issue we know. Time will tell if the cost for it was worthwhile but let's leave aside the question of Swiss.

True most carriers will probably disappear as quick as they appeared . The ones I mentionned seemed to me more "solid" than VG Airlines ,Vbird and the like because they are in business for some time now and some of them like air berlin having ambitious expansion program in store but ok in the Low-cost segment. Let us face that they are living "dangerously" as you rightly imply. But is there then an alternative to dangerous living? Would Snba and the like have a different or a better lot ?

True snba is not performing too badly in the sense that it is still in business and in the light of the recently published result.
But the challenges have never been so great because the european sky is changing very rapidly and I don't see in place the strong lines from which the company can capitalize. To me there is urgency
- developping a stronghold in africa (doubling the current volume asap)
- in parallel developping business ties to enforce partnership.
I know it's easier in words than implemented in facts but to put it bluntly if we "export" l/h pax to lhr (or whatever cdg,ams) it seems normal to expect some (african) flow in reverse. For the moment we are not selling the export flow (indeed quite the opposite we are financing HST connexions from cdg or eh/ams to bru-city not even bothering to enforce a stop at EBBR .. is this what some of you here call "aapland"?)

Concerning the VEX merger, I am doubtful as you are on what to expect.
Just integrating it to snba ? But is the market there ? Or rather sell the B737 VEX fleet and lease instead some additional w/b a/c to sustain the growth in africa?
The latter seems to me much more promising.
But then is the current a330 the good horse?
What about the B767 ito costs and availability? (not mentioning compat with ba fleet)
Lots of open pressing questions for the external that I am ..

Ok all for now
Greetz to everybody

Post by **sn26567** » 20 Mar 2005, 11:05

sn-remember wrote:Sure the investment in Swiss was not profitable from the point of view of the immediate and blunt cash return. I mentionned the Swiss example because they managed to find the cash that eventually led them to the issue we know.

From whom did SWISS get the cash? From the Swiss government that was desperate to keep a national airline. But in the merger discussions with LH private shareholders will get EUR40 million, whereas the Swiss governemnet will not get one cent (or centime...). If only SN BA had received from the Belgian government the same kind of support SWISS received from its government, it would be a 'world' airline now.

sn-remember · Post by **sn-remember** » 20 Mar 2005, 12:11

Andre wrote

If only SN BA had received from the Belgian government the same kind of support SWISS received from its government, it would be a 'world' airline now.

Some support from the belgian authorities was an absolute necessity.
I was amazed the way the 2001 debacle was handled by the belgian government. Simply throwing the precious Sabena assets to the waste basket was unbelievable and unbearable. It still is

Avro · Post by **Avro** » 20 Mar 2005, 12:16

What a country we live in.......

BTW does someone know if the B737's of TV are owned or leased ?

Could the Holding safe some money if they would have a more uniformed fleet rather than B737's and 3 A319's ?

BTW I'm still convinced that VEX won't survive in the future.

Chris