Lufthansa buys the remaining 55% of Brussels Airlines

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sean1982
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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by sean1982 »

I hear a lot of people talking about "a hybrid carrier". What is that? Its a low cost airline in all but a name, at least for people on a handbagage fare only. Its a low cost carrier that still offer the benefits of a "legacy carrier" (like lounge acces, frequent flyer programme, flex tickets). Having said that, almost all airlines are hybrid carriers name besides the big 4 LCC's.

Aer lingus, Vueling, Transavia, sas, eurowings in itself, even BA, LH, swiss are becoming one on the short haul. That does not prevent anything. The old legacy model is passé xomposé

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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by Passenger »

sean1982 wrote:I hear a lot of people talking about "a hybrid carrier". What is that? Its a low cost airline in all but a name, at least for people on a handbagage fare only. Its a low cost carrier that still offer the benefits of a "legacy carrier" (like lounge acces, frequent flyer programme, flex tickets). Having said that, almost all airlines are hybrid carriers name besides the big 4 LCC's.

Aer lingus, Vueling, Transavia, sas, eurowings in itself, even BA, LH, swiss are becoming one on the short haul. That does not prevent anything. The old legacy model is passé xomposé
Brussels Airlines is no hybrid airline as you describe it. Other legacy carriers try to compete to Ryanair and Easyjet through a separate carrier: Transavia (KLM/AF), Vueling (IAG/BA) or Eurowings (LH). Brussels Airlines is competing Ryanair and Easyjet direct, through lowering rates on the routes that compete direct. And “hybrid” also means they don't only offer two price systems (low cost and legacy), but also charter flights (for Club Med) and feeder flights (for Thomas Cook).

Brussels Airlines is able to compete to Ryanair because they don’t need to fill an aircraft with only 69 € rates. They just have to create enough competition to disrupt the Ryanair business model (= attract people with 19,90 rates and increase them slowly to 150-200). And on top, that competition make it impossible for Ryanair and Easyjet to operate the number of flights they would like to do. Proof: Ryanair’s market share at Brussels Airport which is only 7%-10%.

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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by sean1982 »

Passenger wrote:
sean1982 wrote:I hear a lot of people talking about "a hybrid carrier". What is that? Its a low cost airline in all but a name, at least for people on a handbagage fare only. Its a low cost carrier that still offer the benefits of a "legacy carrier" (like lounge acces, frequent flyer programme, flex tickets). Having said that, almost all airlines are hybrid carriers name besides the big 4 LCC's.

Aer lingus, Vueling, Transavia, sas, eurowings in itself, even BA, LH, swiss are becoming one on the short haul. That does not prevent anything. The old legacy model is passé xomposé
Brussels Airlines is no hybrid airline as you describe it. Other legacy carriers try to compete to Ryanair and Easyjet through a separate carrier: Transavia (KLM/AF), Vueling (IAG/BA) or Eurowings (LH). Brussels Airlines is competing Ryanair and Easyjet direct, through lowering rates on the routes that compete direct.
Really? How many legacy carriers have a buy on board product? Nearly all of them with the exception of KLM/air france I think (and they are losing loads of money)

Passenger wrote:Proof: Ryanair’s market share at Brussels Airport which is only 7%-10%.
As if what is leaving from BRU is the only thing that counts for SN and LH? It's a very simplistic statement. FR carries almost as many pax in Belgium (and dont need low oil prices to compete) SN could be double the size they are now if it wasnt for them. So the market share in BRU only shows they can make (some) money with low fuel prices, but in no way, shape or form that they are beating "the LCC's". FR only accepts 6 months of loss making on a route before the close it. They are mostly only adding in Belgium

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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by Boeing767copilot »

Davignon over toekomst Brussels Airlines: ‘Geen Sabena bis’

Brussels Airlines zal niet verdwijnen. Dat heeft voorzitter van de raad van bestuur Etienne Davignon gezegd in een interview met de Franstalige omroep RTBF.
Vandaag om 15:08 Biz
‘De werkgelegenheid staat centraal’, zei Davignon. ‘We kunnen die houden. Ik ben niet naïef, ik weet waar we staan in de onderhandelingen. Er is geen enkel sociaal plan in zicht bij Brussels Airlines.’

Hij zegt dat er geen ‘Sabena bis’ komt. De overname door Lufthansa zal volgens hem ook niet het einde betekenen voor het merk Brussels Airlines.

De top van Lufthansa zette woensdag het licht op groen voor de totale overname van Brussels Airlines, maar blijft verder karig met informatie.

Het is de bedoeling om met de Belgische aandeelhouders een akkoord te bereiken over de modaliteiten tegen het einde van het jaar. Lufthansa zou dan begin 2017 de 55 procent aandelen die ze nog niet in handen heeft, kunnen overnemen. De Duitsers konden dat eenzijdig beslissen door een in 2008 onderhandelde aankoopoptie.

Bij de Belgische aandeelhouders en bij het personeel is er veel onrust over de inlijving van Brussels Air­lines. In april liet Lufthansa nog weten dat de Belgische luchtvaartmaatschappij onder de lagekostendochter Eurowings zou worden gebracht.

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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by sn26567 »

Boeing767copilot wrote:Davignon over toekomst Brussels Airlines: ‘Geen Sabena bis’

Brussels Airlines zal niet verdwijnen. Dat heeft voorzitter van de raad van bestuur Etienne Davignon gezegd in een interview met de Franstalige omroep RTBF.
Vandaag om 15:08 Biz
‘De werkgelegenheid staat centraal’, zei Davignon. ‘We kunnen die houden. Ik ben niet naïef, ik weet waar we staan in de onderhandelingen. Er is geen enkel sociaal plan in zicht bij Brussels Airlines.’

Hij zegt dat er geen ‘Sabena bis’ komt. De overname door Lufthansa zal volgens hem ook niet het einde betekenen voor het merk Brussels Airlines.

De top van Lufthansa zette woensdag het licht op groen voor de totale overname van Brussels Airlines, maar blijft verder karig met informatie.

Het is de bedoeling om met de Belgische aandeelhouders een akkoord te bereiken over de modaliteiten tegen het einde van het jaar. Lufthansa zou dan begin 2017 de 55 procent aandelen die ze nog niet in handen heeft, kunnen overnemen. De Duitsers konden dat eenzijdig beslissen door een in 2008 onderhandelde aankoopoptie.

Bij de Belgische aandeelhouders en bij het personeel is er veel onrust over de inlijving van Brussels Air­lines. In april liet Lufthansa nog weten dat de Belgische luchtvaartmaatschappij onder de lagekostendochter Eurowings zou worden gebracht.
As it was on RTBF, thus in French, here is the original:

Etienne Davignon: "Brussels Airlines a la capacité de maintenir l'emploi en Belgique"

Le président du conseil d'administration de Brussels Airlines, Etienne Davignon et le PDG de l'aéroport de Charleroi, Jean-Jacques Cloquet, étaient les invités d'"A Votre Avis" ce dimanche midi. A l'occasion des 25 ans de l'aéroport carolo, ils ont fait le point sur la situation du monde aéroportuaire belge face à Sacha Daout et ses chroniqueurs.

Davignon confiant pour l'avenir de l'emploi belge

En 2017, la compagnie nationale belge passera sous pavillon allemand. Les craintes sont bien réelles du côté des syndicats qui redoutent que le rachat de Brussels Airlines par Lufthansa se transforme en bain de sang social. Étienne Davignon s'est pourtant montré rassurant : "la capacité de maintenir l'emploi, on l'a !" a-t-il martelé sur notre plateau. "On ne se dirige pas vers un Sabena bis."

Autre thème abordé ce dimanche midi : la sécurité. Six mois après les attentats du 22 mars qui avaient touché, entre autres, Brussels Airport, la sécurité des aérogares a-t-elle été améliorée ? Voici l'une des questions auxquels le patron de Brussels South Charleroi Airport a répondu.

Video: http://www.rtbf.be/auvio/detail_etienne ... id=2146583
André
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brusselsairlinesfan
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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by brusselsairlinesfan »

We know about LH intention to buy the remaining shares in SN. After lots of talks/speculation, what could be the next steps/facts?

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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by webstermc »

brusselsairlinesfan wrote:We know about LH intention to buy the remaining shares in SN. After lots of talks/speculation, what could be the next steps/facts?
The only official communication is that
a) board approves full take over
b) negotiotations about further approach of the take over will be discussed with the shareholder as of october

Until negotiations are done, no official news will come (I think). All the other stuff above are just speculations at this point...

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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by sn26567 »

brusselsairlinesfan wrote:We know about LH intention to buy the remaining shares in SN. After lots of talks/speculation, what could be the next steps/facts?
Good question.

The next step will be the discussions between the Belgian shareholders of SN Airholding and the Lufthansa Board, probably mid-October The least we can say is that they don't have the same views.

The Belgian shareholders want their money back. Many of them also want to keep a Belgian identity, Belgian jobs, an intercontinental hub in Brussels that needs feeder flights. Those Belgian shareholders represent a large diversity which could have different goals: private companies (Electrabel, Umicore, Solvay, the large banks operating in Belgium, etc.), public investment companies (SRIB, SRIW, SFP, ...), Brussels Airport.

On the other side, Lufthansa might not be as united as it seems. Their board members are divide between hardliners (everything to be integrated into Eurowings) and more pragmatic people who might be more able to understand Belgian concerns.

Anyway, little will probably change between now and two years from now. Let's wait and see. And maybe also try to influence decisions by showing what Belgians feel about their flagship airline by every possible mean!
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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by convair »

sn26567 wrote: The Belgian shareholders want their money back. Many of them also want to keep a Belgian identity, Belgian jobs, an intercontinental hub in Brussels that needs feeder flights. Those Belgian shareholders represent a large diversity which could have different goals: private companies (Electrabel, Umicore, Solvay, the large banks operating in Belgium, etc.), public investment companies (SRIB, SRIW, SFP, ...), Brussels Airport.
Maybe so, but most of them will want their money back first, with a few "Belgian" add-ons for good measure.
sn26567 wrote: On the other side, Lufthansa might not be as united as it seems. Their board members are divide between hardliners (everything to be integrated into Eurowings) and more pragmatic people who might be more able to understand Belgian concerns.
This divide between the "bullish" ones and the more cautious ones will always be there, and not only concerning SN.
It's SN management's job to show their new bosses over the next 2 years that there is a risk to loose a lot (of pax and money) with too fast an integration, in LH or in EW for that matter.

I see no problem if LH decides to repaint a few planes in EW livery to take over some leasure and charter flights; however some of their clients like e.g. Club Med might prefer their customers to continue flying a legacy airline to their camps/resorts rather than a so-called LCC, even one belonging to LH.

The l/h feeder flights should remain SN, imho, at least for a while, like the FRA and MUC feeders from BRU (and from the other LH Group hubs in Europe) will probably remain LH flights.

I believe that using some creativity could make everyone relatively satisfied, if not totally happy.
Last edited by sn26567 on 03 Oct 2016, 13:40, edited 1 time in total.
Reason: FKF -> FRA

Passenger
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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by Passenger »

convair wrote:
sn26567 wrote: The Belgian shareholders want their money back...
Maybe so, but most of them will want their money back first, with a few "Belgian" add-ons for good measure...
With the upmost respect for the Belgian investors: their company isn't debt-free. Sure, the annual account of 2015 shows a very nice profit. But the cumulated result shows that Lufthansa takes over an airline with quite some losses from the past.

And let's not forget that the profit / cumulated profit/loss includes the 2 x 16,8 € mio state aid (decision Belgian KB-AR 07/01/2014), support against a competitor has filed a complaint with the European Commission and the Belgian trade court.

But then, they can rely on Davignon and a former governor of the NBB/BNB.
-

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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by Flanker2 »

Well Passenger, you can see it the way you do from the German perspective.
Also the German clueless "expert"guy who spoke on the news piece a few days ago said that the Germans deserve a cheap buy-out because they invested in the airline during difficult times.

However, ont he flip side there is the fact that Belgian parties have invested hundreds of millions in this airline, starting with the government who forgave a huge start-up loan that LH won't ever have to repay.
In addition, they invested non-monetary resources to make SN survive.

LH's loan has only come to replace the forgiven start-up loan from the government, so you can't call that an investment. Very conveniently, LH received the A330's for C-check and refurbishments at its LHT facilities in Malta, at values of over 3 million USD per A330 and per check, by my estimates.
In addition, SN has had many LH managers on its payroll at a cost of several millions.

In addition, I wonder if SN isn't paying LX the leases on the ex-LX A332's, valued IMO at over 7 million USD per year.... and there is much more such as LH's total exclusivitty on ZRH, FRA and MUC routes.

So much for LH's "investments" into SN.

The Germans have milked this cow too much. Without clear prospects and a decent pay-out, I think that the Belgian shareholders should look for another take-over candidate.
In fact, if I were them, I would ask LH to sell their 45% share back at the price they paid under threat of shutting the airline down (which they can do) or diluting LH's shareholding.

The only way LH should get SN IMO, is if LH pays a decent price and guarantees SN's independence and lack of EW competition for at least 10 years.

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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by Passenger »

Flanker2 wrote:Well Passenger, you can see it the way you do from the German perspective.
No, I don't: figures don't have a nationality.

(there are about 100 errors in your above post, so it's impossible to reply to each of them)

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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by sn26567 »

Flanker2 wrote:...diluting LH's shareholding.
That's something that was on the drawing board one year ago. The Belgian government wanted to invest in the airline to reduce the German influence on the decisions, especially the decision not to repay in full the LH loan, and keeping a Belgian blocking minority in the airline to preserve Belgian interests. This wish was rejected by the SN Airholding board. Under the influence of the German directors?
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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by Yuqu12 »

sn26567 wrote:
Flanker2 wrote:...diluting LH's shareholding.
That's something that was on the drawing board one year ago. The Belgian government wanted to invest in the airline to reduce the German influence on the decisions, especially the decision not to repay in full the LH loan, and keeping a Belgian blocking minority in the airline to preserve Belgian interests. This wish was rejected by the SN Airholding board. Under the influence of the German directors?
I read somewhere the reason of the block WERE the german directors. So they should be fair and pay a decent price and let SN be SN. To come back on diluting the shareholding of LH. I'm wondering Marc Coucke doesn't have 200 million or so to buy the 100% of shares from LH :D

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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by sn-remember »

IMO the problem is not about "paying a decent price" but about developing the belgian wings and hub.
There is no reason to rejoice if they "pay a decent price" and then dilute the airline and terminate the hub operation. BTW it costs a great deal of money to develop and make a hub succeed. The creation of MUC as a modern airport and a 1st class hub was very costly. The swiss authorities allowed the LX/LH merger at very good conditions. There were a modern fleet including 18 airbus 330/40 family in the basket of the bride.
The B. shareholders knew the risk they were taking when they invested in SN. They did'nt live up to expectations business wise , there sole merit is having perpetuated the brand. This bean-counter discussion about the take-over price is to me unpleasant and typical of snba's poor management along the 15 yrs or so of existence/survival. Not glorious, sorry if I hurt the sensibilities of some posters here, just a sad opinion from a distant observer.
Last edited by sn-remember on 03 Oct 2016, 18:28, edited 2 times in total.

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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by Jetter »

Flanker2 wrote:In fact, if I were them, I would ask LH to sell their 45% share back at the price they paid under threat of shutting the airline down (which they can do) or diluting LH's shareholding.
:roll: SN isn't "too big to fail", actions like these will likely lead to SN's demise in no time.

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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by sean1982 »

Jetter wrote:
Flanker2 wrote:In fact, if I were them, I would ask LH to sell their 45% share back at the price they paid under threat of shutting the airline down (which they can do) or diluting LH's shareholding.
:roll: SN isn't "too big to fail", actions like these will likely lead to SN's demise in no time.
Indeed, SN is not much more than an empty box with a lot of debt and not many assets. None of their aircraft are in ownership now as far as I know. Their operational result/brand is the only real asset but 40m€ profit at an all time low fuel price, there is not many threats to make. (And btw, few of you seem to forget that denying LH the shared aint an option. They have to contractual right to do so)

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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by Passenger »

sn26567 wrote:That's something that was on the drawing board one year ago. The Belgian government wanted to invest in the airline to reduce the German influence on the decisions, especially the decision not to repay in full the LH loan, and keeping a Belgian blocking minority in the airline to preserve Belgian interests. This wish was rejected by the SN Airholding board. Under the influence of the German directors?
Are you sure about the timing of "investing in the airline": one year ago? I thaught it was a plan from end of 2013, when Wathelet looked at what could be done to allow Brussels Airlines to compete to Ryanair: reducing social security taxes or investing money ("investing" not by refunding the outstanding loan, but by a cash participation of shares/warrants/whatever).

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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by convair »

sn26567 wrote:
Flanker2 wrote:...diluting LH's shareholding.
That's something that was on the drawing board one year ago. The Belgian government wanted to invest in the airline to reduce the German influence on the decisions, especially the decision not to repay in full the LH loan, and keeping a Belgian blocking minority in the airline to preserve Belgian interests. This wish was rejected by the SN Airholding board. Under the influence of the German directors?
Well, if that dilution was (is?) still a possibility, the option agreement(s?) between LH and the Belgian shareholders look(s) more and more obscure to me!
Is the full text available somewhere? Some people seem (!) to know a lot about it (them) but I have yet to see an official document.

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Re: Lufthansa buys the remaining 55% of Brussels Airlines

Post by sn-remember »

A summary from CAPA :
"Lufthansa's decision to take full control gives Brussels Airlines greater security and stability as a full member of the Lufthansa Group. It gives Lufthansa the opportunity for a step change in the scale of its low cost brand Eurowings (further boosted by the airberlin wet-lease agreement).

However, Brussels Airlines is a network airline (and an alliance member), while Eurowings is primarily (but not exclusively) a point-to-point airline. Furthermore, Brussels Airlines cannot be defined as low cost from a CASK point of view, even if its unit cost is below that of Eurowings. It should be said however that Brussels Airlines has managed to grow in the face of increased LCC competition in the past two years).

These discrepancies – in business model and in CASK levels – suggest that Lufthansa's vision of Eurowings is not that of the kind of LCC with which it increasingly competes in Europe. Perhaps it is more a pragmatic recognition of the limitations on how far it can take the LCC model. Perhaps, too, it will only integrate part of Brussels Airlines into Eurowings."

Expect further clarity of Lufthansa's thinking to emerge over coming weeks. It is quite probable that thinking is still evolving."
From http://centreforaviation.com/analysis/l ... ngs-304536

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