Lufthansa acquiring Brussels Airlines

[sn26567]

Indeed. For those of you who do not read Dutch:

1) The Belgian companies that invested 150 million euros in SN Airholding in 2001 want their money back, with interest: they want at least 200 million euros. That is more than the bid of Lufthansa.

2) American Airlines does not like Brussels Airlines (one of the few remaining profitable airlines) go to rival Star Alliance, because of the many codeshares it enjoys with Brussels Airlines. British Airways has its hands full with the bid on Iberia, but would join in the AA effort. It remains to be seen if SN shareholder Richard Branson would appreciate the airline to be sold to his arch-rival.

[BrightCedars]

Well, the article in Standaard does tell much. That in Trends tells a bit more as far as the numbers are concerned but nothing about the alternatives to Lufthansa.

I can see a lot of synergy with Lufthansa and Star Alliance but ultimately I believe that SN and Brussels' chances will be far better off with American Airlines, British Airways, and oneworld indeed. If I had to vote I would give my vote to oneworld, but this isn't about politics, it's about business, so we'll have to wait and see what comes out of it.

Good luck to SN and their people no matter what!

[sn26567]

For a full article in English about Brussels Airlines looking beyond Lufthansa, check Reuters

[euroflyer]

Well, thanks for the links to Reuters. They claim ideal would be a buyer which will leave Brussels Airlines to folow an independent strategy .. I wonder which buyer would ever have that in mind after paying 200 million Euro

Clearly not LH and not BA, they would integrate BruAir in their European strategy in one way or another. If AA or any other non-EU buyer would come up, they might be willing to give more room. But I guess than traffic rights for flights out of the EU (Africa !) might be in problems ?

I see this article more as a desperate try by BruAir's management to make LH paying a little more ...

[brussels airlines]

That's just the task of the shareholders, putting some pressure on Lufthansa. Behind the doors, the deal will be almost closed and Lufthansa will get SN how they proposed.

[EBBR]

Hainan Airlines also interested in Brussels Airlines: http://www.hln.be/hln/nl/942/Economie/a ... ines.dhtml

[BrightCedars]

There will be more candidates to takeover Brussels Airlines, it's a given. The issue is that some of them have short term objectives that are pegged to their own needs of a European hub to increase their European portfolio. But there is no way Hainan or Jet Airways, or even American Airlines alone, will work for the good of Brussels Airlines itself. Partners like Lufthansa I believe, and potentially British Airways if they consider the thing seriously, will in turn want to max out the local and African potentials of Brussels Airlines.

With the failure of Sabena, Brussels failed to become the de-facto hub between Africa, Europe and beyond. There are now several direct dailies between the US and Africa and between Asia and Africa. Emirates have more flights to Africa than Brussels Airlines, so do Delta Airlines if I'm not mistaken.

I don't think independence is what Brussels Airlines needs. Sure it needs to be a proactive force, but it cannot be let to operate on its own without synergies.

I don't believe it's all about money for the investors, sure they do want to recoup their investment and that's only fair, but they are motivated by the long term sustainability of the operations based in Brussels, as they were when they put the money down on the table, knowing that they may loose it all and knowing that it would bring them more returns to put it in many other places. In any case, the amount of 150M€ total is pocket money for the players we're talking about. They will make the best choice for Brussels Airlines, and only then if one comes with a premium over the other will there be a shift in decision.

[itami]

Hainan Airlines also interested in Brussels Airlines

One more source : http://www.aviationweek.com/aw/generic/ ... 20Airlines
Important detail : Grand China Airlines (= former Hainan Airlines) applied for a Oneworld membership.

[Atlantis]

Off topic but interesting: Cargo B Airlines is looking for a new Asian partner for the future. Maybe they can find them in Hainan. It are those Chinese who asked Brussels Airport for more cargo facilities.

[sn26567]

Hainan Airlines also interested in Brussels Airlines

According to an article in L'Echo today, Hainan would first be interested in an increased cooperation with Brussels Airlines, and in part of the capital, but certainly not in a full takeover.

[LX-LGX]

The Belgian companies that invested 150 million euros in SN Airholding in 2001 want their money back, with interest: they want at least 200 million euros. That is more than the bid of Lufthansa.

The LH-offer is indeed ridiculous. The want 45% of the shares now, at 65m EUR. And they want a formal option on the remaining 55% shares, at a price that will depend on Brussels Airlines' performance over 2008/2009. As most of us know that IATA predicts 2008/2009 will be bad for all airlines, the price for the remaining 55% will be even less then the 65m EUR they want to pay now for 45%

LH is looking for a bargain, but I think they underestimate Davignon and Lippens.

[brusselsairlinesfan]

Sept, 15 will tell... it is coming step by step...

[Ducatibiker]

Hurry and sell before it's even worth less !

[fcw]

[he LH-offer is indeed ridiculous. The want 45% of the shares now, at 65m EUR. And they want a formal option on the remaining 55% shares, at a price that will depend on Brussels Airlines' performance over 2008/2009. As most of us know that IATA predicts 2008/2009 will be bad for all airlines, the price for the remaining 55% will be even less then the 65m EUR they want to pay now for 45%
LH is looking for a bargain, but I think they underestimate Davignon and Lippens.

Rediculous?? That is what the Alitalia unions said to the AF-KLM offer. Exactly the same might happen to BruAir... except in this case the unions are in favour but the middle management is against, because they know they will loose their job after the take over.
I think you are overestimating Mr Lippens, as did a lot of FORTIS shareholders.
BruAir should accept the LH offer before this years results are known.

[itami]

BruAir should accept the LH offer before this years results are known.

Panic is a bad advisor ! I hope SN will take the time to find the best solution for its future. There's simply no second chance.

[NCB]

The LH-offer is indeed ridiculous.

Not so ridiculous.
Belgium and Brussels are a very tiny market and SN has only old leased aircraft.
Earnings of 20 to 30 million a year is the most potential SN would ever achieve on its own.
LH is offering 65 million to take-over over an unsustainable operation.

I would sell ASAP and agree with fcw that I would do that before the year results are known.
The year risks to put B.air in a deep loss due to high fuel prices and if they couldn't make more than 20 million a year when oil prices were half what they are now, what are they suppose to loose this year?

Probably the shareholders are aware of this and are just doing little art to pull out a couple more millions.
I would be very careful in doing that, as LH is also looking into OS and a share in AZ. If SN comes too late, with LH buying BMI, the EU may not approve...

Sell ASAP!

[FlightMate]

Don't forget that the yearly results have been arranged, year after year, to show better and better profits.
I think the best year, was achieved in 2003 or so. (12 m$ profit bruto - of which 10 m$ have been carried over the following year as reserve, in order not to pay the promised profit sharing to employees - thus giving 2m$ netto)
The following year, 2m$ bruto went up to 12m$ netto, as the reserve was surprisingly transfered as profit.

And the better and better results SN achieved the last years is mainly due to sale of its aircraft.
But as from next year, no more aircraft to sell!

So as some of you said, I'd better sell before the next results are out.

[DannyVDB]

Flightmate, NCB,

Do you really think LH will buy an airline of it does not know exactly the financial status? Currently they are studying the books. This will be taken into account to fix the price for the remaining 55%.

The market of an airline is not defined by the boundaries of its home country or the nearby city: in fact the O&D market for BRU is more or less the same as AMS, i.e. around between 20 million which is considerable. Don't forget, you have to take into account BRU and the rest of Belgium + southern Netherlands, some border region of Germany, Luxembourg and parts of Northern France.

LH is not buying airlines because they have airplanes or other assets. They buy them because they have market potential. This is cleary the fact they are in BRU at the heart of the EU and have experience and routes to Africa.

I do not exclude they want to have indirect influence on 9W. If they take over SN, it means 9W is dealing with LH automatically. This opens some perspectives for LH in my opinion as well.

Although I think LH is a good choice, taking quick decisions is not necessarily better or worse. But always think twice!

Regards,
Danny

[LX-LGX]

Some here think that the shareholders will have to sell now - and at any price. I disagree.

May I please remind you the two most important reasons why Brussels Airlines (SN Brussels Airlines) was established? To maintain as much aviation employment as possible after the bankruptcy from Sabena, and to keep a Belgian airline as leading carrier at Brussels.

1) Employment at BRU is back in order: the airport generates 20.962 direct jobs (including 15th Wing and Express courier) (source: report "BRUtrends 2007").

2) A foreign carrier taking over BRU isn't that evident. Most of the shareholders from Brussels Airlines are Belgian companies. Cheap fares at Brussels Airlines means cheap travel costs for them. If a foreign carrier would take over as main carrier at BRU, this carrier will be more interested in short term and long term profit then in cheap rates (or employment). So: if they sell their shares, the fares will go up. If they sell now and without profit, it's a loss/loss for them.

I also disagree that there is time pressure for Brussels Airlines: it looks like fuel prices are going down again. If Lufthansa (or another carrier) wants to take over Brussels Airlines, they're not interested in the annual account: they' will ask for at least the latest quarterly report. So: if the past annual account one was good and the next annual account will be bad doens't count. Turnover, assetts (slots) and debts are far more important for them then one bad result.

Some press reports mentionned that the shareholders want at least 150 mio euro - the money they have invested. I wouldn't be surprised if many of them wouldn't be interested in selling at all. Let's not forget that their investment in SN Brussels Airlines was more an emotional then a business decision, after personal request from the Royal Palace, through Lippens and Davignon. Indeed, one had to be quite mad to invest in Belgian aviation just after Nine Eleven and just after the largest Belgian aviation bankruptcy ever. Why would they sign now for a small loss, if they have accepted a total loss years ago?

[sn26567]

A title in The Times dated 6 September 2008:

British Airways talks with Brussels Airlines could lead to Branson selling stake to rival

British Airways is in takeover talks with Brussels Airlines in a move that could lead to Sir Richard Branson, who owns 30 per cent of the Belgian national carrier, selling out to his fiercest rival.

Lufthansa, the German flag carrier, has made an offer for Brussels, and BA is considering whether to table its own formal bid. The airline is likely to be valued at about €150 million (£121 million). A source said: “BA have approached the board of Brussels and we are waiting to see if they make a serious offer.”

BA is in merger talks with Iberia, the Spanish national airline, and has also expressed an interest in Austrian. There have been suggestions that BA might want to partner with Alitalia, the Italian carrier that was declared bankrupt last week, but analysts believe that this is unlikely.

More details in The Times on line