Luxair, a Luxembourg scale Sabena scenario?

[PAA]

Luxair, which had announced late last year it would publish a restructuring plan by February 2006, had postponed the decision, in spite of very bad figures for the early 2006. According to internal sources, if trend persists, cumulated losses for 2006 could reach an all timme high 20M EUR. For the first time ever, cargo handling activity slowed down at Luxair's Cargo Center. Simultaneously, the move of airport responsability to state owned lux-Airport private company is substantially changing the landscape of aviation management in Luxembourg. Major internal political disputes are ongoing as to the future of the airport platform, especially now that Luxair revealed it evalautes the option of basing aircraft in 'less expensives' eastern countries. Weaknesses in strategic management @ Luxair is almost a lifetime story: remember the LUX-EWR flight? Along with a necessary fleet realignement process (and we read everyday about poor turboprops aircraft availability), Luxair is facing many challenges today. Also obvious that their B737 fleet has ridiculous block hours if you look at their scheduling & planning! An airline that makes its $$$ on the ground is not in a good position, is it?

[snoep]

YEAH, THEY REACHED THEIR LEVEL OF INCOMPTENCE ALREADY SOME TIME AGO

[thalenoi]

Strange, did they lose their handling monopoly then? They used to make their money from screwing Cargolux, and naming Jean-Donat Calmes president of Luxair (1998?)was also a stupid thing to do, talk about level of incompetence...a banker with no clues about banking who was supposed to learn about airlines when he was pushed into the seat of SVP Finance and Admin at CV (Cargolux) by Mr. Sitsen

[pull-up]

Yeah, Luxair is making money just by providing high price handling to the high revenue Cargolux airlines.

Also the airline is managed by the state with a bureaucratic stucture, just compare the number of employees versus the pax transported per year.

Now the airlines has quite a bad reputation, since it was discovered after the F50 crash that many of it's pilots didn't pass the recruitment examination just because they were from Luxembourg and knew the chief pilot

Also the Ryanair hub of Hahn is expanding a lot and is just at 1hrs from Luxembourg, this create a big competition.

But because it's a state airline and Luxembourg state is rich, this airline will never end like Sabena, in Luxembourg it's even prohibited to fire employees and restructure a state company.

Cheers

[PAA]

Restructuring a company is certainly allowed in Luxembourg, look at the recent examples of Villeroy & Boch (180 persons fired) and TDK factory (300 expected to get fired imminently). Also, about 'Luxembourg = rich country', I would just point out that the Luxembourg government is currently deeply reviewing the allocation of public finances, so that has dramatically changed over the years. Unemployment has reached an all time for Luxembourg, and of course being a very small country makes it extremely sensitive to turbulences. You are right concerning Luxair, run by bureaucrats in a state ownership environment. in addition, Hahn airport is now joined by Metz-Nancy, which is due to finalize talks with easyJet later this year (flights to Luton and to northern Italy, I heard). Lux media had announced Luxair's plans to move crews and aircrafts to Riga and St petersbourg, of course this has been rejected by management. Now talks have been ongoing for a while with the ministry of employment here...So something hot is cooking, in spite of Luxair management denying...More to come!

[airazurxtror]

. Lux media had announced Luxair's plans to move crews and aircrafts to Riga and St petersbourg, of course this has been rejected by management. Now talks have been ongoing for a while with the ministry of employment here...

It reminds me that, illo tempore, Pierre Godfroid, Sabena boss from 11-1990 to 2-1996, tried to delocalize the Sabena pilots to Luxemburg, by incorporating them to Luxair, thus saving much on the fiscal side. The Belgian government did not allow it...
(see his book : A la recherche du temps et de l'argent perdus, Ed. Racine, Bruxelles, 1996 - pages 6 et seq.)
You can always find a country where the labor is less costly...

[PAA]

Just for info, yesterday, Mr Ney (GM LG) was 'on show' on RTL Luxembourg TV for 'Kapital' Magazin; Link to the interview:
http://www.rtl.lu/tele/videoarchiv/inde ... 5_100K.wmv
I guess most of you don't speak letzbuergisch, so a quick recap: Mr Ney has presented figures that a solid 2/3 of the operated O&D's are not profitable - 12 out of 25 are even generating straight operating losses. A comparison has been presented with Ryan Air's operation and pricing model out of Hahn. Mr Ney's plan for 'building a new airline' (sounds familiar, doesnt it?) contents 4 folders: 1/. A more aggressive commercial strategy 2/. codeshares where possible 3/. substantial cash improvement plan 4/. fleet reorganisation ( a solid tradition at LG). SO after having opted for a 'full jet' fleet, guess they might be downsizing back to ATR or Bombardier, selling some of their assets and eventually show another picture by 2008. At least, that's the plan. With an average 50/60 employees per aircraft, ground personnel may start worrying, and folder 3 of the plan might as well be the most solid!

[snoep]

Their internet site for booking flights is totally useless - they should learn more what other competitors do. If they d'ont get their ass into gear, I d'ont see a bright future. They still live with an old structure and if they fail to correct than it will become for sure another failure like the old SN.

[snoep]

The meaning of getting your ass into gear means is - go!

[Established02]

Their internet site for booking flights is totally useless.

I'm occasionally visiting the Luxair website and I've simulated a booking numerous times. I did not notice any bugs or user-unfriendly items. I find their booking engine to be straightforward and easy to work with.

If I would have to point out an irritating booking engine, then it would definitely not be Luxair's, but rather KLM's booking engine!

[PAA]

For info, heard that the Mc Kinsey study, which is being used by senior management to support the cost reduction plan, includes partial or complete sell of the Luxair Tours business unit. Sound strange thought, as it is known for being one of the few profitable b.u and socialist ministers are not in favour of sell-outs. Could make sense in case of a major fleet re-alignment, forcing LG to sell most of it's B73.....

[airazurxtror]

Heard to-night on the TV news that something is going to happen at Luxair : wages freeze, cuts in the employement, etc..
Somebody knows more ?

[PAA]

In the papers today: salary freeze until 2009, 200 job losses (no straight furloughed, they claim), 1 B73 goes on the market and several routes will be canceled ( for example, LUX-MAN-DUB), search for an 'adequate' equipement is underway (you know they look for that aircraft that does not exist, economical, flexible, reliable, fast...). Anyway unions sem to be very cooperative with the plan, so it will definitely go thru. Let's hope this one is the good one.

[an-148]

last year, they sold the turboprops to buy jets in the 50seater segment!!!!!!!!!!!!!!!!!!!!!
such mistakes can be fatal!

[sn26567]

Full details on the Luxair reorganisation: https://www.aviation24.be/article11457.html

[Established02]

In the papers today: salary freeze until 2009, 200 job losses (no straight furloughed, they claim), 1 B73 goes on the market and several routes will be canceled ( for example, LUX-MAN-DUB), search for an 'adequate' equipement is underway...

PAA, would you happen to have a link to one of these newspaper articles?

Thank you.