Future of Brussels Airlines

[BigJets]

Very funny pikey 8)

That's just it. It doesn't take a manager (or a rocketscientist for that matter) to see what's wrong with Brussels Airlines.

It's very good to defend and to be for your airline like LX... is, but, just like an alcohol or a drug addict, you must first admit YOU have a problem (and not go into denial) before you can only begin to do something about it!

But, hey, you're right. Who are we?

[FLY4HOURS.BE]

Plus look at all the problems there are: pilots leaving and to compensate, wet-leasing an aircraft at 300 000 more euro's per month, while training new pilots monthly for an amount of 200 000 euro's...

That's 500 000€ a month they could give to their own pilots, of which numbers are still leaving every week.
The pilots will be more than happy to do the very same overhours, or at least they will not push the max cost index in the FMS just to be home half an hour earlier at the end of the day

I've been through many managers and realised that some are cool-minded and know-what-they-are-doing.
I'v seen other managers who are really stupid.

By the way ask your ex-Proximus manager if it's Boeing 320's or Airbus 737's they are leasing. I'm sure he's gonna tell you he doesn't know, all he's gonna say is that the monthly phone bill costs XXXX€

Another thing you can do is to ask M'Oleary as occasional advisor. He's saying he's bored by the simpleness of the aviation industry.

[buck]

Dear FLY4HOURS.BE, BigJets, Air Key West and many others...

If you think that you can give lessons and teach other people how to run an airline, what are you waiting for to start your own !!!???
I have never seen or heard such a big nonsense on how to manage an airline, you are really THE EXPERTS !!! Please guys stop your bullshit since you don't even have the slightest idea of management, leave alone airline management. The only positive in, your postings are the big laughs they create.

[FLY4HOURS.BE]

what are you waiting for to start your own

I'm accumulating some capital at the moment, give me some time.

I ain't starting without money like B.air (although that's not their fault, I know).

Code: Select all

you are really THE EXPERTS

Yeah and you are blind or like they say : You only hear and see what you want to.

[brussels airlines]

What is actually the problem of Brussels Airlines ?

-Bad communication: if you say good communication is that all managers are member on this forum and should first communicate to you before to the board, staff,etc. then you're right. But wich Vice-president communication has his cellphone number on the website ?
-Bad strategy: I don't think so. For official results will have to wait until 2008, but first 2 weeks of July, they transported 8% more pax.
-They are flying with old planes. You are right, they don't have the money. But are you blaming someone who has to drive a second or third hand car because he can't buy a deluxe new car ?
-Stupid managers ? I don't think so, those managers are making profit for 5 years now. They aren't using some secret banks on islands for washing their black money white like Sabena did.
-No ambition ? If they had no ambition they wouldn't still be flying now and the merger between SNBA and VEX would never been there.

[FLY4HOURS.BE]

Stupid managers ? I don't think so, those managers are making profit for 5 years now

Hell of a profit. With all the profits they have made the last years, they are not able to buy even one B737 on the second hand market.
How efficient is this company anyway? For every 200 millions of revenue, they have 1 or 2 millions of profit... Hell of a profit.

who has to drive a second or third hand car because he can't buy a deluxe new car ?

I think the exact word is rent or lease. And there is a big difference between buying and leasing.
I don't have a problem with B.air, I have a problem with their fleet strategy. Since when is leasing a whole fleet profitable? I can understand for the A333's, but the A319/B737/Avro? If they had bought their aircraft 7 years ago, the aircraft would be theirs now, without needing to spend anything more than the usual operational costs.

-No ambition ? If they had no ambition they wouldn't still be flying now and the merger between SNBA and VEX would never been there.

Has there really been a merger?
Ok, it reduced competition problems, but the staff opinion has never been as bad before.

[JOVAN]

-Bad communication: if you say good communication is that all managers are member on this forum and should first communicate to you before to the board, staff,etc. then you're right. But wich Vice-president communication has his cellphone number on the website ?.

The CEO (nobody seems to remember his name) has been in charge now for quite some time.

It's about time to hear from him.

Does he have a plan, strategy,....??

Where does he want the company to stand after 2, 5, ..10 years.

It is clear that pilots, personel, passengers (and potential passengers like myself) don't feel happy about this airline.

Also BRU probably wishes more vitality.

So Mr. CEO, the airline business is not so well-protected as the telecom-business is (was).
People have more choice how to travel and to choose between SN and many others.

Tell us what is the programme, what is on the menu,.. and convince us:
fill your planes and make progress thru the year (not just 2 weeks in July when it rains in Belgium)
Modernize your fleet, optimize your time-schedule, motivate your personnel, ...

Let us know something from time to time.

And -on a personal note- drop this ridiculous humiliating B.light and Flex formula.

[C-46commando]

If they had bought their aircraft 7 years ago, the aircraft would be theirs now, without needing to spend anything more than the usual operational costs.

Interesting, I didn't know that B.air has been flying since 2000. Very interesting.

[brussels airlines]

On the website of SN Brussels Airlines (flysn.com witch isn't online anymore) you could read a press release on 31 March 2006 about their future plans.

1. The EU network is not profitable, the load factors are to low.
-higher load factors is needed. How: new product witch will focus on two types of passengers: Businessmen wich want more flexibility, time-saving and some extra services/ Tourists who want to fly as cheap as possible.

2. African network is profitable. They wont change strategy. But it is difficult to keep it on long term profitable.
-Starting up of a local carrier (Congo) and possibly later on in other countries (Cameroon, Rwanda). Out of this points passnegers can connect to some various African destinations.
-Expanding long haul fleet: a 4th Airbus A330 has been added to the fleet.
-Looking for extra partners in Africa: Hewa Bora Airways

3. USA, Asia,... Currently they have some code-share partners to those countries:
*American Airlines (New York and Chicago + 20-30 US connections)
*Ethiad Airways (Abu Dhabi)
*Hainan Airlines (Beijing)
*Jet Airways (New Delhi, Mumbai, later on Bangalore and others...)

-They have the ambition to fly with own metal to the US (they are looking for a 5th Airbus 330, possibly a 6th as was sayed in the press release on the 31 March 06)

4. Alliance or not?
-Philippe Vander Putten said in an interview to De Standaard (and this was the headline): "We moeten is hard gaan nadenken of we ons niet moeten aansluiten bij één van de grote luchtvaartallianties" (or something like that)

5. Fleet expanding/ renewal
-Avro/BAe and Boeing 737 fleet have to be replaced by 2010-2011. In an interview last summer Vander Putten said that an order would be made next summer (2008).
-Fleet will this year or next year expanded by 3 midhaul aircrafts: Airbus A319 or Boeing 737, they will replace 2 BAe146's who will leave for Africa.
-In 2010 they want to operate 5 or 6 longhaul jets to Africa and N-America.

6. As the spokeman of Brussels Airport said at the startup from Brussels Airlines: "Beter een kleine gezonde luchtvaartmaatschappij dan wat dan ook" (Better a small good running airline than somethin else) When the journalist asked him what he would chose between Sabena and Brussels Airlines, the choice was quickly made.

7. Pilots running away? Yes, at other Foreign airlines it is better indeed. BUT it isn't only happening at Brussels Airlines, but with all Belgian airlines.

8. Recruting: they are currently busy with finding pilots. But the problem is that most pilots who are leaving are captains. So it is more difficult to replace them than a just started first officer.

9. Profit: this year they want to have a profit of 5% (last year it was 1.6%) and also 5% more pax.

10. This is all confirmed info from their own press release (some of them under the flag of SNBA) and on QUALITY newspapers (De Standaard).

P.S.: You can see (in Dutch) an interesting docu about Brussels Airlines on kanaalz.be seurch for 'Brussels Airlines' and watch the item "Snelst groeiende bedrijven van Brussel'.

[FLY4HOURS.BE]

I didn't know that B.air has been flying since 2000. Very interesting.

Sorry I actually meant to write 18 years ago, but I thought that might cause a heart attack among some luchtzakers ...
B.air is nothing more than DAT, and that's who leased those Avro's, since 18 years ago.(or at least part of them)
Great strategy hun?
I mean, you can afford that if your CEO is the king, but not under a public airline that has to be more than very efficient to compete with others.

-They have the ambition to fly with own metal to the US (they are looking for a 5th Airbus 330, possibly a 6th as was sayed in the press release on the 31 March 06)

ambition--->wet dream

BUT it isn't only happening at Brussels Airlines, but with all Belgian airlines.

So, let's all be friends sit down around a circle and share our misery...?

Recruiting: they are currently busy with finding pilots. But the problem is that most pilots who are leaving are captains. So it is more difficult to replace them than a just started first officer.

Why replace them? Raise their salaries and keep them.
For every captain who leaves, a first officer needs to be upgraded and a new first-officer has to be selected and type-trained. That should cost around... min. 40000€?
If you give that captain 20000€ brut more every year, he will stay 10 years longer and you won't need to ground planes to wet-lease other planes, which costs another... 4+ million € per year...

I am concerned about this airline, and not much for the airline itself but for the economical impact it would have if one day, they would have more costs to pay than money available to pay those costs. They will have no assets to sell, no back-up funds and we 'll have a Sabena II.

Let's buy aircraft, that s a warranty to the future...

[Flybe]

I didn't manage to follow the whole topic, but I do jump in once in a while. In the previous post I do want to correct something though.

If you give that captain 20000€ brut more every year, he will stay 10 years longer and you won't need to ground planes to wet-lease other planes, which costs another... 4+ million € per year...

Thing is that if you do it for 1 captain, others will hear about it, etc. So you do it for all captains, or not... That's at least what would be said. That means that also captains that would have stayed under the current wagecircumstances also would get 20000 more, while you wouldn't have the cost for them in the example of not paying them more, ... because they anyway would stay.

Plus 20000 extra in gross salary means more costs for the employer. There is something called "werkgeversbijdrage" (literally translated "employers contributions") which is around 30% of the gross salary if I'm not mistaking. That makes around 6000 per year per captain more...

I am concerned about this airline, and not much for the airline itself but for the economical impact it would have if one day, they would have more costs to pay than money available to pay those costs.

More and more firms (not talking only about airlines here) are doing a sale and lease back, even though they aren't in financial troubles, but just to enhance their figures. Financial analysts will even tell you that in some cases this is more beneficial than buying assets. In the case of airplanes, the airline is more flexible to change to other types when they lease, which makes them more flexible to benefit from "good deals" in the market. Also, if they lease for a not too long period, they can change quicker for less fuel consuming types. The leasecompany will calculate the whole life of the aircraft, so also the benefits it can make after that, by leasing it to another airline. So for the leasecompany it can still be beneficial, and also for the airline.

Finally just to say that, if an airline has to start selling assets, no matter what they are, in order to pay for outstanding debts, it's already too late in my opinion. Talking about using long term income to pay back short term debts... It cannibalises your whole future!

Greets,

Pieter

[airazurxtror]

5. Fleet expanding/ renewal
-Avro/BAe and Boeing 737 fleet have to be replaced by 2010-2011. In an interview last summer Vander Putten said that an order would be made next summer (2008).
-Fleet will this year or next year expanded by 3 midhaul aircrafts: Airbus A319 or Boeing 737, they will replace 2 BAe146's who will leave for Africa.

Ryanair sells from time to time some of its "old" 737 NG which are still quite new by BruAir standards...

[FlightMate]

Indeed, LX, probably nodoby here is from the board, so we can only guess about their business plan

my guess for SNBA:

Start with low profile, don't invest money, post rapid positive results, sell the airline.

my guess for b.air:

Reduce costs in order to still be able to show positive results, sell the airline.


It's simple: (Revenue - Cost) = Profit
But I think b.air was so focused on reducing cost, they forgot how to increase revenue.

the best example to show how bad their business plan was is to compare with Swiss:

They both started at the same time
They both started from a subsidiary company (Crossair / DAT)
Swiss invested some money and made quite big losses for some years
SNBA invested no extra money and made big losses for 1 or 2 years but showed positive results rapidly
Swiss joined One World
SNBA staid alone
Swiss has always focused on keeping a good Long Haul Network
b.air has focused on becoming a low cost in Europe
Swiss was bought by LH, and now show excellent results (>150M € profit in 2006)
b.air is still alone and show almost the same results as 5 years ago. (12M€ profit)

So, LX... is this really a sign of a good business plan?



When I read b.air has 5% more pax than last year, I find it great news, but I would like to know how about the other airlines in Europe (or in the World), as everybody knows, now is a good time for aviation, and every airlines is getting more pax... but what in 5 or 7 years, if a downturn comes?

[Ducatibiker]

Indeed, LX, probably nodoby here is from the board, so we can only guess about their business plan

my guess for SNBA:

Start with low profile, don't invest money, post rapid positive results, sell the airline.

my guess for b.air:

Reduce costs in order to still be able to show positive results, sell the airline.


It's simple: (Revenue - Cost) = Profit
But I think b.air was so focused on reducing cost, they forgot how to increase revenue.

the best example to show how bad their business plan was is to compare with Swiss:

They both started at the same time
They both started from a subsidiary company (Crossair / DAT)
Swiss invested some money and made quite big losses for some years
SNBA invested no extra money and made big losses for 1 or 2 years but showed positive results rapidly
Swiss joined One World
SNBA staid alone
Swiss has always focused on keeping a good Long Haul Network
b.air has focused on becoming a low cost in Europe
Swiss was bought by LH, and now show excellent results (>150M € profit in 2006)
b.air is still alone and show almost the same results as 5 years ago. (12M€ profit)

So, LX... is this really a sign of a good business plan?



When I read b.air has 5% more pax than last year, I find it great news, but I would like to know how about the other airlines in Europe (or in the World), as everybody knows, now is a good time for aviation, and every airlines is getting more pax... but what in 5 or 7 years, if a downturn comes?

-Swiss joined *Alliance

[b-west]

If I'm not mistaken, Swiss only started to make a profit after they were taken over by LH and the Germans did some serious rethinking of the whole airline? But indeed, it's remarkable how the two airlines evolved differently.

Still, I do think Swiss had more financial means from day 1...

[Ducatibiker]

If I'm not mistaken, Swiss only started to make a profit after they were taken over by LH and the Germans did some serious rethinking of the whole airline? But indeed, it's remarkable how the two airlines evolved differently.

Still, I do think Swiss had more financial means from day 1...

-Yes, Swiss banks are and remain behind the airline.
-The membership in *Alliance is also important. According to Webflyer, the Lufthansa/Austrian/Swiss has 14 million members and might be the largest European Frequent Flyer. Also in *Alliance is United Airlines with its 50 million members (but Mileageplus was created before)
-The airlines has a real focuss on business passengers - not words but hard factors (F cabin on all their long haul flights)
-Swiss has also very good pricing in C/Z - they do their homework for each market !

[FlightMate]

I thought Swiss first joined One World then left it in order to be bought by LH, and then joined Star Alliance, but I can be mistaken.

Swiss had maybe more money to spend, but definitively, b.air looked in the wrong direction. They needed to expand their Long Haul network to feed the European One (well, actually, it's the european network which feed the Long Haul one), and not focus all their attention on being profitable in Europe as a low cost.

What bring money is the long haul, no question!

As some stated here: the good plan, is creating a hub in BRU, the airport has the capacity to grow.

If b.air wants to be a profitable IATA carrier, it needs to expand its long haul network.
If b.air wants to be a profitable LCC, it needs to restructurate its office, its fleet, the whole product!
If he wants to play on the 2 tables, it needs to create another airline, and not mix everything!

Again a good example of bad previous management: now they try to expand (3 to 4 or 5 Long Haul aircraft), but they refused to do it when the aircraft were cheap and available on the market, as the business plan was clearly to NOT expand.

If some say everything was clear as from the start of SNBA, I really doubt it.
I'm sure they didn't have the idea to buy VEX when they started in 2002, and clearly they didn't have the idea to go from a Full Service Airline (Passionate about you) to a Half-low-cost airline

---------------------------------------------------------


On another side:
Rumors are that VEX was a few months from Bankruptcy, when SNBA bought it. And they bought it at the request of one the Board Members who had some money invested in VEX.
Could it be true?

[kiwiandrew]

Swiss joined One World

Swiss signed an agreement to join One World , but they never actually joined . British Airways ( who are surely being cursed to this day by the other One World carriers ) made life more and more difficult for Swiss until they decided to forget about OW and they started talking to LH instead

[LX-LGX]

Dear FLY4HOURS.BE, BigJets, Air Key West and many others...

If you think that you can give lessons and teach other people how to run an airline, what are you waiting for to start your own ?! I have never seen or heard such a big nonsense on how to manage an airline, you are really THE EXPERTS ! Please guys stop your bullshit since you don't even have the slightest idea of management, leave alone airline management.

The only positive in your postings are the big laughs they create.

Indeed buck. This is one of my favourites (taken from "SN adding medium haul aircraft"):

I can tell you what it costs to lease an Avro-class aircraft: a new Avro costed around 35 million euro new. The lease is for 20 years (those aircraft are in service since 1989). During these years they need to accumulate those 35 millions they have costed plus their yearly gain, let's say 100% of the lease value for a long-term leasing.(which is cheap). That makes it 70 million euro spread on 20 years, or over 3.5 million euro per year plus no resell value (because the lessor is getting the planes back). That alone costs 10.000 euro per day per aircraft. Add to that, the Avro is a bird that likes to drink alot and needs quite some maintenance resulting in quite bad CASM for its passenger-class. Practically, if all the aircraft were theirs, they would have around 100 million euro less expenses per year...

Brussels Airlines leasing second hand AR's at 35 mio euro each???? You really think this??? Allow me to go back almost 6 years : to 11th Sept 2001 (9/11, all flights grounded) and 7th Nov 2001 (Sabena's bankruptcy, whole fleet grounded). Aircraft manufacturers and leasing companies worldwide are on their knees, and many flights are one ways to Chateauroux. And then, just before Christmas holiday 2001, Davignon and Lippens, on behalf of New DAT, are telling (not asking!) them the leasing contracts have to be re-negociated, or otherwise SIC (Sabena Interservices Center) will ask for their bankruptcy. The lessors are relieved: it's seen as a re-start for Sabena, so SN's small planes will not have to join the big ones in Chateauroux. Nobody knew how long aviation industry would be dead, so every offer was accepted.

Off topic: also Van Gaever understood that the lessors were on their knees, and he started VG Airlines.

So, fly4hours.be, the leasing contracts from New DAT (SN Brussels Airlines) are unbelievable cheaper then those from the old DAT (Sabena). If you think the new leases are half price of your 35 mio euro, you may guess again...

(this also explains why Brussels Airlines still uses the Avro's/BAe's, although they are indeed not the best for the routes they're flying)

[FLY4HOURS.BE]

Nobody knew how long aviation industry would be dead, so every offer was accepted

Wrong: lessors have departments who spend every day calculating the future. In those calculations, even unlikely events are taken into account, and the thinking goes over 20-30 years depending on the typical lifespan of the aircraft involved.

If only your pretentions were true then why the hell didn't they lease B737 and A320's at the time, if every lessor was at their knees?
Overall operational costs of A320's per flight with the same number of pax is the same as Avro's, CASM is just uncomparable.

Let's face it, DAT chose for additional Avro's because these were the cheapest leases on the market (no one wanted them). Also, they are quite reliable and DAT knew them well from the operations they conducted mainly from ANR, but it doesn't take an Avro to take-off from BRU.

Lessors would rather see their aircraft rotten in the sun rather than leasing at a price where they have no profits.

So, fly4hours.be, the leasing contracts from New DAT (SN Brussels Airlines) are unbelievable cheaper then those from the old DAT (Sabena). If you think the new leases are half price of your 35 mio euro, you may guess again...

No way they are at half the price, they should be at double the price.

Brussels Airlines leasing second hand AR's at 35 mio euro each????

I'd say 70 millions on a lifespan of 20 years (which is about 3.5 million euros per year, as leasing is more often calculated on a yearly basis ), and new or old doesn t change the price that much, as for a lessor, a 10 years old aircraft is a young aircraft.
Lessors always charge at least double the list price of the aircraft because of the big investment and risk involved. After 20 years it is difficult for a lessor to lease an aircraft: aircraft become less efficient, more maintenance costs involved, more innovative and efficient aircraft available on the market,...
The only thing that advantages an airline in opting for the lease is the 1.lack of cash to pay themselves the whole aircraft, 2.redcuced risk-taking, 3. the immediate availability of the aircraft.

The shorter lifespan of the AVRO (20 years) is because it is designed for intensive very-short haul operations, involving much more cycles and STOL operations.

I've been in the business, if you wanna know something, ask me.