SN's 2008 financial results....

[tolipanebas]

In a nutshell:

SN booked a 1,5M euro operational profit over the past fiscal year, but due to financial obligations from unfavourable fuel hedging contracts and the provisions set aside for this purpose, this small operational profit turned into a net loss of 12,5M euro.

Needless to say 2009 will be much worse...

[b.lufthansa]

How much has the AIRDC-flop costed them ? Between 30M € and 40M € ?

[Ricard]

How much has the AIRDC-flop costed them ? Between 30M € and 40M € ?

Exactly my thoughts, but of course not a word about that fiasco !!

[Atlantis]

http://www.tijd.be/nieuws/ondernemingen ... 19-431.art

+ some more details:

Revenue: +7%: 984,6 million euro
Pax in 2008: 4,6 million transported in Europe and 460.000 pax to/from Africa.
When we also took the codeshare pax: total transported: 5,45 million pax.

[airazurxtror]

Some more details in "Le Soir" , 4 april 2009, page 46.

Savings of about 40 to 50 millions euros are necessary.
By lowering the frequencies - planned global decrease of capacity : 15 % (against - 10 % in 2008).
10 million must be spared on the cost of personnel - without any "dry" firing. Possible : no more "bonus" and a pay freeze - the unions are against.
In 2008 : 5,4 millions pax carried (5,8 mil in 2007). Loss of 12,2 millions euros (against a 23 million profit in 2007).
A marked loss of passengers since october 2008 - in february : - 25 %.
A possibility to stem the losses : increase the "charter" activity in the summer, if possible.

Also :
http://www.trends.be/fr/economie/entrep ... euros.html

Meyfroidt : "We are going to do all we can not to be in the same situation as the Sabena in 2001".
!!

[sn26567]

Official press release: viewtopic.php?p=216181#p216181

[tolipanebas]

Basically, the fact SN have hedged almost all of their fuel till the end of Q3 at prices more than double what they are today, combined with an exceptionally weak demand are now making that cash flow is said to be out of control <double digit M per month>.....

And although SN categorically refuses to talk about it and management becomes angry when you dare to just refer to it, the failed Air DC project must also have costed them quite a big sum.....

I wonder just how realistic it is to expect a cost saving program to generate almost 50M euro in just over 8 months! There just isnt enough low hanging fruit to pluck any longer, otherwise it would have long been done, so I fear they will once again just turn to the staff and notably flying staff to fill as much of the holes as they can, while messing around a bit at the managerial level with new flashy concepts, smart talk and some new eyecatching stuff which in the end wont contribute positively to the ballance sheet at all!

[fcw]

BruAir is still charging a fuel "tax", so the passengers are paying for the mismanagement!
Maybe, thats why they are running away in droves...

[Ducatibiker]

Yes, you are right. Most of my flights in 2008 went to LH and LX...where you even get free food and drinks in Y ! I will never forgive the B. Air manager who deleted the red candies in the lounge...the Brussels Airlines lounges are in terms of catering the poorest to be found on the market. The food is b.flex is a real disgrace...and all those saving for a web site which does not work and an African venture so the managers can fly to a warmer climate !

[airazurxtror]

The management shows the exemple : all the members of the management will travel in B-Flex, not in Business. Tuesday night, coming back from a meeting with LH, if Davignon was in Business, his managing director was in B-flex. Hot meal for the viscount, salad sandwich for the commoner.
("Le Soir", today, gossip column page 45).

[Atlantis]

SN offered 10% less capacity in 2008 and will offer 15% less capacity in 2009. I think they should do also something about their very high prices.

F.e. you have to pay 922€ for a flight to BUD, two persons, in economy in September. Malev offers the same flight for the amount of 200,2 euro. Wizz Air something around 300 euro. And this is only one example.

I'm not surprised that they loose pax to other carriers.

[SN1203]

I think they should do also something about their very high prices.

F.e. you have to pay 922€ for a flight to BUD, two persons, in economy in September. Malev offers the same flight for the amount of 200,2 euro. Wizz Air something around 300 euro. And this is only one example.

I checked Brussels Airlines' fares on their website, and found 11, 32 or 63 EUR fares on almost EVERY single day in September.

The only more expensive fares, were ON THE FLIGHTS OPERATED BY MALEV (!!!). So could you please double-check your facts.

BruAir is still charging a fuel "tax", so the passengers are paying for the mismanagement!
Maybe, thats why they are running away in droves...

What a cheap accusation... tell me which airline didn't hedge at way too high prices! Do not forget that virtually all airlines are still charging fuel taxes... and those airline who don't (like Ryanair) have a whole range of other surcharges ready to compensate for the expensive fuel bill. You might not like the fuel surcharge, but this has nothing to do with Brussels Airlines in particular.

an African venture so the managers can fly to a warmer climate !

You're right: Dakar, Banjul, Nairobi, Entebbe etc. are not attractive enough for b.air's managers to spend some well deserved holidays, that's why they decided to create a hub in the exotic city of Kinshasa

so I fear they will once again just turn to the staff and notably flying staff to fill as much of the holes as they can

Why do you specify the flying staff? I guess you assume that the ground staff is so much better off then?

[tolipanebas]

Why do you specify the flying staff?

Because flying staff is about the only category of staff feeling the impact of cost savings made on things other than direct labour costs. The idea of cutting even more flights, reducing the number of nightstops, lowering direct operational costs etc, all this has serious financial repercussions on the variable part of the income of flightcrews which would come on top of any linear salary efforts made by all staff (including flight crew).

For instance: when SN cut production by 10% at the end of last year, ground staff didn't loose a cent by the implementation of the reduced flight schedule, but flying staff lost a significant part of their monthly income which is made up of flight time dependant premiums.
Now there will be another cut of 15%, so again flight crews can expect to see their monthly income being reduced as a consequence, well before the labour cost itself was mentioned as a target by the management.

I can agree that the aim of these cost saving measures is justified and that the loss of income from them for the flying crews is just colateral damage, but it is felt very real by all people flying, so don't expect them to just accept any other salary cuts on top of it all: we've been giving up part of our salary for months already, without anybody even mentioning it!

[FLYAIR10]

The idea of cutting even more flights, reducing the number of nightstops, lowering direct operational costs etc,

What are the alternatives in the short run when you have to scale down due to economic circumstances?

[SN1203]

Atlantis, by reading your posting again I see what you mean now. However, this has nothing to do with Brussels Airlines' passenger numbers on their own metal flights, and it is perfectly normal that prices between operating carrier & marketing carrier are different.

It all depends on the agreement with these respective carriers (sometimes you cannot sell the cheaper fares for example), the way how your booking classes are mapped to those of the operating carrier, whether you have anti-trust... These agreements are often pretty complex.

Tolipanebas - thanks for your elaboration. However, I don't think that an airline can guarantee that you earn x EUR of variable wages each month. I understand your concerns, but you cannot ask for guarantees about nightstops etc. if these flights are not economically viable for the company.

[tolipanebas]

Tolipanebas - thanks for your elaboration. However, I don't think that an airline can guarantee that you earn x EUR of variable wages each month. I understand your concerns, but you cannot ask for guarantees about nightstops etc. if these flights are not economically viable for the company.

Nobody has ever been asking for guarantees whatsoever; I was just pointing out that some categories of staff (i.e. the flying staff) have already seen their monthly income being reduced by 10% (and more) the past few months due to cuts which have remained largely unnoticed to most other staff, so don't expect us to be very willing to join the collective efforts asked from 'all' the staff....

Besides, allow me to say the other categories better shouldn't be too willing either!

Like the Flemish financial newspaper 'De Tijd' wrote yesterday: A considerable loss might even be good news for the airline itself, as it seriously cuts the price our future owner LH will pay for the remaining shares: the idea being that the cheaper LH can buy us, the better for LH obviously, but by definition also SN in fact, which has then become a part of LH.

Let's be fair: the only thing Davignon still wants to realise at SN is to sex up the financial results as much as possible so his Airholding can get as much money as possible from LH...

Maybe we as staff however, should all better focus on the long term interests of our future owner and start thinking and acting accordingly, rather than listen to the short term interest of our current shareowners who are merely trying to prepare their exit in the best possible way...

Who's interest do you prefer to defend? Your departing shareholders' interests? Or your future owners' interests and thus your own long term interests?
Something to think about, isn't it?
If LH buys us cheaper than it expected, it will keep more money in its pockets to strengthen the LH group of airlines even further, a group of airlines to which we will belong: Hum, think I know what I'll pick...

[shockcooling]

If LH buys us cheaper than it expected, it will keep more money in its pockets to strengthen the LH group of airlines even further, a group of airlines to which we will belong: Hum, think I know what I'll pick...

Don't you think that's naive to say that now? LH has the "choice" to buy the rest of the shares in TWO years. As I'm also flying staff, I rather would like to keep flying and earn 10% less allowances per month or other measures for the staff, than waiting to see that LH loses interest in buying the rest of 65% in shares, because we're a bleeding dead like a cow. (I don't know if the last is a correct saying in English )

my 2 cents

SC

[tolipanebas]

Don't you think that's naive to say that now? LH has the "choice" to buy the rest of the shares in TWO years. As I'm also flying staff, I rather would like to keep flying and earn 10% less allowances per month or other measures for the staff, than waiting to see that LH loses interest in buying the rest of 65% in shares, because we're a bleeding dead like a cow. (I don't know if the last is a correct saying in English )

That's exactly the idea the management will want to make you believe, my friend:
"LH will not buy us in 2011 if we're not profitable"
Allow me to say that that is a wrong assumption, IMHO.

Lufthansa hasn't decided to buy SN based on a quick look at our day-to-day PLA (aka Profit Loss Account, in full), their Strategic Mergers and Aquisitions department has done a thourough analysis of the opportunities and synergies which could come from a full integration of SN and have concluded that it definitely makes sense to go after SN and turn it into an African focussed branch of their airline.
Don't believe for a second they will suddenly change course because of a loss from SN due to the worst economic crisis in decades. Lufthansa hasn't been scared off by losses in the past (LX), nor the present (OS) and will not in the future (SN), provided the business case still does make sense.
And the business case is made up of the long term strategy from LH, plus the underlaying performance of SN, both of which remain unchanged.

I don't know how good you are in analytical economics, but as you maybe know, an overal result is made up of an underlaying structural performance combined with a cyclic trend.

At SN, it is clear that the announced results for the coming year are negatively impacted purely and solely by the economic downturn which is impacting aviation globally and the problem definitely isn't structural.
However, since LH has agreed to a result-based purchase price for SN, our shareholders obviously have started panicing and have instructed management to implement cost savings up to 50M euro in just over 6 months!!! It really gives away the panic they must feel now...

I can very well understand them: After having invested money in SN and making sure it never had to burn any if it for almost 8 long years (thus even blocking off expansion on some occasions), they now risk seeing SN burn most of it, just before they thought to book a very nice profit on their high risk investment AND they risk getting a much lower than expected sum from LH at the end as well!
NO wonder they want to act swiftly, bluntly and accross the whole spectrum, ignoring the clear difference between structurally endured losses and cyclicly endured losses! We shouldn't however!

Even if they come back and tell LH thinks the savings plan is a great idea too (what manager would mind extra savings, euh?), we should not forget that any efforts asked from us would come on top of and next to all which was given the green light by LH duing their pre-acquisition audit last summer. As such it won't make or brake the deal, although I am sure management will do it utmost to convince us otherwise.

Also, allow me to say Davignon and his friends have nobody but themselves to blame if they get less than they'd hoped for! They've lost more than 2 years on the merger with 'Virgin Express', a time during which 'SN Brussels Airlines' was forced to merge and mutate from a premium airline, focussed on lucrative African routes, into a wannabe low-fares airline focussed predominantly on Europe, only to rush and reshape the newly created hybrid 'Brussels Airlines' back into what it once was at a record pace, so as to prepare it for sale to Lufthansa!

They could have spared everyone the hastle and just forgone on the VEX merger, selling SN 2 years ago, but as we all know, our shareholders (against the will of the SN management at that time) wanted to merge with VEX to create a bigger company and get a higher price for it when selling... unfortunately for them, they will now likely get a much lower price even due to external economic circumstances, but as we all know: the end of this decade will for long be remembered as the time when unlimited greed finally met up with reality...