Brussels Airlines future and financial perspective

[RoMax]

Looking at their European network, loadfactors went up while the CASM dropped dramaticly by retiring the old and costly RJ85's and 737's, it's not all that bad in Europe. The reason they didn't achieve their goal of 0-20 million loss in 2013, was due to bad performing long haul network, the European network performed just as hoped or even better.

Btw, operating an all Q400 fleet in Europe? I'm sorry, but I'm not flying a Q400 from BRU to let's say the south of Spain, most of Italy (Turin/Milan maybe, but not further), Vilnius, Stockholm, Copenhagen, Oslo, Athens, Budapest, ... Not even the comfortable NG's. And together with me, many, MANY passengers think like that. Airlines like AirBaltic and Croatia Airlines do it, but they are not exactly the best examples of financial miracles. Besides it imposes a problem with the Africa connections. Cargo is not a problem for the Q400 on the shorter routes (unless it is really full), but it is on longer routes (and yes Flanker, even the NG and don't make such stupid statements that SN has "clearly not spoken to Bombardier", you can be assured Bombardier has been speaking with SN, though probably not to sell them the Q400NG, but the Cseries instead).
Btw, the Horizon operations you are talking about in Alaska, are these the ones to Fairbanks being transferred from Alaska Airlines (737 operations)? Actually that's a short and not exactly cargo demanding business route connecting the two main cities of Alaska with a high frequency (which is the reason why they'll shift to the Q400). And yes Ethiopian Airlines does a good job operating them in Africa, though almost all routes they serve are domestic or to neighbouring countries like Sudan and South Sudan. But it's not because they are African routes, that they are luggage/cargo heavy, which is the case with long haul Africa flights (and its connecting passengers).

[Flanker2]

Looking at their European network, loadfactors went up while the CASM dropped dramaticly by retiring the old and costly RJ85's and 737's, it's not all that bad in Europe. The reason they didn't achieve their goal of 0-20 million loss in 2013, was due to bad performing long haul network, the European network performed just as hoped or even better.

That's a bit too naive and simplistic a view as already explained in previous pages.
The RJ85/B737 is not the main issue. The total fleet has reduced in numbers a bit as they merged frequencies and cancelled routes to operate A32S instead of Avro RJ.

The CASM drop can be quite significant between a RJ85 and a A319 (not so much between a B733 and A319), however CASM is of no significance if you can't fill the extra seats at the same yields or quite high average yields. A RJ85 still has lower trip costs than an A319.

Btw, operating an all Q400 fleet in Europe?

You are putting words into our mouths. No one talked about an "all Q400 fleet".

I'm not starting the whole Q400 debate all over again, I invite you to find the thread and read it through.
It shall answer many of your doubts in your subsequent post, such as operating exclusive point-to-point routes where customers will rather fly a Q400 point to point than transfer through another hub.

I think that the luggage capacity is a mere excuse.
Of course a full Q400NG will be more of a challenge luggagewise than a half empty A319.
On a per pax basis, it's approx. the same capacity and the new luggage bins make a world of difference.

[RoMax]

That's a bit too naive and simplistic a view as already explained in previous pages.
The RJ85/B737 is not the main issue. The total fleet has reduced in numbers a bit as they merged frequencies and cancelled routes to operate A32S instead of Avro RJ.

The CASM drop can be quite significant between a RJ85 and a A319 (not so much between a B733 and A319), however CASM is of no significance if you can't fill the extra seats at the same yields or quite high average yields. A RJ85 still has lower trip costs than an A319.

Less flights (rationalized network), higher average capacity of the European fleet (but less aircraft). The last one resulted in a significant drop in CASM, the first resulted in a higher average loadfactor on the European network and meanwhile the amount of passengers remained rather stable (partly thanks to increased feeding from long haul, but as a FSC you can never see one thing apart from the other). All in all that ads up to lower operating costs for the same amount of passengers. And that's concluding, not putting it naive.

I like the Q400(NG) for regional routes, I do like it a lot. But I don't think it's the holy grail for SN's network. Their (regional) network is in my opinion not large enough to make it worth having a Q400 sub fleet which really fits these routes and which can't be served by other aircraft.

You are putting words into our mouths. No one talked about an "all Q400 fleet".

It's pretty obvious certain peoply imply SN should have an all Q400 fleet for Europe.

I'm not starting the whole Q400 debate all over again, I invite you to find the thread and read it through.
It shall answer many of your doubts in your subsequent post, such as operating exclusive point-to-point routes where customers will rather fly a Q400 point to point than transfer through another hub.

With all due respect, I've read pages and pages of your posts and no I'm still not convinced.

As a realise we will never agree on many subjects, I often try simply not to respond in topics like these, but sometimes I just can't resist...maybe I should learn to do so as obviously we are getting nowhere anyway

[Flanker2]

With all due respect, I've read pages and pages of your posts and no I'm still not convinced.

It's not my job to convince you , nor SN. It's SN's job to coinvince themselves.
In any way, you don't seem to have read the Q400 thread because you continue to imply that we talked about an all-Q400 operation.

[RoMax]

It's not my job to convince you , nor SN. It's SN's job to coinvince themselves.

Nor do I expect you to convince me, neither SN and for sure not LH (who is the one actually making the final decision). But don't make a fool of yourself by writing pages and pages about the same ting on this forum, followed by saying you are not trying to convince me (or anyone else, as I believe this is not the first time you say this to someone).

[Flanker2]

So tell me Romax, since we're talking personal, what is your involvement with SN? Are you in SN management or is your family?

Are you aspiring a career in aviation at SN?
Believe me, I've been there, and what you find on the other side isn't as pretty as you'd expect it to be. If you want my advice, stay in retail and climb your way up in that branch, make some money and stay involved with aviation, without the emotion. If you are passionate and smart and you certainly seem to be so, you can aspire for bigger things than being a low-level manager at SN earning less than 2000 nett with a title as only reward.
You can go back to aviation with better prospects at a later stage in your life if you stay involved.

[RTM]

So tell me Romax, since we're talking personal, what is your involvement with SN? Are you in SN management or is your family?

Are you aspiring a career in aviation at SN?
Believe me, I've been there, and what you find on the other side isn't as pretty as you'd expect it to be. If you want my advice, stay in retail and climb your way up in that branch, make some money and stay involved with aviation, without the emotion. If you are passionate and smart and you certainly seem to be so, you can aspire for bigger things than being a low-level manager at SN earning less than 2000 nett with a title as only reward.
You can go back to aviation with better prospects at a later stage in your life if you stay involved.

Please Flanker, take a pill of your own medicine...
This is going nowhere! Certainly has nothing to do with SN's situation.

Deal with the facts, your beloved Q400 is minus 1, because they don't work, the last RJ85 is staying, and despite that, Europe is not doing bad...
This year the decision will be taken on the European fleet, and it will be between the A32F or the CSeries, or most likely a compromise between the two. Whatever theory you put up, it is not going to effect that, wheather you like it or not. But it sure as hell doesn't mean they will go belly up...

And now please back on topic!

[RoMax]

So tell me Romax, since we're talking personal, what is your involvement with SN? Are you in SN management or is your family?

Are you aspiring a career in aviation at SN?
Believe me, I've been there, and what you find on the other side isn't as pretty as you'd expect it to be. If you want my advice, stay in retail and climb your way up in that branch, make some money and stay involved with aviation, without the emotion. If you are passionate and smart and you certainly seem to be so, you can aspire for bigger things than being a low-level manager at SN earning less than 2000 nett with a title as only reward.
You can go back to aviation with better prospects at a later stage in your life if you stay involved.

You are only making a bigger fool of yourself and you don't seem to realise it.

And for a matter of fact, besides that I originate from Belgium and therefore always will have something with Belgian aviation, there is nothing that bounds me with SN. Is it that hard for you to believe that there are actually people that have no direct link with SN, still 'defend' certain decisions of them, really?
And looking at my avatar should bring you little closer to my background (not the company, but the country).

...or how Flanker once again succeeds in turning an attempt to end a 'normal' discussion, into a personal bitch fight...

And thank you RTM, indeed back on topic!

[Flanker2]

Is it that hard for you to believe that there are actually people that have no direct link with SN, still 'defend' certain decisions of them, really?

Yes it's too hard for me to believe that so much energy and emotion would go into defending obvious bad decisions despite not being involved at all. Sincerely, for you, I did hope that you were involved, because it does make you look like a weirdo (responding to your fool comment).
I have dozens of friends who work at SN from my time there and from being around in the industry in general, so you should take into account the fact that this isn't some video game we're talking about, it's real business. If you're not involved, I see no reason for you to get emotional. Also, it makes me question your level of expertise to comment on my analysis... I'm not pulling my facts out of a hat.

...or how Flanker once again succeeds in turning an attempt to end a 'normal' discussion, into a personal bitch fight...

If someone is trying to build a personal bitch fight by calling names, it's obvious to me that it's you. You jump in 3 pages late to dispute what was already questionned, discussed and settled, ie shorthaul/longhaul profitability, which is disrespectful by itself. Then you have continued on with half facts concerning the Q400 strategy proposed, putting words in our mouths to make your point seem more valid.

Deal with the facts, your beloved Q400 is minus 1, because they don't work, the last RJ85 is staying, and despite that, Europe is not doing bad...
This year the decision will be taken on the European fleet, and it will be between the A32F or the CSeries, or most likely a compromise between the two. Whatever theory you put up, it is not going to effect that, wheather you like it or not. But it sure as hell doesn't mean they will go belly up...

RTM, I don't think that you realise that in 2014 the question won't be what SN will choose for their shorthaul replacement... but whether they will at all survive this year. I have strong doubts, as is obvious from the previous pages.
Even if they survive on life support, it's obvious that with their current strategy, it will only be a matter of time, no matter what aircraft they choose. I think that FR will like their position in BRU and will further expand it towards the summer and even more in the winter... FR is keen on finding new winter-proof routes to avoid parking too many of their B738's and BRU provide many of those.

[FlightMate]

If no q400, SN needs something they can fill up.

Is there something similar to the a320 family, but smaller, with a better fuel consumption?

It would be nice if SN could be flexible in their operation, swapping larger aircraft when required.

Different types don't help.

The A318-321 are nice, but too big, or costing too much in lease, or burning too much fuel.

What would be nice as well, for european network load factor, is a second wave of long haul in the evening.
If they could add frequencies to Africa, while keeping load factor up, that would be ideal.

Saying that, if they can fill up two a319 a day, they might as well fly a single a330. That'll probably be cheaper to operate.
Maybe start flying to new places? In Africa, but as well as Asia?

[RoMax]

I see no reason for you to get emotional.

So now I'm already getting emotional when I don't agree with your ideas?

You jump in 3 pages late to dispute what was already questionned, discussed and settled, ie shorthaul/longhaul profitability, which is disrespectful by itself. Then you have continued on with half facts concerning the Q400 strategy proposed, putting words in our mouths to make your point seem more valid.

Oh come one, read the previous page again, you don't know what you are talking about or you are too blind to say it. And to add to that, no single subject in this topic has been settled, because no one reacts anymore to your nonsense doesn't mean you 'won'.

Clearly you are still at the same level as a small two years ago when you 'responded' a normal PM from me with "fuck yourself buddy".

(oh btw, yes now I'm getting personal, not emotional, but I'm not the one who started)

It's impossible to have a normal discussion with you concerning subjects like SN. A pitty, it's not wonder these kind of topics are a discussion with just a few members really involved...

[convair]

the last RJ85 is staying...
This year the decision will be taken on the European fleet, and it will be between the A32F or the CSeries, or most likely a compromise between the two.

@RTM

Is this information or you guessing? Maybe could be discussed under "Avros replacement".

[Inquirer]

What a naive reply, I don't know if I have to laugh or cry at your continued denial inquirer. This article exactly points out the problems that SN faces and from many different angles too. Time to wake up and smell the coffee

Not a very kind personal remark of you, but I'd like to point out that those who are naive are in fact the ones discussing "solutions" without knowing any operational figures, so in fact without knowing what the issues are.

So, over the whole year combined, all routes combined, they are modestly lossmaking, but does that mean they have to throw everyting out, from their product, over their network, to the entire fleet, as some here proposed?

Some provocative food for thoughts: if this company would operate under less unfavourable fiscal and social rules other than those in Belgium, it might operate at a small profit even, all without changing a single thing to the way it operates today and nobody would suggest them to radically throw everything out just like that. Both advices (doing nothing and doing 'all at once') are equally and diceivingly wrong, but just to show you that 'success' or 'failure' is a perception too which can depend more on the environment than on the performance itself, a remark which -to some here- interestingly enough seems to be only a valid one if the environment suddenly improves (see the discussion about cheaper fuel above), but doesn't seem to be a factor when it takes a bad turn.

Relating back to your employer: he's known to be losing more than 100M euro over this winter season: based on that negative winter result, maybe he should just stop flying alltogether too then, till April?
See how ridiculous advice can become if you base it on nothing but the overall result?
As you have understood: you need to cut where the losses are, keep what is good, grow what is doing well and fix the product shortfalls while at it. Sounds familiar? It's because it's how everybody does it, in fact. The specatular ideas are for forum managers, some of which have been drinking a little bit too much coffee to keep them awake at night in order to post here, it seems.

[RTM]

Finally some sanity.
Thanks Inquirer!

[Flanker2]

So, over the whole year combined, all routes combined, they are modestly lossmaking, but does that mean they have to throw everyting out, from their product, over their network, to the entire fleet, as some here proposed?

Are you familiar with the expression "sitting duck"?
The problem that I and others are warning about is primarily the fact that SN is evolving in its market as a sitting duck. What it means is that if they get challenged on their primary markets by new entrants, they will not be able to compete and they will be shot down by them.
Isn't that what we warned about 4-5 years ago about Africa? Yes solutions to secure the market were offered and they were obviously ignored.
Now look where SN stands today. They are challenged by mainly TK who is eating up their market piece by piece with exactly the same concept that was offered as a solution to defend SN's market.
Now look at what was proposed about Europe: Upgrading the hard and soft product, increasing frequencies on their main lines to push competitors out of the market and avoid new entrants. Again, ignored. SN's sitting duck strategy found Vueling and Ryanair entering the BRU market.

SN's losses are just the cherry on the cake.

If you will, it makes of SN a sitting duck that is growing hungry because it's too inconvenient to stick its head under water to find some fish.

Some provocative food for thoughts: if this company would operate under less unfavourable fiscal and social rules other than those in Belgium, it might operate at a small profit even, all without changing a single thing to the way it operates today and nobody would suggest them to radically throw everything out just like that.

The unfavorable fiscal environment was here from before SN was established. Also, I don't hear JAF complaining.
Excuses are easy to find. At the end of the day, it's useless to be right and dead (doesn't that sound familiar?). What matters at the end of the day is whether you have a sound business plan to deal with it and still make a decent profit. SN obviously does not, so maybe it's time to do something about that?
To keep complaining, won't make it go away.

If the fiscal regimes were the same, without changing a single thing, they would still be at the mercy of the competitors. If all things relating to fiscality were equal, I'm sure that Ryanair would have developed in BRU instead of CRL and still be much cheaper than SN, while offering a higher salary to their pilots and still making decent profits.
The problem is not the environment they operate in, but how they operate in it.

If SN were an animal that could morph into any animal's aspect, SN is choosing to morph into a mouse to walk through a snake orgy... that is the problem.

As you have understood: you need to cut where the losses are, keep what is good, grow what is doing well and fix the product shortfalls while at it. Sounds familiar? It's because it's how everybody does it, in fact.

Just because you put "as you have understood", it doesn't make it true at all.
First of all, that's not how business works, at all.

Being in business is like being at war. Your team is your army.
You need to be aggressive to stay alive and protect your army.

A. You don't simply cut where your losses are. If it's worth going after, you look at ways to turn it around.
Example: according to your advice, SN should soon start cutting Africa.

B. Keep what is good? You never just "keep" what is good, you look at ways to make sure that no one can come into your market and take what is good away from you. I would correct that to "defend what is good".

C. Grow what is doing well. Obviously... just remind how that relates to SN's growth in Africa?

D. Fix the product shortfalls? Playing catch up with your enemy doesn't make you win.
You need to create a product that overwhelms your enemy. "Create a product better than your competitors' ".

[airazurxtror]

http://www.lalibre.be/economie/actualit ... 3e183fdf55

Extract (my translation) :

Michael O'leary this morning : "We will complain against the aid plan for Belgian companies , if it goes "

Michael O'Leary heavily tackled the State aid plan for Belgian companies. As a reminder , this plan (€ 19 million) aims to support the Belgian airlines ( Brussels Airlines, Jetairfly and Thomas Cook ), via a system of " rebate " on security costs in Zaventem . " I do not understand this plan: Brussels Airlines is not a Belgian but a German company , because it is controlled entirely by Lufthansa (note: which owns 45% of Brussels Airlines). The history of subsidized airlines in Belgium and Italy is not brilliant : they more money they receive from the state, the less fundamental necessary changes they make. It is also interesting to note that in Brussels, capital of Europe struggle against state subsidies , they try by all means to implement this type of plan to allow Lufthansa (sic ) continue flying from Zaventem . "

According to the Irish boss, this plan is " clearly discriminatory ." " There 's no chance for it to pass, from a legal point of view . We have seen in Greece or Portugal , such aid has been failed by the European authorities . But if this plan passes , we will be in the long line of companies that will complain . But then , this aid, it is so little compared to what Brussels Airlines loses each year. This won't make them profitable . "

[cnc]

err ok...and this morning he said he'd try to get a piece of that 19m euro...

[convair]

Financials were not one of the topics of yesterday press conference; however an amount of 100 million € was mentioned to "cover" (by LH!) the newly announced action. Another 100 millon € was brought by LH last year.
It is hard to believe LH would do this had they not already decided to buy SN's remaining shares in the near future. What I don't understand is why they are not doing it right now. The present shareholding situation is awkward: LH obviously takes the decisions but these must be approved by the majority shareholders that are "dormant" between Board meetings, while waiting for the minority shareholder to buy their shares! Indeed, what real power does a majority shareholder have if the minority shareholder has an option to buy his share at any moment?

Now, I don't remember on which thread, but someone mentioned here that Davignon was seen rather recently in the offices of Turkish Airlines...One can imagine that some arm-twisting on LH might have been taking place there. Or was it LH sending Davignon to mend fences with Turkish?

[Inquirer]

It is hard to believe LH would do this had they not already decided to buy SN's remaining shares in the near future. What I don't understand is why they are not doing it right now.

It's obvious Lufthansa has been keeping them 'off their books', because there isn't an appetite to book both the large negative annual results they have been posting as well as their past financial obligations (i.e. loans).

If indeed their results show a significant improvement as they claim and they also found a way to clear (most of their) debts, then the main reasons for keeping them off the books are gone, especially as there are also certain financial benefits from a consolidation which can contribute further to their turnover plan.

The fact LH is again putting 100M on the table is indeed a significant signal, but then there's a world of a difference between consolidating a company which books €90M in losses and has hundreds of millions in bebt and once which is only marginally lossmaking and virtually debt free in comparison, of course.

[sn26567]

Gustin did not mention that it was LH which would fund the 100 M€ needed for the expansion over three years. He said that the airline would invest those 100M€ with the approval of the shareholders. The money could as well come from the own funds.