Brussels Airlines future and financial perspective

[Stij]

Hello Jan,

I agree, therefore the distances are to short, but I think you'll see LCC high speed trains: the SNCF is experimenting with this http://www.ouigo.com.

Cheers,

Stij

[RoMax]

Designit, which also cooperated in the design of SN's new lounge, apparently also was involved in the design proces of the new booking engine (besides Datalex as the technical partner).
And it seems they are very happy with the results:
"Just six weeks after the launch, the result is an impressive 42% increase in conversion rate."

http://designit.com/cases/success-in-a- ... oat-market

I wonder, is there more to come in cooperation with Designit besides this and The Loft? Given this sentence: "The redesigned Brussels Airlines booking engine marks the first milestone in an on-going partnership between Brussels Airlines and Designit. The journey continues …"
Of course The Loft was step-2 as it was opened after the launch of the new booking engine, but are they planning to continue working with Designit for new innovative things?

[crew1990]

After a little screening of the booking engine I made some discoveries.

Flybe:

Only 2 Q400 will still Flying for SN this summer, they will do all the flights between from/to Billund and Hanover, they will operate 1 flight per day to Turin and Strasbourg, the other flight will be operated by Brussels Airlines on RJ100

Tyrolean Airways:

It looks like the contract with them ended.

BMI:

The ERJ145 will keep flying on behalf of Brussels Airlines to/from Bristol

Warsaw:

The flight will get an upgrade from Avro RJ100 to A319

Birmingham:

Brussels Airlines will now send his own metal there upgrading the flights from Q400 to Avro RJ100

[SFM]

Birmingham:

Brussels Airlines will now send his own metal there upgrading the flights from Q400 to Avro RJ100

Isn't BHX already operated with Avro now?
I went to BHX in March last year, and it was definitely on an Avro.

[Inquirer]

BHX still on the propeller as far as I know, but my last flight of 2014 was from Warshau and that was already operated on Airbus 319.

[crew1990]

The flights to Birmingham are still operated with Flybe, but SN fly there a few times per week too.

[Inquirer]

Today in the lesser news (due to the dramatic events in Paris, of course):

Brussels Airlines flew more than 7 million passengers in 2014,
a passenger growth of more than 17% on all its flights combined.



http://deredactie.be/cm/vrtnieuws/economie/1.2202717

[DannyVDB]

Hi Inquirer,

I don't think this is entirely correct (though the 17% is correct). My estimate is that they will end up between 6.6 and 6.7 million. Together with the pax transported on charter flights that might be around or above 7.0 million.

But this remains a nice increase of course, mainly because many of us thought that with the expansion of Vueling, the coming of Ryanair, etc. they would see a decrease ...

I am more curious about early 2015 figures.

Regards,
Danny

[Inquirer]

I just post the quotes, I do not make them, but I see your point, Danny.

I think the 7M passengers quote is referring to also charter passengers (?), probably because it was made at a press conference in which they announce their collaboration with Thomas Cook,reported in another topic; https://www.aviation24.be/forums/viewtopic ... 21#p311321

For the 2015 figures, we'll have to wait a bit more, I am afraid.

[RoMax]

Yeah in the article they quote Lars Redeligx saying that if they add up their own scheduled pax with the charter pax, they'll certainly end up above 7 million.

For the financial results we'll have to wait until late March/early April probably? But the operational data will be something for tomorrow or next week based on the time they normally publish these numbers each month.

[sn26567]

For the 2015 figures, we'll have to wait a bit more, I am afraid.

I spoke with Lars Redeligx at the press conference this morning. The figures will be released next week. Lars said they would be close to 7 million pax for scheduled flights.

For the first time, he also disclosed a hint of the number of pax on charter flights. Thomas Cook represents its biggest customer and will book 200,000 seats in 2015. That should give an idea of the total, taking into account some business for Club Med, for Corsica and some smaller ones. My estimate? 250,000 to 275,000....

[Flanker2]

It's a great boost but what about SN's future and financial perspective?
-Will they continue to grow pax numbers in 2015?
-Was 2014 less loss-making, or did it stay the same regardless of +17% passengers? I can't imagine that they would become more loss-making.
-Jet fuel prices in Euro's have decreased 30-35% versus last year.
-How will the low Euro reflect on SN's plans to open new North American routes? Will they even be able to maintain their current U.S. routes given a probable sensible decrease of outbound pax?

Depending on how much SN hedged, at same traffic levels, SN should get about +40 to +80 million euro's (the lower the fuel hedge, the higher the advantage) on their 2015 earnings versus 2013 and 2014.
So that alone should catapult SN to at least a break-even before subsidies.

With the subsidies, if fuel prices stay this low and if they maintain this traffic performance, they should be easily profitable in 2015.
If 2015 is profitable, what comes next?
-Will LH take-over the remaining shares of SN in the spring of 2016 as promised?
-Will the government stop paying subsidies even if it's unlikely that fuel prices will stay this low in the long run?
-Will Ryanair let SN have its way after they are investing money by dumping a lot of seats? Will VY manage to stay or will they retreat from BRU?

[sn26567]

-How will the low Euro reflect on SN's plans to open new North American routes? Will they even be able to maintain their current U.S. routes given a probable sensible decrease of outbound pax?

From Lars Redeligx yesterday I learned that expansion of the long-haul network is not a priority. Before doing so, SN must first develop a suitable European feeder network. This is done by increasing and rationalising the size of the aircraft (all A32S fleet by end 2016) and by having a sufficient number of European destinations. And when this is in place, the priority will remain Africa. But the intention is well to increase the long-haul fleet in the medium-term future.

[crew1990]

From Lars Redeligx yesterday I learned that expansion of the long-haul network is not a priority. Before doing so, SN must first develop a suitable European feeder network.

Unfortunately, this is not by opening flights to Ibiza, Dubrovnik or Calvi that SN will feed the long haul flight.

I think there are some other priorities like for example a night stop rotation in Barcelona and Nice, it's really time for it, those are two big cities and the pax can't fly from there to the US or even Dakar as there aren't any early flight from there. Some other cities operated only in summer could as well be operated in winter, I have in my mind Napoli, Séville, Bordeaux, St Petersbourg which are not operated in winter by partner. Finally there are some destination where the time with a bad scheduled like Moscow.

I thing SN already have a strong European network but unfortunately, they don't use it at 100% of his capacity.

[RoMax]

Unfortunately, this is not by opening flights to Ibiza, Dubrovnik or Calvi that SN will feed the long haul flight.

These operations bring short term profit for SN, that's currently very important for them. Their European network can stand or fall with a strong summer offer. You can indeed say that all these leisure operations have nothing or at least very few to do with establishing a feeder network, but you can't only have a loss making feeder network (which is almost always the case if you don't have enough point to point business and/or leisure/VFR traffic). SN has to be profitable and they found a very good 'niche' (difficult to say that of the leisure market, but for SN's core business it is a bit of niche) that can bring them a lot of additional profit in the summer season.

I think there are some other priorities like for example a night stop rotation in Barcelona and Nice, it's really time for it, those are two big cities and the pax can't fly from there to the US or even Dakar as there aren't any early flight from there. Some other cities operated only in summer could as well be operated in winter, I have in my mind Napoli, Séville, Bordeaux, St Petersbourg which are not operated in winter by partner. Finally there are some destination where the time with a bad scheduled like Moscow.

To decide on matters like this you need much more extensive inside information. You always have to prioritise routes in terms of feeder potential. You only have a limited amount of aircraft and you can't serve every route in the most optimal way to enable smooth transfers (or the very best business schedule). If SN sees the transfer potential of such a schedule vs the costs of its operation vs the potential profit it could generate from operating another flight with that aircraft at that time, it's is perfectly possible that you end up with BCN and NCE low on the list (also mind that it's not only about the potential of the market itself, but also about the competition from others, I'm sure there are EU destinations with maybe less potential but also way less potential competition). Or maybe high on the wish-list, but currently not high enough to establish such a schedule at the cost of another.

[White Light]

I spoke with Lars Redeligx at the press conference this morning. The figures will be released next week. Lars said they would be close to 7 million pax for scheduled flights.For the first time, he also disclosed a hint of the number of pax on charter flights. Thomas Cook represents its biggest customer and will book 200,000 seats in 2015. That should give an idea of the total, taking into account some business for Club Med, for Corsica and some smaller ones.

What Redeligx & Co. don't say, don't want to say or may not say, is that no single shareholder wants to put "cash on the table" for SN to become a serious international player.
With SN's b.family and more and more charter flights and less and less focus on business travellers, they look increasinly more at best like a Vueling type of airline (which btw also flies to Dakar and Banjul). SN's management cannot be blamed for the passiveness of their shareholders. They have to run a "Delhaize Proxy" instead of a full "Delhaize supermarket".
Somehow, I wishes LH could be prevented from buying the 55% of shares that are "in the fridge", or that they will not buy these shares. LH will do its utmost to keep SN as a small "niche" airline to Africa and that's it !
If we'll want to fly intercontinental outside Africa, we'll be "invited" (lol) by LH to travel through the group's four hubs. Well, my choice is now Skyteam. Bye bye Star Alliance and the stingy Miles&More. But LH's strategy will in the end mean less expansion for SN and consequently less job and wealth creation in Belgium. SN may need an alliance, but not a "partner" like LH.

[Stij]

@White Light

Skyteam? Are you serious? Between their two mega hubs CDG and AMS?
Where AMS still has space to expand?

Maybe OneWorld as LHR's saturated and expansion will be very difficult and the next hub is far away...

Cheers,

Stij

[RoMax]

Sorry but I really wonder what kind of expectations people have from SN. A small hybrid-FSC surrounded by the biggest hubs in Europe and with its hub close to one of the largest FR bases in continental Europe (especially if you combine CRL and BRU bases).

Does someone really think that ANY shareholder/investor would put hundreds of millions of Euro's in SN to develop a huge intercontinental network and in Europe of course only the best and highest profile business and feeder routes.

These charters and these 'stupid' leisure summer-only destinations might be the ones that bring SN back to profit, because for the moment there is not much else that could do that and reading the great ideas of some, they would be bankrupt before earning one Euro of those huge investments back.

On a side note, maybe you don't realise, but the overall business market is growing slower compared to the leisure market and there are many airlines going after the business market, making huge losses on them despite the very high yields (high yields is not exactly the same as high profits).

[Stij]

Romax,

I can only agree!

I m flying less and less for my job... The tools for collaborating online have improved a lot. I just fly for trade fairs, first meetings and quality inspections...

Cheers,

Stij

[Inquirer]

I m flying less and less for my job...

Lucky you!
My job is in auditing, so no online tools can save me there: the year has only just started and I already did 2 ZRH returns and a small tour in Poland via FRA. :crazy: