Korongo Airlines: THE END

[Passenger]

OO-LTM was built in 1991 (c/n 25070, l/n2037) and delivered new to TEA in may, I think.

In 1999, the list price for the B733 was 40-46 million USD. Remove customer discounts from that and 25-35 million USD is a realistic price range. 30% of that is 7.5 to 10 millions, and at today's market valuations given above quite accurately by Bralo20, anyone can see that such a sale would result in a one-off impairment that can swing SN's fragile earnings quite significantly.

It’s totally irrelevant what the newprice of OO-LTM was in 1991. Flanker, you stated that Brussels Airlines will have to book a loss on the sale of OO-LTM. What ’s relevant for that, is how much Brussels Airlines paid for OO-LTM when they bought it. And that was not in May 1991 (delivery to TEA) and even not in 2004 (merger VEX/SNBA): that was in November 2007, when Brussels Airlines bought OO-LTM through a call option. Depreciated over five years, so paid off since October 2012. Rest value: 30%. Not 30% of TEA’s 1991 newprice, but 30% of Brussels Airlines’ purchase price in November 2007.

Therefore I stand that Brussels Airlines will cash in for OO-LTM: winglets, excellent log book, only Sabena Technics / Brussels Airlines maintenance. Has Brussels Airlines lost money on their overall Korongo adventure? Perhaps/probably, but one has to know some very relevant figures to be sure.

[Bralo20]

Translated: ... "Brussels Airlines possesses just one aircraft in full ownership: OO-LTM (B737)..."

You are correct, just looked at it and it was mentioned in 2013 that OO-LTM became fully owned. Guess my memory was a little behind. Mea culpa.

According to the balance sheets of 2013, the year when the plane was put in the books as owned, they paid a little less then 975.000 EUR for it.

[Flanker2]

And that was not in May 1991 (delivery to TEA) and even not in 2004 (merger VEX/SNBA): that was in November 2007, when Brussels Airlines bought OO-LTM through a call option. Depreciated over five years, so paid off since October 2012. Rest value: 30%. Not 30% of TEA’s 1991 newprice, but 30% of Brussels Airlines’ purchase price in November 2007.

You seem to know an awful lot for a customer

If that's correct then I withdraw my previous argument, as it indeed doesn't hold.
Thanks for the information.

According to the balance sheets of 2013, the year when the plane was put in the books as owned, they paid a little less then 975.000 EUR for it.

Does that price include engines? That's cheap.

[Bralo20]

Does that price include engines? That's cheap.

Well, it's the only plane that was bought that year so I guess it's a complete plane in fly-away condition.

The price may seem low but it's quite common, it seams the deal was negotiated in 2007.

I done it before with a particular piece of machinery that I leased at one of my former employers, at the beginning of the contract you negotiate terms and at the end you have the option to acquire it for the value you negotiated. When you opt to pay more in lease then you can acquire it lower at the end. Not a big deal.

[KriVa]

You seem to know an awful lot for a customer

To be honest, there's nothing secret about this. With a bit of Google-fu, and other search engines, anyone can find this information, exactly to the letter as Passenger quoted it.

[Passenger]

And that was not in May 1991 (delivery to TEA) and even not in 2004 (merger VEX/SNBA): that was in November 2007, when Brussels Airlines bought OO-LTM through a call option. Depreciated over five years, so paid off since October 2012. Rest value: 30%. Not 30% of TEA’s 1991 newprice, but 30% of Brussels Airlines’ purchase price in November 2007.

You seem to know an awful lot for a customer.

Exactly KriVa. I was just writing this:

It's all on the net, free accessable. Actually, Bralo20 and me have given lots of hints here, so I was surprised you didn't find it yourself.

[Sai]

Maybe something for JAF for their Congo-Brazaville ops, including pilots as SN has no need for Boeing type-rated pilots anymore...

[brusselsairlinesfan]

After the demise of Korongo, will brussels airlines also participate in the Congo Airways project?

[Passenger]

Interview Radio Okapi with Christophe Allard about Korongo: see link in this article:

http://www.radiookapi.net/2015/09/07/em ... d-sexprime
(the full conversation seems to be edited - shortened)

[RoMax]

The failure of Korongo didn't have anything to do with them being unable to run an airline. But the limited infrastructure puts extreme limits on Korongo's options to operate domestic routes. International is easier said than done when you need traffic rights from a government which is not exactly pro-Korongo and doesn't have such a good relationship with some of the neighbouring countries. Even at the airports that they did operate, operational problems (of which several quite serious) continued despite efforts to resolve them. Etc. Etc. Etc. They ended up in a vicious circle and lost the hope of a structural solution for the operational and political difficulties they face in the DRC. Without a solution on that aspect, there simply is no hope to generate a critical mass and make money.

[RTM]

That's a bit of a shortsighted statement air...ror...
I don't think it was an utter failure at all. They sure did not succeed, I give you that, but I do think they could have, if only given the right assets. With the loadfactors they showed, it would have been possible with a slightly larger fleet, either a couple more 737's, or A32F. The BAe's were pointless I think. But it would have meant a larger investment, and I don't think all shareholders were prepared to do that. But I think they did prove it could be done. So no, definately not an utter failure.

[Passenger]

Brussels Airlines and Korongo Airlines have offered the Congolese Government to participate in the project by bringing their valuable experience of operating an airline in Congo

Valuable experience of operating an airline ? They just succeded in bringing Korongo to an utter failure ! Some recommendation ...

What a poor reply. In Irish, thus predictable.

The Mbuji-Mayi incident (19th August) is the final drop that made the bucket overflow. It was a safety incident beyond their control: the worst that can happen to an airline. Overall aviation in the D.R. Congo remains below EU safety standards (I think the latest ICAO score for DRC was 16/60), so Belgium decided to pull the plug before a OO-aircraft does what many aircraft do in D.R. Congo (see André's reply).

On top of that, Safair South Africa now needs the 737 backups for own use. Till end of 2014, Korongo could use them as backup.

May I suggest you do listen to this interview? It's in French, and methinks that Allard explains correct why Korongo ceased operations and what contribution Korongo has given for aviation in D.R. Congo:
http://www.radiookapi.net/2015/09/07/em ... d-sexprime

[jan_olieslagers]

The other airlines operating in D R Congo crash their aircraft !

I understand that it was precisely a crash (well, a "mishap" to say the least - but those other airlines will be quick to reclassify their crashes too, to begin with the one that was blamed on a crocodile prancing about the gangway ) was the final straw for Brussels to pull the plug.

They just succeeded in bringing Korongo to an utter failure ! Some recommendation ...

My thoughts, too, partly. Then again, they can claim they do know how NOT to do it, and have learned the hard way!

[KriVa]

Not a mishap, and certainly not a crash. The correct terminology, as per ICAO, would be an Accident, the same way it's categorised on AVHerald too.

I don't think they brought Korongo to an utter failure. The initiative did not succeed, but a big part of the reasons as to why it did not succeed, are out of the hands of the airline and its management.
But, instead of rehashing all that has been said, I'd like to just refer you to RTM's post, just a few posts above.

Also, jan_olieslagers, when quoting multiple different posts, it might help if you include the original poster's name in between the quote tags, this makes it easier to recap the statements and their owners.

[airazurxtror]

Not a mishap, and certainly not a crash. The correct terminology, as per ICAO, would be an Accident, the same way it's categorised on AVHerald too.

No, not a crash - but a narrow escape nonetheless.
From the sn26567 post, on 25 Aug, 12:35, in the "Korongo" topic :

Wrote one on condition of anonymity to avoid being harassed and singled out for retaliation: “This incident could have led to a much more serious accident, not just damage to the aircraft itself. In a worst-case scenario the result could have been loss of lives. It is clear that minimum safety standards which are required by ICAO have not been met, and that is almost criminal. They were all just very lucky.”

[Passenger]

Not a mishap, and certainly not a crash. The correct terminology, as per ICAO, would be an Accident, the same way it's categorised on AVHerald too.

No, not a crash - but a narrow escape nonetheless.
From the sn26567 post, on 25 Aug, 12:35, in the "Korongo" topic :

Wrote one on condition of anonymity to avoid being harassed and singled out for retaliation: “This incident could have led to a much more serious accident, not just damage to the aircraft itself. In a worst-case scenario the result could have been loss of lives. It is clear that minimum safety standards which are required by ICAO have not been met, and that is almost criminal. They were all just very lucky.”

You have this strange habit of allways misquoting people and/or "forgetting" details that are relevant. Same here:

1. it was not a quote from André: it was a quote from an article from eTurbonews.com that André had posted
https://www.aviation24.be/forums/viewtopic ... 60#p321420

2. you have not copy/pasted the previous phrase - probably because it clearly points towards the airport and the aviation authorities, and not towards the airline: "...While Korongo has been diplomatically silent on laying blame on the Congolese aviation authorities and the airport management of Mbuji- Mayi, other aviation sources have left no doubt in communications to this correspondent that they consider those responsible for the maintenance of the airport’s runway and regulatory oversight as utterly incompetent and negligent..."

[convair]

Brussels Airlines and Korongo Airlines have offered the Congolese Government to participate in the project by bringing their valuable experience of operating an airline in Congo

Valuable experience of operating an airline ? They just succeded in bringing Korongo to an utter failure ! Some recommendation ...

Although your comments are often biased, I don't recall any of them being so appalingly stupid as these. Obviously, as far as you are concerned, anything in which SN is involved has to be a failure. Nice mentality!

[Flanker2]

Sorry guys but Airazur has a point. If you want to run a successful airline operation, you would want to get involved with partners that can make it work profitably.
Korongo has failed on that, and many factors contributed to this, some outside their control, some within their control.

I can see many aspects that contributed to Korongo's failure that were within their control.
-Choice of FBM as hub rather than FIH where the bulk of the traffic is
-Failure to remove Korongo from the EU blacklist, using lobbying
-Failure to connect FIH with the SN network, codeshare with SN
-Using aircraft that weren't suitable for the operating environment, including the B733 that got damaged
-Fares that were too high
-Not investing sufficiently in the right area's, a strategic mistake
-Investing unnnecessarily in a hangar in FBM, while there were plenty available in FIH

This being said, I'm not sure that AF was a better partner for Congo Airways.
AF's current management are first grade amateurs who can't seem to find a solution to their own problems, so this is headed for another failure.

[Inquirer]

Personally, i think the main issue is that Congo just isn't a suitable place for such private foreign investment.
All the things listed above would IMHO simply add more risk to this adventure and constitute far more exposure for Brussels Airlines itself than they only wanted to put in to it and rightfully so, it seems.

They've tried something out of the box and managed to demonstrate to the local authorities they could make it work (with limited resources) if only they would put their full weight behind the demonstrator; if however they don't bite for whatever reason, its much better cut your losses over throwing many more millions after bad money only to stubbornly carry on alone: in the end its not the task of a private foreign airline to run terminals, maintain runways nor organize the country's administration, is it?

Now that the whole idea of setting up local spin offs in Africa (an idea quite popular around here too, so I've noticed) can be put to rest for once and for all, better have them refocus on BRU: the financial benefits for airline and country will be far bigger. In that perspective, they have the right foundations with their quite spectacular growth path over the last 2 years and their subsequent return to profitability, so they should be able to do something with it next year here in Belgium.

[convair]

Personally, i think the main issue is that Congo just isn't a suitable place for such private foreign investment.
All the things listed above would IMHO simply add more risk to this adventure and constitute far more exposure for Brussels Airlines itself than they only wanted to put in to it and rightfully so, it seems.

They've tried something out of the box and managed to demonstrate to the local authorities they could make it work (with limited resources) if only they would put their full weight behind the demonstrator; if however they don't bite for whatever reason, its much better cut your losses over throwing many more millions after bad money only to stubbornly carry on alone: in the end its not the task of a private foreign airline to run terminals, maintain runways nor organize the country's administration, is it?

Now that the whole idea of setting up local spin offs in Africa (an idea quite popular around here too, so I've noticed) can be put to rest for once and for all, better have them refocus on BRU: the financial benefits for airline and country will be far bigger. In that perspective, they have the right foundations with their quite spectacular growth path over the last 2 years and their subsequent return to profitability, so they should be able to do something with it next year here in Belgium.

IMHO, your analysis is much more to the point, Inquirer. Aside from a too weak commitment from SN and its partner, Korongo went down mostly for reasons totally beyond its control. But, obviously, their biggest mistake was to have faith in Congo!