Brussels Airlines future and financial perspective

[lumumba]

I tried to book Brussels -Nairobi last week, besides to my surprise the Privatair flight the other alternative LH is offering is a flight to Addis via Jeddah and then another with Ethiopian to Nairobi. You can hardly call this a selling proposition. Four 'legs' from Brussels... I booked with Swiss. If this is the LH offer going forward maybe then better leave it to Swiss or ask SN back offering their traditional triangular flights on that route. From my experience though (5 flights or so over last years) with SN on that route more people board at the other destinations than in Nairobi and the route seems to have lost some traction. Also from the people I know in Kenya, Turkish and the Arab based airlines seem to be very popular with them. Of course one cannot extrapolate personal experiences but it may give an indication

They Changed the aircraft from a A340 to a B73W of Privatair till the end of August 2016... Weird deciscion to me... Leave the african network to SN, LH!

Oepsss it's a mistake erase please...

[sn26567]

Oepsss it's a mistake erase please...

What is a mistake and what should be erased?

[BRU]

Flying back from NBO in November with LH, just checked my ticket and i am indeed flying back on privatair...

[sn26567]

SN is codesharing with both LX and LH to NBO, but given a choice, I would always select the LX A333 over the LH 73W! With one additional A330 (-200 or -300), SN could easily replace LH on the route. I wonder why LH wanted so desperately to get NBO if it is to fly there with a single-aisle narrow-body aircraft.

When Sabena was "flying together" with Swissair, NBO was served 8x weekly (4x for each company) with coordinated schedules. It would be easy to re-introduce a similar scheme now.

And NBO remains an important destination in Africa: it hosts a large UN agency: UNEP, responsible for the environment.

[lumumba]

Oepsss it's a mistake erase please...

What is a mistake and what should be erased?

I thought there was a mistake in the post but I was wrong ... and it was posted already...

[White Light]

First, I was disappointed (even a bit angry) that LH would replace SN to NBO. Even if NBO remains an important destination in Africa, I constantly hear that demand to NBO and Kenya in general in going down because of security threats.
So, the swap NBO/ACC for SN is probably positive. I admit I haven't recently followed the routes developements at SN, but perhaps SN can now reinforce its (triangular) flights to their three other East African destinations, Entebbe, Kigali and Bujumbura.
In the end, my guess is that LX will in the end be the only airline operating to NBO among the LH Group, perhaps with one of their new B777s.

[Passenger]

SN is codesharing with both LX and LH to NBO, but given a choice, I would always select the LX A333 over the LH 73W! With one additional A330 (-200 or -300), SN could easily replace LH on the route. I wonder why LH wanted so desperately to get NBO if it is to fly there with a single-aisle narrow-body aircraft.

When Sabena was "flying together" with Swissair, NBO was served 8x weekly (4x for each company) with coordinated schedules. It would be easy to re-introduce a similar scheme now.

And NBO remains an important destination in Africa: it hosts a large UN agency: UNEP, responsible for the environment.

Yes, but the whole tourism market has collapsed. Safari organizations to Kenia suffer from lack of demand because of terrorist attacks, and nowadays tourists link Mombasa more to "Somali pirates" rather then "nice beaches!". On top of that, the latest update on Belgium's travel advice for Kenia isn't really motivating travel:

Ingevolge de interventie van de internationale coalitie tegen de terreurgroep IS, is verhoogde waakzaamheid geboden. Reizigers wordt gevraagd kennis te nemen van het bericht gepubliceerd op de homepage... Reizen naar sommige regio’s zijn afgeraden... Op het Keniaanse grondgebied vinden regelmatig terroristische aanvallen plaats, zo ook nog op 2 april 2015 in Garissa. Reizigers dienen zich dan ook uiterst waakzaam te tonen... In het licht van lopende rechtszaken zijn wij van oordeel dat het risico op ontvoering van Belgen ernstig dient te worden genomen. In dit opzicht is een bijzondere waakzaamheid geboden.

Une vigilance accrue est recommandée dans le contexte de l’intervention de la coalition internationale contre Daech. Les voyageurs sont priés de prendre connaissance du message publié sur la page d’accueil... Les voyages vers certaines régions sont déconseillés... Des attentats terroristes ont régulièrement lieu sur le territoire kenyan, comme l'attaque à Garissa le 2 avril 2015. Les voyageurs doivent dès lors se montrer particulièrement vigilants... Dans le contexte d’affaires judiciaires actuellement en cours, on considère que le risque d’enlèvement de Belges est à prendre au sérieux. Une vigilance particulière est également recommandée à cet égard.

[sn26567]

According to De Tijd,
http://www.tijd.be/ondernemen/luchtvaar ... newsteaser
A new financial mechanism has been agreed between the Belgian gouvernement and the EC to provide financial inventives to -amongst others- Brussels Airlines at our national airport.
The new mechanism is designed at helping only those airlines using BRU as transfer point, rather than just give security fee discounts to whomever reaches certain predetermined volumes of traffic like in the past.
The idea is that connecting passengers are traffic flows which otherwise would not come to BRU and are thus an additional activity for the airport and the country for which financial incentives are justified.
The EC is said to have had problems with the old system of volumetric discounts, mainly because it was ment to keep using the traffic volumes of 2013 -rather than the most recent figures- for the next few years, most obviously in an effort to lock out newly arrived airlines at BRU like e.g. ryanair.
In this perspective, it's interesting to note that there was apparently no payment done for the year 2014 to avoid any future legal problems according to De Tijd! If confirmed, this makes their financial results over 2014 (-4M) an even more spectacular turnaround vs 2013 than it already looked at first because those results did include the in hindsight unique payment.

Also in La Libre Belgique and L'Echo.

The Belgian State devises a new mechanism to defend Brussels Airlines

The Minister for Mobility Jacqueline Galant and her experts will present in the coming days to the European Commission a proposed overhaul of the support mechanism to airlines operating from Brussels Airport, L'Echo revealed this Saturday. If this new mechanism is approved by Europe, 5-6 companies will share the envelope of €19 million planned for the aviation sector. The project that will be presented by Ms. Galant offers support for security costs at Brussels airport for companies operating interconnecting flights via Brussels, which would be, according to L'Echo, a non-discriminatory way to help some companies (including Brussels Airlines), but not the Irish Ryanair.

From the envelope of €19 million at stake, Brussels Airlines would receive between 6 and 7 million.

This aid would be welcome for the company, while the European Commission will soon demand repayment of €19 million paid in 2013 to the companies who struggle against social and fiscal dumping of Ryanair. Brussels Airlines had then cashed 11 million euros.

[Flanker2]

@inquirer. "No payment done" doesn't mean that it didn't reduce the loss for 2014. It probably ended up in the accounts receivable and will be rectified through corrections this year. You are probably confusing cash flow with earnings."No payment done" is a cash flow matter, not an earmings matter.

In the end, those of us who were doubting the legality of this are being proven right, and SN is going to have to book this as exceptional negative items this year, reducing this year's profits to less spectacular levels. But at least now they have settled this matter at the EC level and can keep the subsidies, so win-win for all, except the taxpayer. unless SN offers the taxpayer low fares that compensate their high tax burden.

[sn26567]

If I understand correctly the new mechanism proposed by Ms. Galant, one of the big beneficiaries (besides Brussels Airlines) could be Jet Airways.

Which other companies operate transfers at Brussels? Not Jetairfly, not Thomas Cook (both would completely lose their subsidies, as they fly point-to-point like Ryanair). If SN gets only 6-7 million euros from a jackpot of 19 million, where is the remainder of the money going to?

[convair]

If I understand correctly the new mechanism proposed by Ms. Galant, one of the big beneficiaries (besides Brussels Airlines) could be Jet Airways.

Which other companies operate transfers at Brussels? Not Jetairfly, not Thomas Cook (both would completely lose their subsidies, as they fly point-to-point like Ryanair). If SN gets only 6-7 million euros from a jackpot of 19 million, where is the remainder of the money going to?

Isn't Jet Airways mostly transit rather than transfer? Wouldn't United qualify with their 3 dailies to the US?

[airazurxtror]

5-6 companies will share the envelope of €19 million planned for the aviation sector.

From the envelope of €19 million at stake, Brussels Airlines would receive between 6 and 7 million.


For the sake of Brussels Airlines getting 6-7 million euros, 4 or 5 foreign companies will be presented with 12-13 million ? I hope I am mistaken !

[sean1982]

This government is so focussed on protecting SN (from what some say here "a harmless underperforming Ryanair") that they are willing to give 13 million euro to OTHER foreign companies in a time where people on the street see their social securities melt as snow.

Great reasoning here

[RoMax]

They are clearly not happy in Kenya with LH's decisions on the NBO route.
http://www.eturbonews.com/64611/lufthan ... ontroversy

Seems like this whole transfer is turning out in a bad decision for LH, at least on the short term. However for SN it is not even such a bad deal, the NBO route was not performing well anymore (for reasons well explained before) and ACC certainly has potential. I also think LH thought there was more potential for them in NBO than they actually see now, because I don't believe they did it to do SN a favour either, but an optimisation on group level that seems to fail on the NBO side...
NBO might have been a 'big route' in terms of their image in Africa and they might have been offering a very good service for the flying public in Kenya, they were not making good money overthere, not anymore. The hope was LH could do better with (much) more feeding...

[convair]

LH Group obviously urgently needs to hire a seasoned Africa hand to run their Afi operations.

Let SN lease a few more planes and take NBO back, together with a couple of NA destinations.

[crew1990]

NA destinations? What does it means?

[sn26567]

I guess North American destinations...

[Passenger]

Lufthansa, which forced partner Brussels Airlines off the Nairobi route in exchange for flights to Accra, Ghana, is coming under severe and sustained critique.

Apparently, the airlines has made a U-turn and is scaling back the number of services operated from the envisaged four to just three, in addition to which a smaller aircraft is now scheduled to operate the Frankfurt to Nairobi flights from mid-October.

Read more :
http://www.eturbonews.com/64611/lufthan ... ssional%29

They are clearly not happy in Kenya with LH's decisions on the NBO route.
http://www.eturbonews.com/64611/lufthan ... ontroversy

Seems like this whole transfer is turning out in a bad decision for LH, at least on the short term. However for SN it is not even such a bad deal, the NBO route was not performing well anymore (for reasons well explained before) and ACC certainly has potential. I also think LH thought there was more potential for them in NBO than they actually see now, because I don't believe they did it to do SN a favour either, but an optimisation on group level that seems to fail on the NBO side...
NBO might have been a 'big route' in terms of their image in Africa and they might have been offering a very good service for the flying public in Kenya, they were not making good money overthere, not anymore. The hope was LH could do better with (much) more feeding...

Let me repeat once again why this switch has been done and why Lufthansa had to reduce Nairobi (from the planned A340 to a 737): traffic to Nairobi has dropped dramaticly since the deadly attack at the Westgate Shopping Centre in Nairobi, in September 2014).

Reuters, June 2015: “…The number of visitors to Kenya fell by 25 percent in the first five months of 2015, according to tourism board figures, showing just how badly the industry has been damaged by a spate of Islamist militant attacks that have killed hundreds…. Visitor numbers fell to 284.313 from 381.278 in January to May 2014, a drop of 25,4 percent, according to Kenya Tourism Board figures obtained by Reuters. That follows a fall of 4.3 percent a year before… The number of visitors from Britain, the biggest contingent, fell by 35 percent to 36.022 in the period. Tourist arrivals from the United States dropped 22 percent to 30.083..."
http://www.reuters.com/article/2015/06/ ... S920150612

AllAfrica.com reports an increase for June 2015 of 33,5% (compared to June 2014). Remarkable, given the deadly attack at the Garissa University in April 2015.
http://allafrica.com/stories/201507240171.html

[convair]

NA destinations? What does it means?

I guess North American destinations...

Yes, sorry for that "crew1990" and thanks André.

[RoMax]

In response to Convair, I don't agree they need to take NBO back, not if the destination was indeed badly performing. It can't be that SN was forced in this decision while NBO was a profitable route. LH has a big say in such decisions, but they can't force SN in doing something like this, the board can't be forced by LH, certainly if it has a negative financial impact on SN, than they might even face legal problems if other shareholders complain.

As far as I know they will expand in Africa or maybe North America next summer, but I don't expect it will be NBO.