Lufthansa buys the remaining 55% of Brussels Airlines

[Yuqu12]

I read in an article today that Luftie made a 8 million € loss in the first 3 months of this year. They said however that it wasn't a consequence of the attacks of 22/3.

[Passenger]

A new column on the Dutch aviation site Luchtvaartnieuws.nl about LH/SN:

http://www.luchtvaartnieuws.nl/columns/ ... -eurowings

Free translation:
https://translate.google.com/

[convair]

I read in an article today that Luftie made a 8 million € loss in the first 3 months of this year. They said however that it wasn't a consequence of the attacks of 22/3.

Maybe SN could lend them some money then.

[RoMax]

I read in an article today that Luftie made a 8 million € loss in the first 3 months of this year. They said however that it wasn't a consequence of the attacks of 22/3.

The first quarter is traditionally a very weak one, very few airlines in oa Europe make a profit in that period. Their net result indeed dropped a whopping €433 million from 425 to -8, but that's only a result of an exceptional income of €503 million from an early conversion of a convertible bond with Jetblue last year. Their operating result improved from -167 million to -53 million this year.

In comparison, AF-KL improved its net result from -559 million euro to -155 million this year.

[Passenger]

I read in an article today that Luftie made a 8 million € loss in the first 3 months of this year. They said however that it wasn't a consequence of the attacks of 22/3.

The first quarter is traditionally a very weak one, very few airlines in oa Europe make a profit in that period. Their net result indeed dropped a whopping €433 million from 425 to -8, but that's only a result of an exceptional income of €503 million from an early conversion of a convertible bond with Jetblue last year. Their operating result improved from -167 million to -53 million this year.

In comparison, AF-KL improved its net result from -559 million euro to -155 million this year.

Indeed. Actually, the good news was mentionned in the link that was posted at about 1 cm above "I read in an article today..."

Repeat of that link:
https://www.lufthansagroup.com/en/press ... /4028.html

"...The Group’s net income for the first quarter amounted to EUR -8 million (Q1 2015: EUR 425 million). This is a EUR 70 million improvement on the adjusted prior-year result, since the 2015 first-quarter result included a EUR 503 million financial profit from the early conversion of the JetBlue convertible bond..."

[Bel33]

According to La Libre and Le Soir, LH will take over Brussels Airlines on next Wednesday September 28! The name, the product and the commercial model seems to be fully guaranteed! No more new informations in the article but, this time, it seems to be confirmed because it's a recommendation of the board of directors of LH group.

[Bel33]

The link to the article: http://www.lalibre.be/economie/libre-en ... 4e720b3d23

[Boavida]

The name, the product and the commercial model seems to be fully guaranteed!

Please let this be true! I hope LH has some ambitious plans for SN.

[brusselsairlinesfan]

I just can't wait for more information on Wednesday!!!

[sn26567]

There is more troubling information in De Tijd and L'Echo.

NL: http://www.tijd.be/ondernemen/luchtvaar ... 6-3085.art
FR: http://www.lecho.be/entreprises/aviatio ... 1474659453

In brief:
In 2008, LH bought 45% of SN for 65 M€.

In 2012, bad times for SN, LH granted a 100M€ credit line to SN, from which SN used 65 M€ and reimbursed 20 M€. Thus SN still owes LH 45 M€. But a clause of the contract says that LH can purchase the remaining 55% of SN for only 2.6 M€ as long as the credit line is not reimbursed in full.

In 2015, good year for SN. The board wanted to reimburse the remaining 45 M€ of the credit line, but the three German directors of SN refused!!! Guess why! LH can now get the remaining 55% SN for just 47.6 M€ (the debt of 45 M€ + the contractual 2.6 M€).

And who would get the 2.6 M€? Sir Richard Branson is entitled to the first 42 M€ as agreed when he sold Virgin Express to SN. He would thus get the 2.6 M€ (and nothing more). The Belgian shareholders would receive... zilch!

[cathay belgium]

Hi,

So in brief : we were f* by the Swiss and now f* again by the Germans ?
History is repeating itself again... except the gift-wrapping is better this time...
Not much in the news after a few days probably...

Guess the transformation will be slow but SN will be gone soon...

CXB

[brusselsairlinesfan]

Hi,

So in brief : we were f* by the Swiss and now f* again by the Germans ?
History is repeating itself again... except the gift-wrapping is better this time...
Not much in the news after a few days probably...

Guess the transformation will be slow but SN will be gone soon...

CXB

Let's wait a little bit... maybe LH wants to run SN just as they do with LX and OS?

[sn-remember]

No need to enter the blame game, belgian civil aviation is what "we" make it and "we" share the reponsability of what it is today.
Anyways it's the interest of both parties to make of bru a successful airline operation base.
Things should evolve progressively and positively ..
@Flanker
I agree with many of your comments indeed the EW project is far from attractive at this point. And it might collapse sooner than we imagine. It can as well develop along a strong business case, it depends how they will implement it and market it ... It's clear that a brand must be recognised for the product it conveys. Just being low cost should not be the finality , EZY for instance targets the business community as well. Which has specific requirements such as frequency mainly , destination portfolio, plus some in flight service differentiation mainly on longer hauls. SN is rightly positioned on this strategy and EW probably will try the same. There might be some tweaks needed but it should be feasable. So for s/H I see no big problems except the risks linked to a poor image. In terms of route structure and services, EW have everything to prove and it won't be easy.
Concerning the long hauls that's where I have the most objections. These need worldwide brand recognition to succeed and linking a carrier's identity to its home country (or town) is an easy (and often effective) marketing tool, at least in the first world. Brussels Airlines has gained a positive brand recognition along the years in Africa, now in America, tomorrow in India or China ?
The other question you rightly evoke is the feeding requirement for longer hauls (except a few exceptions like VS out of lhr). Operating l/h out of CGN is not so strange since they have Germanwings catering for that (which should merge into EW soon I expect). Plus the populous Ruhr Gebiet within car reach. But I fear they might use cgn in priority to bru.
I think the DY model is in the minds of many airline professionals , we have to think and shape the future of sn or ew with that model in mind, at least partly.
I wonder what's in store for Austrian ? After all they are in a similar position to SN ... And maybe lh have purchase ambitions regarding LO and SK as hinted at times in the past ?
Imagine they would buy TP (I know pure fiction at this stage), would the portuquese brand disappear inside the EW nebula ? Just wondering ...

[RoMax]

The purchase price is bad news for the Belgian shareholders of SN Airholding for sure in this scenario, but for SN as a conpany it does not make much of a difference. In essence they are relieved of the remaining 45 milion debt at the cost of the shareholders due to an agreement they approved themselves years ago.

[Stij]

I don t get it... The Germans had a minority position... how can they block a decision of the majority?

Anyhow, as posted above... better for the balance sheet!

Stij

[Flanker2]

I have previously mentioned the purchase price as being a significant factor of what comes next.
If the story is true, then I have clearly overestimated the majority shareholdeer's negotiating power.
At 2.6 millions, it makes sense to dump SN under EW to boost it.

If the "Belgian" shareholders have to dump SN at 2.6 million Euro's, they have really been taken for a ride by LH.

[lumumba]

The purchase price is bad news for the Belgian shareholders of SN Airholding for sure in this scenario, but for SN as a conpany it does not make much of a difference. In essence they are relieved of the remaining 45 milion debt at the cost of the shareholders due to an agreement they approved themselves years ago.

I totally agree with that....

[crew1990]

I'm totally agree with that....

You totally agree with that, not you "are" totally agree with that

[LJ]

Hi,
So in brief : we were f* by the Swiss and now f* again by the Germans ?
History is repeating itself again... except the gift-wrapping is better this time...
Not much in the news after a few days probably...

Guess the transformation will be slow but SN will be gone soon...

CXB

Not really, the only one who really got screwed is Richard Branson as the price probably wouldn't have exceeded the EU42mln anyway. If you look at the book value of LHs stake into SN one could already have concluded that SNs worth wouldn't be much. Moreover, those who agreed to a EUR 2.6mln selling price should the credit line not be reimbursed should be blamed, not LH. Anyone agreeing to such a provision should be able to understand that with three directors on the board, the credit line wouldn't be repaid prior to selling the stake.

I don t get it... The Germans had a minority position... how can they block a decision of the majority?

Your influence isn't always measured on the stake you have (hence why the principle of "effective control" is so important in avaiation). It seems that LH already controlled SN despite not having a majority stake.

The purchase price is bad news for the Belgian shareholders of SN Airholding for sure in this scenario, but for SN as a conpany it does not make much of a difference. In essence they are relieved of the remaining 45 milion debt at the cost of the shareholders due to an agreement they approved themselves years ago.

Not really. The EUR is just cash flow and doesn't cost LH anything except for lost interest (for 2016) and opportunity cost (which are well below 45mln). Hence why the 45mln shouldn't be counted towards the purchasing price. The only thing is that teh credit line may have prevented SN from going bankrupt and thus it was as beneficial for LH as it was for SN. As such that deal was a win-win situation for LH as, without any doubt, SN had to post collateral in an event of default (or at least ensured it would get most part of the cash pledged back, plus the fact that 100mln isn't much for LH Group).

[RoMax]

Not really. The EUR is just cash flow and doesn't cost LH anything except for lost interest (for 2016) and opportunity cost (which are well below 45mln). Hence why the 45mln shouldn't be counted towards the purchasing price. The only thing is that teh credit line may have prevented SN from going bankrupt and thus it was as beneficial for LH as it was for SN. As such that deal was a win-win situation for LH as, without any doubt, SN had to post collateral in an event of default (or at least ensured it would get most part of the cash pledged back, plus the fact that 100mln isn't much for LH Group).

Yes so a bad deal for the other shareholders of SN as I said, but for SN itself it doesn't make much of a difference. That it was a great deal for LH with the option in mind is without doubt, but that's not what I meant with my previous comment.