Lufthansa acquiring Brussels Airlines

[itami]

LH is not buying airlines because they have airplanes or other assets. They buy them because they have market potential. This is cleary the fact they are in BRU at the heart of the EU and have experience and routes to Africa.

I fully agree ! It's indeed all about marketing : (as I said before in this topic) if LH doesn't take it they will have to deal with the threat of a Oneworld hub in their backyard. Moreover SN has a rich pocket of (unused) landing rights.

[NCB]

LH is not buying airlines because they have airplanes or other assets. They buy them because they have market potential. This is cleary the fact they are in BRU at the heart of the EU and have experience and routes to Africa.

Market potential has a price.
But when you bid for an airline, and you stick a pricetag to it, you have to look at the real estate involved as well. If SN owned a fleet of new B738's or A320's and new A333's, it would have been worth alot more.

LH has given its bid. SN is still negociating, meaning they don't agree and want more.
They openly admit they are talking with BA as well, playing around with LH.

The market of an airline is not defined by the boundaries of its home country or the nearby city: in fact the O&D market for BRU is more or less the same as AMS, i.e. around between 20 million which is considerable. Don't forget, you have to take into account BRU and the rest of Belgium + southern Netherlands, some border region of Germany, Luxembourg and parts of Northern France.

Well that's in theory.
So why does AMS deserve many airlines like Singapore, Cathay, China Southern, Malaysia, EVA Air, Korean, Air Berlin, ....etc.... that BRU does not have? I don't want to hurt your feelings but what is there in Brussels and more specifically in Belgium for a tourist to see except for a few grey parliament buildings? where's the big business/trade centre?

I also disagree that there is time pressure for Brussels Airlines: it looks like fuel prices are going down again. If Lufthansa (or another carrier) wants to take over Brussels Airlines, they're not interested in the annual account: they' will ask for at least the latest quarterly report. So: if the past annual account one was good and the next annual account will be bad doens't count. Turnover, assetts (slots) and debts are far more important for them then one bad result.

Two comments here: oil prices are dropping, effectively.
But the dollar is rising strongly too: today's rate is 1.42 down from 1.59 just 3 months ago. European airlines are suffering from this, so the relief at this moment in time can only be felt in USD countries.
After seeing the numbers of SN, LH offered a price, a price that SN's shareholders do not yet accept.

Somtimes it is best to loose a bit, rather than to loose everything...

[brusselsairlinesfan]

As I really love this airline :

@ BRUSSELS AIRLINES & STAFF : I wish you the best partner for a bright future!

[AirDupont]

thanks brusselsairlinesfan, I hope both LH and BA have good intentions with us. Personally I prefer LH, because BA just wants to have a foot on the European soil. But then, who am I...

[jan_olieslagers]

I hope both LH and BA have good intentions with us.

Don't be a fool. It's all about making money, no more no less. Good intentions belong to an earlier epoch. Money, you know, money, the stuff that makes the world go round, edgewise mostly...

[LX-LGX]

I hope both LH and BA have good intentions with us.

Don't be a fool. It's all about making money, no more no less. Good intentions belong to an earlier epoch. Money, you know, money, the stuff that makes the world go round, edgewise mostly...

Indeed : money, that's probably the most important. But not only for the shareholders. Also for the cleaners, the (un)loaders, the check-in guys, the supervisors, the switchboard operators, the customs officers, the coffee shop employees, the bus drivers, the barkeepers, the Pizza Hut guys, the cabin crew, the cockpit crew, the emigration oficers, the porters at the Sheraton Hotel, ... ...

I think AirDupont probably means this: let's hope that the new partner or owner understands that they can get a good - probably better - result if the company spirit is good / remains good. Attitude from ownership / executive management which seems to be impossible for some people here, who probably start the day by saying "den baas is ne smeirlap".

[Ducatibiker]

Money might be important for all those working at Brussels Airport, but the latest post seem to translate exactly the feeling that Brussels Airlines Managers forget that money is also important for us, the passengers.


We notice when the red candies and the flowers are missing in the lounges because of...savings !

W notice when the buses have their engines on while loading passengers and waiting for the (sometimes very late) signal to go

We notice when the meal box in B.flex has very nice prints which are more expensive than the 40 gr pasta which hardly makes ‘the delicious meal’

And so we can compare what we pay and get on other airlines and in other lounges.

And when we visit the Lufthansa lounges, we notice the vast selection of sandwiches, the hot soup, the wide selection of wines...sometimes even champagne ! And everyone notices the Toblerone in Swiss lounge in Zurich !

So we are looking forward to a major change

[summersso]

Personally, I'd rather SN link up with British Airways than Lufthansa. With LH it seems to me that SN will be marginalised as a small regional (European) carrier with the key being regular shuttle flights. Comparable to say, Lufthansa Cityline or Eurowings.

My gut feeling is BA may have more ambitious plans for SN. Their tie-up with IB (and LAN) has made OneWorld the dominant alliance in Latin America and with SN they could take Africa by storm.

I also wonder whether a BA investment in SN will have any impact on Openskies operations - wouldn't it be great to scrap that cheap "Brussels Airlines" logo and dubious corporate image (plagued by strikes, weak management etc) and rebrand the airline as Openskies... haha?! Seriously though - I think it would seem more likely that Openskies link BRU-JFK if BA invest in SN.

* Final point: would someone please correct the topic title -it's spelt "targeting"!

[brusselsairlinesfan]

thanks brusselsairlinesfan, I hope both LH and BA have good intentions with us. Personally I prefer LH, because BA just wants to have a foot on the European soil. But then, who am I...

You're welcome... Frankly, I always have fun flying on brussels airlines wings... I don't hesitate to drive 3 hours from Paris (where I am leaving) to BRU just to enjoy flying in your company... You can't imagine how good it would be if the CDG-BRU flight could also welcome the transit PAX to SN european network!

[NCB]

I think it would seem more likely that Openskies link BRU-JFK if BA invest in SN.

I don't think that BRU needs Open Skies or anymore carriers flying to the U.S.
The demand is just not there.
Most airlines are using their smaller planes transatlantic to BRU.

Personally, I'd rather SN link up with British Airways than Lufthansa. With LH it seems to me that SN will be marginalised as a small regional (European) carrier with the key being regular shuttle flights. Comparable to say, Lufthansa Cityline or Eurowings.

SN is already a small regional carrier with only a handful of longhaul destinations. Until now SN didn't have to cope with the increasing threat posed by Easyjet. Once Easyjet settles in BRU, SN will have nowhere to run to if not supported by a strong airline.
LH doesn't need to buy SN to take a monopoly on BRU.
I only see one reason for LH being interested in SN: Africa and the ability to feed African pax from/to Europe.

[summersso]

I don't think that BRU needs Open Skies or anymore carriers flying to the U.S. The demand is just not there. Most airlines are using their smaller planes transatlantic to BRU.

Hmm... I appreciate your point and you're probably right. Despite the fact that there are a few daily connections to the US, they're all on US airlines without PTV and the levels of service are below those you expect of European airlines. I for one avoid them and route via FRA/MUC/LHR when going long-haul. I recall the excitement of some participants in this forum when Openskies was launched and they announced their intention to fly from BRU. Right now I'd happily pay 250euros more to go Openskies direct rather than US Airways/United/AA...

While I'd welcome easyJet's expansion at BRU the reality is they'll never connect BRU with all European capitals (and 2nd/3rd cities) with 3/4 flights a day which suit the majority of business travellers (after all that's the reason people come here) in the same way that SN do.

I don't fear too much for SN but they will need to differentiate their product from what easyJet and other lowcost airlines offer, provide quality service, flexibility, free drink/snack, just like SN Brussels used to. And they can't keep getting away with charging business class fares for an economy class product (Bflex Econ)... it's crazy. And...

...IMHO (very popular phrase on Luchtzak!), OneWorld are a "superior" alliance in that they choose members based on quality (better service, PTVs etc), not quantity like *A (best route network). And for that reason I'd rather see them join OW.

Interesting times.

[Atlantis]

I don't think that BRU needs Open Skies or anymore carriers flying to the U.S.
The demand is just not there.
Most airlines are using their smaller planes transatlantic to BRU.

Only Delta Airlines is using a smaller aircraft since 9W is flying to JFK. All the others are still flying the same metal or will even use bigger aircraft then today.

[euroflyer]

... With LH it seems to me that SN will be marginalised as a small regional (European) carrier with the key being regular shuttle flights. Comparable to say, Lufthansa Cityline or Eurowings.
My gut feeling is BA may have more ambitious plans for SN. ...

From a pax point of view I am really not a friend of a SN/LH merger, I have made that point already in an earlier posting.

But I can still not see why some people continue to believe they would be better off with BA as the new owner. Why on earth should BA be interested in SN's European network? BA has cut most of its non-LHR European network to my knowledge. Try to fly from Manchester, Glasgow or Edinburgh - some quite big UK cities in BA's homemarket - to major EU cities like Paris, Frankfurt, etcetera: No BA flights anymore You have to take LH, AF, KLM or flybe. So why should BA now suddenly be interested in setting up a new EU-hub in BRU? Sorry, I just do not get it. Their strategy is to focus on LHR plus long-haul and not to fly to Ljubljana, Bucharest, Oslo or Bilbao !! Do not know what it will be like after the merger with IB, but so far I feel BA's intentions towards SN are either just to act "on behalf of AA" or to avoid LH becoming even bigger. My feeling is it is the first reason, as they have not cared much about LH and AF getting bigger so far plus BA's focus has always been transatlantic, here they need AA as a strong partner and are willing to keep them happy. However, they will always aim to first bring as much traffic as possible to LHR, than maybe the "overflow" to BRU. Might be same with LH some will argue, ok, fair enough, but BA will not be any better than either.

I understand some people at Brussels Airport might prefer a big OW hub to be developed here, but sorry, I simply do not see this happening, not without BA and not with BA owning SN. LH owning SN will of course mean a bit of a monopoly as - as far as I know - LH is today already one of the biggest airlines in BRU and than owning SN as well they might be able to press BRU for better fees etcetera, but for Brussels Airlines and its staff I feel LH will be the better option. Do not get me wrong, I am a big fan of the UK and I have spent some time there, but in terms of labour relations, trade union recognition etcetera you will have to prefer a German company like LH to a UK company I am afraid ...

[NCB]

To my knowledge we never see US's biggest in the fleet, the A330's, and too often the B757's.
Same for UA and AA that often send the B767's.
Continental sometimes send their B777's, I agree, but it's often B767's.

Then there is Jet Airways with B777/A330 who sell seats to the US as well.

I understand you have a PTV on most Continental flights out of BRU.

Only Delta Airlines is using a smaller aircraft since 9W is flying to JFK. All the others are still flying the same metal or will even use bigger aircraft then today.

When I say "most airlines are using their smaller planes transatlantic to BRU", it's not a comparison in time-scale, it's a comparison relative to the bigger aircraft in their respective fleets, which often are B777ER's.
Most of the time BRU get B757/B767's, only rarely B777's/A330's except of course from 9W.

I'm flying out tomorrow morning, will tell you what aircraft types I saw, though you probably already know what equipment airlines are sending.

While I'd welcome easyJet's expansion at BRU the reality is they'll never connect BRU with all European capitals (and 2nd/3rd cities) with 3/4 flights a day which suit the majority of business travellers (after all that's the reason people come here) in the same way that SN do.

I do agree that if a business traveller had to choose between SN or Easyjet, they'd probably find SN more suitable for their needs. On another hand, business travellers flying between capitals often find other alternatives with real business classes instead of SN's Bflex: To Germany: LH To Swiss: LX To the UK: BA etc...
But the bigger problem is that the leisure traveller will fly Easyjet. On most flights, the price is just half or less than with B.air and there we agree that:

they will need to differentiate their product from what easyJet and other lowcost airlines offer, provide quality service, flexibility, free drink/snack, just like SN Brussels used to. And they can't keep getting away with charging business class fares for an economy class product (Bflex Econ)... it's crazy.

but for Brussels Airlines and its staff I feel LH will be the better option.

Agreed

[tolipanebas]

While I'd welcome easyJet's expansion at BRU the reality is they'll never connect BRU with all European capitals (and 2nd/3rd cities) with 3/4 flights a day which suit the majority of business travellers (after all that's the reason people come here) in the same way that SN do.

That's correct and perfectly logic.
LCCs are not focussed on the yield from offering multiple FREQUENCIES, but rather on the yield through VOLUME.
The easiest (sorry for the pun) way to do so it so group all of pax on a route on 1 (max 2) flights a day. Look at Easyjet's network from BRU: It should be no surprise they have picked BER, NCE, GVA and MXP as these are 4 routes which are served by SN multiple times daily (4, 5 or even more times a day ). What Easyjet have been doing is steel a modest number of price sensitive pax who don't care about the time of their flight from each of these daily SN's flight, do the same with price consious pax from the competitor (LH, LX, AZ etc), add some new ones and put them on a single plane. That's why I say its not worth investing in a Low cost terminal either, because 70% of the users will be ex users of the full frill terminal, and the 30% new ones aren't going to pay for the lost revenues from the 70 old ones, but hey: BRU knows best, right?

Now, filling a single A319 between BRU and any of these 4 destinations isn't difficult you know... its filling the second that's getting difficult, and guess what? Easyjet have tried it and has already decided to cancel the second daily on BER during the quiet season. Now, forget about a 3rd daily or beyond, because they know it to be far too difficult, so they'd rather open a new route with that plane instead: MAD or BCN might be considered because there to they see a lot of frequencies which they can play the same pax stealing trick on, but there are already LCC doing the same on these routes, so the yield will probably be even lower for them...
But I am sure they could try CPH, ZRH, LIS or BHX and be successful for instance...

SN will need to differentiate their product from what easyJet and other lowcost airlines offer, provide quality service, flexibility, free drink/snack, just like SN Brussels used to. And they can't keep getting away with charging business class fares for an economy class product (Bflex Econ)... it's crazy.

Indeed, there is no point in trying to be a pseudo-LCC like SN is right now when SN becomes part of LH.

SN can't beat a real LCC: its loadfactor will always be lower than that of a LCC because it needs to offer more FREQUENCIES to its business traveler and as such its seat-mile cost will always be higher (thus also its prices). Forget making the seat-mile gap up by cutting the operating costs to levels below those of Easyjet too as a Belgian airline: they have a brandnew fleet, have bought it in bulk (200+ A319), are very slim and lean in their overhead structure and exploit the European-wide differences in social and labour legislation to the max, basing crews at the cheapest places (which Belgium definitely is NOT).
Higher costs and lower prices than your direct competitors... definitely NOT sustainable and certainly not what LH would want.

On the other hand, SN can attract real time sensitive business travelers, who like the fact they can do real one day return trips on the airline, arriving at their destination by 8AM, and leave again after work at around 6PM (have a look at the schedule of Easyjet on MXP-BRU to see the difference), but then it must really adress this group in full...

The idea of a hybrid airline ('a new generation airline') was born in the minds of VEX staff right after the merger and I can agree that it might have been a good interim plan yo keep both traditional segments of the combined airlines covered, but it isn't sustainable in the long run, that's a fact.

I am convinced that IF LH takes over SN, one of the first things we will see is a complete change of the product. You can say bye bye to the LCC approach at the back of the plane and you can be guaranteed to see a real business class re-appear too. There's no other option but to turn back the clock and become a traditional airline again, if SN has to be integrated into LH's network and will operate in codeshare with them. One of the first things LH did at LX was exactly that too: i.e. to stop the onboard sales of food and drinks. LX had kept its business class throughout, but here too I feel SN is going to have to reintroduce it, if it wants to be part of the German global airline... You definitely can't imagine a first class LH pax going to LAX via MUC, FRA or one day BER on an SN operated code share flight to be sitting in b.flex with a cardboard foodbox in front of him!
It will be fun to read the press release of SN explaining their huge U turn... I will happily put it next to the one in which they announced the end of business class in Europe... After all, I've always found our current commercial product strategy a complete mess. Can't wait to see it overturned by an airline who is far more knowledgable than those SN consultants and VEX-idiots who came up with this concept we're having right now.

[Atlantis]

Same for UA and AA that often send the B767's.

UA is flying with their B777 to BRU and this since the beginning of this year.

[Conti764]

I don't think that BRU needs Open Skies or anymore carriers flying to the U.S. The demand is just not there. Most airlines are using their smaller planes transatlantic to BRU.

Hmm... I appreciate your point and you're probably right.

No, het isn't. Not even close...

The only companies using smaller planes to BRU are Delta on their JFK flight (due to high competition on that market) and on certain days US. They fly 757. Delta flies a 763 to ATL and AA flies two 763, one to ORD and one to JFK. CO flies a 764 to EWR, and plans a seasonal upgrade to 777. BRU is known as one of their better performing routes, so as soon as they receive more material, they will use the T7 permanently. UA already flies a T7 permanently between BRU and IAD.
Now the 767 may not be the biggest plane around, it is big enough not to be called a 'smaller' plane, as is the T7 which is the biggest plane for CO and the second biggest plane (after the 744) for United. The only 'smaller' planes are the two narrowbody 757's.

I don't speak about Jet Airways since BRU is only a stopover for their core business, India - NA and back.

Despite the fact that there are a few daily connections to the US, they're all on US airlines without PTV and the levels of service are below those you expect of European airlines. I for one avoid them and route via FRA/MUC/LHR when going long-haul.

CO has PTV on its 764 and will have AVOD in future, as do they have on their T7. DL already has AVOD on their 757, but not on their 763. UA has at least PTV on their T7, and maybe AVOD (I am not sure about this).

I can only talk about Continental, since it is the only American airline I have flown, and their service is not worse then the average European carrier.

[Conti764]

To my knowledge we never see US's biggest in the fleet, the A330's, and too often the B757's.
Same for UA and AA that often send the B767's.
Continental sometimes send their B777's, I agree, but it's often B767's.

About US, you are right. They switch 762 and 752.

AA sends two 763's a day to BRU, it is the second biggest plane they have in their fleet.

UA is already sending its T7 for almost a year now, they have never used the 763 since they reintroduced the T7 on BRU.

CO is seasonally sending its T7 to BRU, but that is not because of a lack of demand, but a lack of equipment. As soon as they receive more 777-200, they will install a permant T7-service between BRU and EWR. And even with the 767-400 they send their second biggest plane to BRU, and it always has very decent load factors.

DL sends their third biggest plane from ATL and the 752 for JFK.

Right now only 5 cities are served from BRU: New York (JFK and EWR), Chicago, Washington, Atlanta and Philadelphia. BOS has been a very descent flight for SN in their days and at least LAX or SFO, IAH or DFW could be decent, but that depends mainly on whether SN will join an alliance and which alliance they will join.

Off course, BRU will never have the same amount of TA flights as LHR, AMS, FRA, CDG or other power hubs in Europe, but let's not forget that Amsterdams strong position is mainly to thank to KLM which was, unlike Sabena, a strong home carrier. Amsterdam may have more tourists, but it cannot top BRU on terms of potential when speaking about international organizations and companies.

The biggest reason why BRU did not develop to be a hub the size of AMS, or at least comparable, is because at times when airlines where forming alliances, their home carrier - which was more a political product then a healthy airline - got stuck in a crappy alliance (Qualiflyer) and their successor SN Brussels Airlines was far to small to be attractive enough to be in an alliance at times when the entire aviation industry was struggling after 9/11. Therefore they missed a lot of potential long haul destinations from alliance partners, who are now served trough hubs at relatively close distance to Brussels and transferred by regional jets or train.

I understand you have a PTV on most Continental flights out of BRU.

On all CO flights, as on the UA flights and the DL flights BRU-JFK.

When I say "most airlines are using their smaller planes transatlantic to BRU", it's not a comparison in time-scale, it's a comparison relative to the bigger aircraft in their respective fleets, which often are B777ER's.
Most of the time BRU get B757/B767's, only rarely B777's/A330's except of course from 9W.

Maybe it is more a lack of fleet capacity then a lack of demand? They use their bigger planes (CO, DL and AA don't have Airbus) to the European power hubs and to other destinations mainly in Asia which are, of course, more important then BRU, and this for reasons I explained above.

[Atlantis]

The demand is just not there.
Most airlines are using their smaller planes transatlantic to BRU.

Off topic:

Brussels Airport is even one of the few airports with 5 american carriers on his soil: AA, DL, CO, UA, US. We had even 6 carriers in 2007 when NW was flying a couple of weeks at Brussels Airport.

[summersso]

I don't think that BRU needs Open Skies or anymore carriers flying to the U.S. The demand is just not there. Most airlines are using their smaller planes transatlantic to BRU.

Hmm... I appreciate your point and you're probably right.

No, het isn't. Not even close...

Good to know. I'm just a regular business traveller with an interest in aviation, relying on you aviation experts to educate me! So might I have been right in concluding that a BA purchase of SN would increase the likelihood of Openskies coming to Brussels? Sounds like there is the demand.

It's all very interesting but it's a matter of time before we get an "Off the topic" notification though...! And perhaps the topic title should read "Lufthansa and BA interested in acquiring Brussels Airlines" now...