Brussels Airlines future and financial perspective

[sean1982]

Those "millions of Belgians" indeed knew that air travel existed. But for different reasons, they didn't use Brussels Airlines till recently: because they thought that "low cost carriers" were allways cheaper, because they estimated the previous SN-fares too expensive for a city trip or a short holiday.

The arrival of Ryanair at Brussels has changed things. Brussels Airlines lowered it's fare in two waves: a first time just after Ryanair announced they came to Brussels, and a second time with their 69 Euro deal. With that latest move, Brussels Airlines take over much more Ryanair clients then Ryanair does from them. Apart from taking over Ryanair clients, this 69 Euro deal creates a new clientele for Brussels Airlines: tourists who don't want to use "low cost carriers" out of principle, but at the sime time had no budget for legacy carriers like Brussels Airlines (even not in b.light, let alone b.flex). Those people now estimate that a city trip with flights at 69 Euro pp is good value for money. So instead of a CenterParcs or another weekend in Paris, they go to Eastern or Southern Europe for a weekend breakaway.

Only winners then? Not exactly. Charleroi-Airport looses twice: they loose former FR-CRL passengers, now flying FR-BRU. And they loose former FR-CRL passengers, now flying SN-BRU.

What is you source for this statement? Any figures to back this up? Or are you reciting your dreams out loud?
The only reason why pax numbers in CRL are reducing is because the amount of flights in CRL is reduced but load factors remain the same. CRL and BRU are 2 bases in the FR network with one of the highest LF.
In BRU the business plus formula is very succesfull btw.

[DannyVDB]

Dear all,

Interesting discussion on what is happening with SN and BRU (from the stats point of view) ...

In my previous post I stated that the growth in pax numbers could be contributed for an estimated 160.000 pax (so almost half) to Ryanair. I think that figure is probably lower. I assumed that Ryanair stated at the beginning of their activities that they would generate an additional 1.8 million pax in BRU. It seemed that the statement was for 1.5 million. So the 160.000 for September is an overestimation, I think it will be closer to 140.000 to 150.000 ...

The most important conclusion regarding SN though is that the trend does not follow what many here on the forum thought would happen (including myself, at least partially), i.e. that SN would lose pax, there would be a blood-bath at SN, eventually VY would need to pull out of Brussels, etc. I am also not sure that SN sees a shift from high fares to low fares. I think there is a combination. I even think they might win some flex passengers.

I think that people, even with the economic crisis want to keep their travel (they might lower expenses in other areas). And people continue to travel for business because they need to do so (it has nothing to do with the price) ...

I am still curious about the separate figures for BRU for Ryanair, Vueling and Easyjet ... So if someone can provide insight in these, that would be great ...

Danny

[Passenger]

While SN could be the having a good month of traffic growth versus last year, the big winners in terms of traffic are the newcomers FR, VY, EK, as they are going from 0% LF to 80-90% .

I know that it's difficult for you to admit that Brussels Airlines has progressed, but they really did.

Nice try to call load factors for new routes a progress "from 0% to 80-90%". Is that Flanker2 Mathematics version 1.1? In real life, a comparison can only be done with real figures. When there are no figures to compare with, we use "N/A Not Applicable" in real mathematics. With Flanker2 Mathematics version 1.1, a LF of 30% on a new route after one year is not "terrible", but "a good progress of +30%".

Anyway, here are the figures for Brussels Airlines, September 2014:

Passengers : +19,5%
Available Seat Kms : +5,8%
Revenue Pax-Kms : +14,2%
Freight Ton-Kms : +8,5%
Overal Load Factor : +4,9%
Passenger Load Factor : +5,7%

Clear overview, copy/pasted from here:
http://www.luchtvaartnieuws.nl/nieuws/c ... -houdt-aan

More details here: viewtopic.php?f=31&t=54763

[sean1982]

Those numbers do not prove at all what you stated before. So I ask again ... What is your source for your statements or is it wishfull thinking?

[Passenger]

Those numbers do not prove at all what you stated before. So I ask again ... What is your source for your statements or is it wishfull thinking?

Actually, my previous post with the superb Brussels Airlines figures wasn't meant for you.

[sean1982]

Ok, so I ask again .... You state that Brussels airlines is taking passengers from Ryanair in BRU and CRL. What is your source for this?

[Inquirer]

You're confusing CASM with total cost (including operating and overhead), as is Tolipanebas and many people within SN.

I don't think I am confusing anything, nor have I seen anybody else doing what you claim they do: allow me to say you are a little bit too eager to make everybody who's not buying your opinion look as 'confused', while blowing a lot of smoke yourself.

Sure,
unit cost x total production doesn't equal total cost,
that's a fact for all businesses btw as they want the unit cost figure to represent the true cost of a production increase and so any cost centre wich is totally unaffected by an increased production is kept out of the unit cost: a nice exemple of this for instance is the salary of the CEO or (often) also the publicity budget. Unit cost is indeed a fairly arbitrary figure and can include or exclude quite a few important cost centres, so as a general rule, one has to be careful to make use of these unit cost figures in discussions.

However, let's not try to fool ourselves by making wild claims pretending total costs to be massively higher than the unit cost times the production in this case, as occasionally enough figures are available to verify the likeliness of what you are saying.

From their monthly press releases we learn that they offer around 1,250M ASK per month.
(lowest I could find was 1,050M in JAN/FEB, SEP was around 1,350M)
Romax posted a link a few pages up in which it's mentioned their CASK is about 8,5 eurocents
Combine the two and you come to a figure of 1,275BN per year, which matches their annual turn around.
Knowing they are close to break even, this is thus also their total cost, so the conclusion is that their CASK figure must be a fairly all inclusive figure and that as such when they claim they have lowered their 'costs' by 10%, it may indeed be 'just' CASK they talk about, but the 2 are fairly similar and mostly interchangeable so the total cost reduction logically must be in the same ballpark.

As such, your 'either-either' remark was indeed fairly silly, as it completely misses the point that behind the screnes significant cost cutting has apparently been done, allowing the airline to offer prices which it previously couldn't offer.

Other than that, I agree with DannyVBD: as the year progresses and the operational numbers keep rolling in on a monthly basis, things are definitely not going the way predicted at the start of the year, quite on the contrary even, something which also explains why everybody who stumbled into BRU with big plans at the start of the year quickly put consolidation before further growth, a fully logical thing to do when the customer base growth needed for it comes not from simply taking away customers from your direct competitors, but mainly from creating it yourself.

[OO-ITR]

Ok, so I ask again .... You state that Brussels airlines is taking passengers from Ryanair in BRU and CRL. What is your source for this?

well we can't rely on CRL official press releases anymore. Before the arrival of FR at BRU, we almost received a weekly press release of CRL. Now all of the sudden, nothing anymore...strange!

[sean1982]

Ok, so I ask again .... You state that Brussels airlines is taking passengers from Ryanair in BRU and CRL. What is your source for this?

well we can't rely on CRL official press releases anymore. Before the arrival of FR at BRU, we almost received a weekly press release of CRL. Now all of the sudden, nothing anymore...strange!

That's not the point .... Everybody knows that CRL has lower passenger numbers due to less flights offered. Passenger is however claiming that passengers are moving from CRL-FR and BRU-FR to BRU-SN. Which figures point to that?

I'll tell you. None!

[convair]

Ok, so I ask again .... You state that Brussels airlines is taking passengers from Ryanair in BRU and CRL. What is your source for this?

well we can't rely on CRL official press releases anymore. Before the arrival of FR at BRU, we almost received a weekly press release of CRL. Now all of the sudden, nothing anymore...strange!

That's not the point .... Everybody knows that CRL has lower passenger numbers due to less flights offered. Passenger is however claiming that passengers are moving from CRL-FR and BRU-FR to BRU-SN. Which figures point to that?

I'll tell you. None!

I assume you're right. If total FR pax number BRU+CRL is still growing, then SN is not grabbing pax from FR.
What would be interesting to see is the evolution in their respective market shares, not forgetting the comparison is between September 2014 and September 2013.

[Pocahontas]

Why does FR has less flights at EBCI? Because there are fewer pax. So you deny that there is a shift from pax from Brussels-South to Brushasha? Our pax figures are growing, something none of you all expected. No need to deny that Sean1982.

[sean1982]

Im not denying the fact that SN has a serious rise in pax numbers, congrats for that by the way .... but they are not coming from FR. Sure there are some people that shifted from CRL to BRU, but a lot of FR BRU passengers are "new customers"

[Pocahontas]

Both companies can operate out of BRU no? I don't understand the continuous fuzz here about SN and FR and SN and FR and... It's getting boring. Unless something really worth noticing happens, this should stop, for the sake of this forum...

[convair]

I understand fewer flights at CRL is mainly due to lack of aircraft, isn't it?

[White Light]

Both companies can operate out of BRU no? I don't understand the continuous fuzz here about SN and FR and SN and FR and... It's getting boring.

I fully agree.

[Inquirer]

Guys, please.

A lot of all these constant fights between Ryanair and Brussels Airlines crew here is because you all ASSUME certain things to be the way as you HOPE/FEAR/BELIEVE them to be, withouth having any real factual grounds to support it:
- many assumed ryanair's arrival at BRU would mean Brussels Airlines would automatically loose thousands of passengers a day; after all, how can it be otherwise?
- Sean assumed that the passengers he saw onboard in BRU were mostly ex-Brussels Airlines passengers indeed; after all, how can it be otherwise?
- Passenger assumes that the extra passengers Brussels carries must be passengers taken from Ryanair; after all, how can it be otherwise?
etc etc.

And while there will certainly be many individual cases of passengers swapping back and fort indeed, the only logical conclusion which comes forward after looking at the excellent numbers from both the airport as well as the airlines based at it month after month after month is that none of those assumtions is even close to reality and the reason could very well be that a whole bunch of totally NEW passengers are making use of BRU, people who previously never flew at all, or just not through BRU.

As others have noted, CRL isn't booming as it used to because ryanair shifted some capacity to BRU and only some of the lost volume is made good by newcomers, and of course the number of STAR Alliance connecting passengers at BRU is exploding too, something which may be related with the fact that BRU is taking on the role of DUS now that the LH operations there are handed over to Germanwings.

If we can conclude one thing from all this, it's that a whole lot of people with very outspoken opinions on either Ryanair or Brussels Airlines should be feeling quite stupid if they have the courage to look back at what they've posted say 9 months ago. Maybe the fear for a further bruised ego is enough to help them refrain from making the same mistakes again as from now? The quality of discussions here would certainly win from it!

[sean1982]

Both companies can operate out of BRU no? I don't understand the continuous fuzz here about SN and FR and SN and FR and... It's getting boring. Unless something really worth noticing happens, this should stop, for the sake of this forum...

Off course ... That's what I have said from the start of FR at BRU. SN is not really on M'oL radar anyway.
Im not against SN, nor am I really pro FR. I've always said in the past that my loyalty towards FR doesnt go further than my paycheck. The only thing I've ever wanted to do was to defend my colleagues and their professionalism, something that sometimes is being disgracefully dragged into doubt on this forum.

[convair]

Sorry I can't resist this one : keeping up with a now well-established tradition, SN's latest press release on the September figures contains 2 errors, both relative to load factors. They actually are 5.9% and 6.7% higher than last year and not 4.9% and 5.7% as indicated in the table!

[sn26567]

Brussels Airlines wants to expand its flights to the USA for years into a full-fledge addition to the European and African activity, says CEO Bernard Gustin.

In an interview to De Tijd, the CEO of the airline explains that he would like "one or two destinations in the eastern US added to the programme of Brussels Airlines. The company has since 2012, after a long absence, another US offer.

"As the first phase of our development succeeded, then we want to go one step further," it sounds. "The US flights strengthen our African operations. By 2018 it is planned to make the US a full leg for the group, in addition to the European and African".

Gustin also reiterates aiming at profit in 2015. In 2013 the loss was curtailed from 90 to 21 million. It should be reduced further in 2014, only to re-establish positive numbers from next year. In 2018 he expects a net profit of 50 million euros.

In response to the lawsuits filed by Ryanair against Brussels Airlines, Thomas Cook and Jetairfly - the Irish lowcost company complains about unlawful aid from the government to its competitors - Gustin emphasized again that the federal allowance "is fully justified. Europe and the Belgian authorities recognize that." He says also that he does not use the money until the case is not settled.

After De Tijd

[airazurxtror]

He says also that he does not use the money until the case is not settled.

He is not so sure, after all.
It takes a bit more time to have a ruling from the European Commission.
As with Cyprus Airways, a similar case :
All eyes are currently on the European Commission with a ruling on whether a EUR73million rescue package in 2012 and a EUR31.3 million capital increase in early 2013 violated EC state-aide regulations due out soon.