Brussels Airlines in the eye of the crisis

[NCB]

Source: article on http://www.hln.be
http://www.hln.be/hln/nl/942/Economie/a ... isis.dhtml

A quick translation:
In November, Brussels Airlines has carried 15.9% less passengers compared to Nov 2007.
That is lower than the European average decrease of 9.3%.

In terms of traffic (pax/km) the decrease is less significant, thanks to its African routes: 10.1%

The load factors decreased by 2% to 60.1%.


IMO it is fortunate for SN that they found a buyer before they ran out of cash.
Many airlines did not have that luck.
Also the message is clear: SN need more longhaul to Africa.

[Poeli]

I agree, but it could have been worse if we look to olympic and spanair. Its good that Lufthansa ( a big player) bought shares in Brussels airlines.
And we all know (and the management too) that Africa is the goldmine for Brussels Airlines.
Hopefully the crisis won't last too long

[tolipanebas]

Actually, the numbers are not that dramatic to me...

Have a good look at them: you'll see that indeed the number of pax dropped spectacularly as well as the seat/mile number, but the loadfactor only dropped by 2 percent. This is indicative of the fact that SN prepared for the bad times in time by cutting frequencies and routes as soon as the drop started to be felt. These are bad times, but it looks to me that SN did pretty good given the circumstances, although obviously an even more important number than loadfactor is yield and thus the financial result linked with it...

What is a fact is that AFI seems to pretty much immune for the bad economic downturn, which is understandable if you know most pax are either ethnic travelers (visiting family) or small business men, rather than trendy business travellers like consultants, auditors, project managers and shiploads of middle management types who staff the executive floors of many multi-national's HQ and have a habit of commuting accross the Atlantic to visit other sites of their multi-national with all sorts of interesting (and often less-interesting) projects... It's a well-known fact that the overseas travel of these ever-so-bussy juppies is much more influenced by the economic environment than that of the kind of pax you get on the kind of routes SN flies... AF learnt this in 2001, when it saw demand for its longhaul routes drop (in the wake of 9/11), while it expanded agressively and successfully towards africa (thanks to the demise of Sabena).

Anyway, Be sure LH has seen the picture too and understands that the future for SN has longhaul on it...

BTW:
to all those who think LH is just interested at consolidating everything in FRA/MUC; LX is planning on opening 3 new longhaul destinations next year: PEK, SFO and AUH...

[Megaman]

Actually, the numbers are not that dramatic to me...

...the loadfactor only dropped by 2 percent.

I guess this is not dramatric if the initial loadfactor is of 80%...

[NCB]

Actually, the numbers are not that dramatic to me...

Have a good look at them: you'll see that indeed the number of pax dropped spectacularly as well as the seat/mile number, but the loadfactor only dropped by 2 percent.

The 2% LF drop is indeed not that significant and proves indeed that SN has taken the necessary measures in terms of capacity (-7.2% according to AEA sheet) to reduce the impact of the crisis and the overall calm winter season. The progressive phase-out of the Bae-146's comes to mind.
And taking a look at the AEA sheet, it just gives you an idea of how bad the sector is doing and that SN is not doing the worst.

Nevertheless, these figures will prove unsustainable for many airlines that just went through a summer of record oil prices and paints the picture for another line of failures in the near future. Sometimes things happen that are not predictable and those airlines that can survive the unpredictable are those that will make it in the long-term. Be sure that most airlines in the world dropped their "2008 earnings projection sheets" in the trash bin and don't know what kind of projection to write for 2009.

I'm glad to see SN, AZ, BD, OS, VG surviving thanks to the recent round of buyouts, but wonder what will happen to the like of OA, Spanair and Icelandair.

[DannyVDB]

Hi all,

The figures are not good, but indeed they reduced capacity (maybe not enough?). But it seems they will turn breakeven this year. This is in my opinion more important and quite amazing!

On the other hand looking at the other figures: AZ pax dropped 52%! They became a small player in Europe! But also the Spanish market is a disaster: Iberia (-21%) and Spanair (-29%)! Is Clickair included in the IB figures (that might explain a lot).

Danny

[tolipanebas]

Indeed, a LF of just over 60% is low, but not surprising given the fact SN operates a fairly large European network as feeder for a pretty small longhaul network; let's hope that they will expand on longhaul next summerseason as it would greatly improve their LF.

Anyway, regardless the low LF, SN expects to break-even this year, which is more than most airlines will be able to say...

http://www.deredactie.be/cm/de.redactie ... lsAirlines

[Atlantis]

Weird that nobody is talking about the increase of pax on their African flights with 15%!!

On ATWonline there is an article of Brussels Airlines. Finally they are going to set back the business class on their European flights. End of the story with B-Flex and B-Light. They are going back to a full service carrier. That would be good news for their partnerships with other carriers.

We could read also that they are looking for two more A330 a/c. I posted earlier that LH was considering to put some planes at Brussels Airport. Are those indeed from LH or would it be lease ones from ILFC or other companies?

[legfontosabb]

Finally they are going to set back the business class on their European flights. End of the story with B-Flex and B-Light.

Apparently you did not read the article properly. It says that they might reintroduce/add a bussiness class in Europe to align product with Star partners and could retain b.light/b.flex also... Wy not? many airlines have more than 2 products.

It also says b.flex share is now 38%! That looks quite impressive to me. What was the original objective again?

[Ducatibiker]

The return of Business Class is indeed good news but I hope it will be more just an empty name! I hope that this will translate a focus on business passengers and frequent flyers. We want hard factors such as access to lounge, priority boarding, middle seat blocked and catering that does not come in a silly box which is worth more than what is inside, real wines in a glass and ...service. I hope the managers will have a close look at what is offered in C class on other airlines - especially the blocking of the middle seat.

[brussels airlines]

It also says b.flex share is now 38%! That looks quite impressive to me. What was the original objective again?

The objectives were 30% b.flex passengers a year. In 2007 Brussels Airlines carried 22% b.flex passengers. This year, the management decided to offer less b.light tickets and offer much more b.flex seats.

In summer for example there were flights you had about 60% b.flex/ 40% b.light.

[Ducatibiker]

-B. flex share is 38% of what ?
-I would like to see the respective share of each booking codes (connecting flights, code sharing)
-Of course don't forget that all award tickets using points are automatically in b.flex.
-Also does this share include C booking codes to destinations where Brussels Airlines still has a business class ? (Helsinki,...)
-Upgraded passengers ....included in your share ?

[Darjeeling]

SN's loadfactor on the African network has never been as good as it is now. Really impressive.
I really don't understand why they didn't expand more rapidly on the long-haul side. They need their own flight to JFK, a new service to BEY as well, and look to send an A332 to NRT as they still have the possibility to do so (Belgian slot still available.) keeping so many old and thirsty aircrafts on the European network has strictly NO sense at all.

[Conti764]

They need their own flight to JFK

Why? SN should focus on two things only:

-> Their niche market: Africa.
-> Fly to destinations their future *A-partners do not fly to.

The NYC area can easily be covered by their partners: for now AA to JFK and in future CO to EWR. CO already has their flight to EWR so the second one could be operated on behalf of SN (like the current one by AA), so this should give SN some negotiating power to somehow plan this flight the way they desire (giving slot availability at EWR and the agreement of CO, of course).

I still wonder why everybody is so eager to fly to congested JFK while EWR is so much better for passengers traveling to Manhattan and for connections to domestic US. Even AA now transfers their pax from/to BRU via ORD.

[tolipanebas]

I agree in full with you, Conti!
You know my idea: EWR >>> JFK, both for connections within the USA as well as for downtown NY.

SN will predominantly focus on AFI, but they have recently said they have the intention to expand beyond the black continent as well, although I don't think they'll ever be going to NY on their own metal: I'd expect them to focus on Montreal instread.

A daily flight to YUL should be a good option in my eyes. AF will soon have 3 flights a day to Montreal, so it can't be that difficult to take some pax away from them, especially not with the help of soon-to-be STAR alliance partner Air Canada who'd be very likely codesharing the route.

Another good reason why YUL would be very likely a good first transatlantic destination for SN, is that LH isn't operating there themselves yet (LH codeshares on AC's daily flight at FRA), so they will have no problems with transfering Lufthansa pax to YUL from AC's flight at FRA to SN's flight at BRU....
After all, the SN flight at BRU is 'theirs', whereas the AC flight at FRA isn't...

Talking about transfer pax from LH: SN has just announced it expects to start code-sharing with LH and several key STAR alliance airlines as from next summer season (so even before they join STAR).
Expect a serious re-shuffle of SN's network to Scandinavian destinations, as well as on VIE...

Credible rumour also has it that SN will introduce a nightstop service to HEL (as from next winter season), hinting at an end to the AY/SN cooperation on HEL-BRU (and beyond) at that time.

[itami]

SN has just announced it expects to start code-sharing with LH and several key STAR alliance airlines as from next summer season (so even before they join STAR).

As I couldn't find that announcement in the press room of the Brussels Airlines website, could you please post the appropriate link ? I guess 'several key *A airlines' also means 'long haul' ?

[LJ]

A daily flight to YUL should be a good option in my eyes. AF will soon have 3 flights a day to Montreal, so it can't be that difficult to take some pax away from them, especially not with the help of soon-to-be STAR alliance partner Air Canada who'd be very likely codesharing the route.

I wonder if the market is there. CDG-YUL is already busy with the O&D traffic. With AC flying the route twice daily and AF 3 daily next summer I don´t think you can get good yields on the route. Why flying via BRU? Moreover if Air Transat is also on BRU-YUL...

Another good reason why YUL would be very likely a good first transatlantic destination for SN, is that LH isn't operating there themselves yet (LH codeshares on AC's daily flight at FRA), so they will have no problems with transfering Lufthansa pax to YUL from AC's flight at FRA to SN's flight at BRU....
After all, the SN flight at BRU is 'theirs', whereas the AC flight at FRA isn't...

That´s the advantage of a strategic alliance.. Question is whether FRA-YUL is a big market. Given the fact that LH doesn´t have their own metal on FRA-YUL it it probably isn´t. Furthermore the point of an alliance is to make use of eachother´s rescources. This doesn´t mean you start a "competing" flight unless the market demandsa capcity increase.... Given the fact YUL is served out of CDG, MUC, LHR, GVA, ZRH I wonder if Star really needs the additional capacity on Europe - YUL. Maybe AC can start flying to BRU....

BTW LH flies with its own metal to YUL...from MUC

[BrightCedars]

As far as BRU-YUL is concerned, one should not forget that LX already has a daily (?) flight ZRH-YUL. Maybe the yield isn't that great, or maybe they would want to put a second one in service. Then a flight from BRU, closer to the Western shore might be a good thing as far as connections are concerned. It could also be that this flight be entirely moved to a (GVA-)BRU-YUL route (same plane service or not). There are many options and BRU is one of the shortest routes to cross the Atlantic, and it wouldn't make sense to mount a YUL flight at LHR through BD since there is little demand there. It would however be a nice option even for a small backtrack LHR-BRU-YUL.

On the topic of SN in the eye of the crisis, it is misleading as it seems to imply there is information that SN is in torment due to the current economic slowdown. SN is affected but not to the level of questioning its viability, while it has the chance to precisely being in the process of enabling a myriad of economies of scale thanks to its acquisition by LH and its forthcoming membership in the Star Alliance.

I'm sure we'll see a lot of change in the Spring and even more in the Autumn.