Brussels Airlines future and financial perspective

[Inquirer]

I also think that the arrival of FR at BRU shook the SN house to the core.. They probably worked day and night to produce the new products they launched for Europe just in time when FR started their flights.. They were probably planning changes earlier; however as mentioned above the CATALYST probably fast forwarded everything for the new European products.

I know that is the popular view, but if they wanted to somehow financially underpin their new stategy (which is that of a hybrid low cost almost) -something which they've managed to do if the financial guidance they occasionally give is matching reality- they must have worked a lot on the cost side too.

Given this probably involves changes to all their operating processes, it immediately brings along renegotiations with their contractors, staff, and (corporate) customers, so it must have been long underway already, because knowing how time consuming all these things are in our Belgian context, it's just not possible to bring along all the necesary changes in just a couple of weeks: as so often, I bet there's far more to it than what the outside world saw of it and what most here make of it.

[RoMax]

They have been working on the cost side for quite some time, initiated by Beyond 2012-2013. That was indeed absolutely necessary before they could change their strategy in Europe. The strategy change into an even more hybrid carrier was als initiated way before FR came to BRU.

But I'm still inclined to think that Ryanair and Vueling speeded some things up. Certainly not that SN came up with this out of the blue in just a few months, but they must have speeded up things. I believe the head of the IT department also said that at a certain IT conference of which I saw a video.

[Inquirer]

I think sometimes people need a kick in their butt before they start moving.
Mr. O'leary got one when he was forced to post significant losses last winter, and only then did he move
Mr. Gusting got one when O'leary moved and came to BRU, and so he decided to move too
and beyond our borders, we also see other CEO's repositioning themselves.
The really interesting question is: who's so firmy in the driver's seat of European aviation these days to make all others (including the biggest ego of them all) step out of their way and give up their carefully crafted business concept, seemingly almost overnight almost?
I'd say it's a duo: Mrs McCall (easyjet) and Mr Cruz (Vueling).
:clap:

[RoMax]

Some of the comments made by SN at the CAPA World Aviation Summit which this year took place in Belgium (Hilton Antwerp) and where SN was the official carrier and BRU the 'Airport Host'.

"Brussels Airlines VP network and transversal planning David Lyssens, speaking at the CAPA World Aviation Summit, described (21-Nov-2014) the airline as a specialist in Africa. Mr Lyssens said operating in Africa is not easy and requires flexibility. Over the next three years the airline plans to develop additional "anchor points" in East and West Africa, increase frequency to existing "tag points" and develop other new destinations."

"Brussels Airlines VP network and transversal planning David Lyssens, speaking at the CAPA World Aviation Summit, said (21-Nov-2014) the airline is undergoing a commercial repositioning to match changing customer expectations and deliver low prices with a high level of service. The carrier aims to deliver personalised service, a greater choice of prices and products and a "no compromise" network structure. The carrier's destination portfolio is focussed on the three key regions of Europe, North Atlantic and sub-Saharan Africa. North Atlantic is currently the top intercontinental market out of Brussels. The airline intends to serve the rest of the world primarily through the Lufthansa Group and Star Alliance. The carrier will concentrate on the main origin and destination markets out of Brussels, covering the main source markets for its long-haul network, including business and leisure destinations. The airline aims to add six new destinations in 2015 in addition to other capacity investments."

"Brussels Airlines VP network and transversal planning David Lyssens, speaking at the CAPA World Aviation Summit, said (21-Nov-2014) the airline is renewing its fleet to improve efficiency and earning capacity. The carrier has been phasing out its Boeing 737 and Avro RJ aircraft while adding A319s and A320s and leasing Q400s and E-145s. The airline aims to operate about 10 A330s, 30 to 35 A319s and A320s and five to 10 wetleased Q400s and E-145s for a total of around 50 aircraft. The airline intends to operate A320s in a 180-seat configuration from 2016 and is investigating denser A319 configurations, potentially with 141 seats."

And BRU:

"Brussels Airport CEO Arnaud Feist, speaking at the CAPA World Aviation Summit, said (21-Nov-2014) the airport expects passenger traffic to increase 15% year-on-year to 22 million in 2014. Brussels Airport head of aviation marketing Léon Verhallen said the airport aims to secure a position as roughly the 15th largest airport in Europe. Mr Verhallen said traffic is booming and the airport has reestablished itself as a major gateway, with its long-haul network being particularly successful. Mr Verhallen said the introduction of new small aircraft with increased range will allow routes to new destinations where current aircraft are too large for the market. The airport aims to fill missing links in its network in Africa, the Americas and Asia. Mr Feist said the airport's central location is a key asset and it is stepping up freight operations."

Of course much more comments have been made, but I can't access them without a CAPA premium membership. Often CAPA publishes only the least interesting quotes on the free part of its website.

http://centreforaviation.com/news/

[Flanker2]

I for one wonder what kind of numbers they're going to post for November.
Many Belgian service companies did pretty bad in November, including many in the tourism industry.

Short-term: the cheap Euro is a risk and though fuel prices are going down, in Euro terms the fall isn't very significant. Add fuel hedges and I think that there will be no positive effect for SN for a while.

But the picture is bleak. Very bleak.
Not only for SN, but for Europe as a whole.
Belgium could be hit very hard: the real estate bubble has achieved crazy dimensions and will probably burst in the next significant recession.

Europe has embarked on a crazy policy to fund and relaunch the economy with debt, while going for total austerity on its spending. A mistake that has costed Japan 20 years of stagnation and for which it is now finally remeding succesfully through the agressive Abenomics.

If we continue on this path, with the Chinese RMB rising, it's not unthinkable that countries in Eastern Europe could see their spending power overtaken by China, with China establishing factories there to produce their hardware.

Also, Eastern Europe is a big burden for the rest of Europe and this is going to test the sustainability of it.
The European project has expanded beyond its purpose, to become a political union rather than a meaningful, economic one. The Eastern countries had nothing to offer to the rest of Europe, they are plain and simple an unnecessary burden. Those countries have no industry, no tourism, no production of any significance. The only thing they have going for themselves is that they are close to Russia and having them as allies would offer some reassurance in case Russia would go crazy.

The European project is now evolving from an economic powerhouse, to a charity organisation, to a new iron curtain.

An article that describes the problems in detail:
http://www.thefiscaltimes.com/Columns/2 ... s-Problems

[RoMax]

Not really something to do with SN's financial performance, but not really worth a new topic. The readers of the business travelers magazine Global Traveler USA chose SN for the second year in a row as 'Best Trans-Atlantic Airline' and ranked third for 'Best Airline Cuisine' (in 2013 they ranked 8th in this category). Brussels Airport ended second 'Best Airport Dining' (in 2013 they ranked third in this category).

Etihad was selected as the best airline in the world. Other winners include Asiana, Emirates, Singapore Airlines, Delta, jetblue.com (best website), Korean Air, Alitalia, El Al (for best security ), etc. Full results can be found through the link below.

The 2014 GT Tested Awards are based on voting results of GT readers between January and August this year.

This is the same magazine from which SN received for the third (or second?) year in a row the 'Best international Business-Class on the wing' award earlier this year.

http://www.globaltravelerusa.com/2014-gt-tested-awards/

Although these awards might not always give the most objective results (for as far that's possible with a service industry like this), they do give a good view of the 'perceived quality' of these airlines according to mainly US based business travelers.

[airazurxtror]

Michael O'Leary in "Le Soir" today page 2 :

"On ne peut pas vraiment parler de lutte [à Bruxelles, entre Ryanair et Brussels Airlines].
Brussels Airlines fait face à beaucoup de challenges actuellement. Elle a un profil de coûts élevés. Elle est contrôlée par Lufthansa et la stratégie de Lufthansa est mauvaise ! Maintenir des coûts élevés va les mener à leur perte. Brussels Airlines n'a pas la possibilité de croître et n'a d'ailleurs pas de commandes d'avions pour cela.
(...)
Si Brussels Airlines veut être plus compétitive, elle est libre de s'installer en Irlande."

"We can not really talk about a fight [ in Brussels between Ryanair and Brussels Airlines ] .
Brussels Airlines is facing many challenges today. It has a high cost profile. It is controlled by Lufthansa and Lufthansa's strategy is bad ! Maintaining high costs will lead them to their doom. Brussels Airlines is not able to grow and has no aircraft orders for it.
(... )
If Brussels Airlines wants to be more competitive, it is free to move to Ireland. "

[Passenger]

Michael O'Leary in "Le Soir" today page 2 :

"On ne peut pas vraiment parler de lutte [à Bruxelles, entre Ryanair et Brussels Airlines].
Brussels Airlines fait face à beaucoup de challenges actuellement. Elle a un profil de coûts élevés. Elle est contrôlée par Lufthansa et la stratégie de Lufthansa est mauvaise ! Maintenir des coûts élevés va les mener à leur perte. Brussels Airlines n'a pas la possibilité de croître et n'a d'ailleurs pas de commandes d'avions pour cela.
(...)
Si Brussels Airlines veut être plus compétitive, elle est libre de s'installer en Irlande."

"We can not really talk about a fight [ in Brussels between Ryanair and Brussels Airlines ] .
Brussels Airlines is facing many challenges today. It has a high cost profile. It is controlled by Lufthansa and Lufthansa's strategy is bad ! Maintaining high costs will lead them to their doom. Brussels Airlines is not able to grow and has no aircraft orders for it.
(... )
If Brussels Airlines wants to be more competitive, it is free to move to Ireland. "

Webmasters,

Perhaps you can remove the above post to the daily "Ryanair good news" topic"? It's not about "Brussels Airlines future": it's about Ryanair's co-owner looking once again for free press coverage.

[sean1982]

Another indigestion passenger?
The situation in BRU is very relevant to Brussels airlines' financial future I would say.

[crew1990]

And we actually do have some aircraft on order, OO-SSH is joining us shortly, 2 other A319/A320 should join the fleet for the summer, and on top of that the budget for the summer is still open so in case we could fine a great deal for a long haul aircraft, a A330 could join too!

[OO-ITR]

It's not about "Brussels Airlines future": it's about Ryanair's co-owner looking once again for free press coverage.

well if you don't have anything interesting to say about yourself, then I guess the only thing left is to talk about others...

[sn26567]

I was actually at Charleroi Airport to hear Michael O'Leary yesterday. The purpose was to celebrate the 40 millionth Ryanair passenger at Charleroi since 1997. In his official presentation, MOL barely spoke about SN, only to say that Ryanair was now the number one airline in Belgium (he didn't add "by the number of passengers, not by turnover or by number of people employed in Belgium"). And also in comparing the costs of a trip in Europe, where he couldn't resist to say that SN was a high cost airline, subsidiary of Lufthansa and thus following its owner's strategy.

For the rest, he had private talks with several journalists, and that's where he said to Le Soir what airazurxtror reported above, or to La Libre Belgique whose first page title was that RYR will fly to the US from Belgium (in reply to a question that I asked him myself during the Q&A session).

I had myself a nice private talk with him, before a piece of cake that he cut for me. I asked him about the free WiFi that he intends to put on board of his planes (answer in the Ryanair 2014 topic).

[RoMax]

And also in comparing the costs of a trip in Europe, where he couldn't resist to say that SN was a high cost airline, subsidiary of Lufthansa and thus following its owner's strategy.

Does he also know that SN's costs are much lower than these of LH (mainline)? Of course not as low as LCC's, but certainly not as high as that of the big legacy carriers, more somewhere in the middle.

[sn26567]

And also in comparing the costs of a trip in Europe, where he couldn't resist to say that SN was a high cost airline, subsidiary of Lufthansa and thus following its owner's strategy.

Does he also know that SN's costs are much lower than these of LH (mainline)? Of course not as low as LCC's, but certainly not as high as that of the big legacy carriers, more somewhere in the middle.

He certainly doesn't study the balance sheets of all airlines. I think he is only categorising the airlines in three classes: the expensive legacy carriers, the other LCCs, and Ryanair as the only ULCC...

[Flanker2]

And also in comparing the costs of a trip in Europe, where he couldn't resist to say that SN was a high cost airline, subsidiary of Lufthansa and thus following its owner's strategy.

Does he also know that SN's costs are much lower than these of LH (mainline)? Of course not as low as LCC's, but certainly not as high as that of the big legacy carriers, more somewhere in the middle.

He certainly doesn't study the balance sheets of all airlines. I think he is only categorising the airlines in three classes: the expensive legacy carriers, the other LCCs, and Ryanair as the only ULCC...

MOL is an accountant, so I'm certain that he has studied SN's balance sheet and knows it by heart. He would have done that long before he considered his BRU base.
Also, rest assured that MOL is following this forum... if you want to know something about succesfull businesses, it's that they cover all their bases.

You did some great reporting there.

[convair]

And we actually do have some aircraft on order, OO-SSH is joining us shortly, 2 other A319/A320 should join the fleet for the summer, and on top of that the budget for the summer is still open so in case we could fine a great deal for a long haul aircraft, a A330 could join too!

OO-SSH entered commercial operation yesterday (SN2723 to GVA).

[airazurxtror]

OO-SSH - Airbus A319-112
First flight : 23 october 2006
Eight years as RP-C8601 with Philippine Airlines;
Leased from GECAS.
http://www.planespotters.net/Production ... rlines.php

[airbuske]

OO-SSI will join next year A319 SN3895
OO-SN will join next year A320 SN2114

[convair]

The A319 is now Aegean; the A320 is currently Thomas Cook OO-TCQ!!?

[crew1990]

what about leaving the OO-TCQ with his old Thomas Cook color to operate the thomas cook flight