#Brussels Airlines set for transformation in 2018

CHANGE OF OWNERSHIP FOLLOWED BY CHANGE OF CEO AS BRUSSELS AIRLINES LOOKS AT NEW ROLE IN THE LUFTHANSA GROUP

(Posted 15th March 2018)

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2017 was an important year for Brussels Airlines, not only breaking records vis a vis passenger and cargo uplift and expanding the airline’s destination network but also in regard to the acquisition of Thomas Cook Airline Belgium.

Now owned 100 percent by Lufthansa has the airline been made part of the Eurowings division of the German airline group and Brussels Airlines will take on additional functions it is understood by flying long haul services for Eurowings out of second hub located in Germany.

From late 2018, when the operating leases of the current fleet of long haul Airbus A330’s begin to expire, will new aircraft of the same type begin to join the fleet but with a new and completely revamped cabin interior which has regular travelers already watching this and other spaces to learn about configuration, new seat products and other enhanced services on board.

Key data of 2017 were made available a short while ago outlining the successes of last year and giving key indicators on operational performance:

  • Operating profit (EBIT) of €14.98 million in 2017 (IFRS standard)
  • Net result of €3.57 million (IFRS)
  • Continued highly competitive environment which, in combination with a strong capacity increase linked to fleet alignment (+11%), led to important yield pressure
  • Market share increased by 1.4 p.p. (+ 1.3 million passengers)
  • 9.1 million passengers (+17.3%) leading to a record seat load factor of 78.8% (+4.1 p.p.)
  • Key strategic projects implemented, weighing on 2017 results, but creating new sources of profit (Thomas Cook/launch of Mumbai/Toronto)
  • Excluding one-time costs of strategic investments, the operating result amounts to €25 million
  • €1.326 billion revenues and a cash position (€204 million) that remains very solid, despite the reimbursement of €16.8 million of airport security subsidies following negative decision by European Commission. The additional 2 years of subsidies which were expected to be received have been cancelled, which will negatively impact the BGAAP net result (exceptional one-time effect)
  • Brussels Airlines hired 645 new staff members (including 160 crew members of Thomas Cook Airlines Belgium)

In 2017, despite a challenging market environment, Brussels Airlines continued on its growth path of the last years, booking a positive result for the 3rd consecutive year. Brussels Airlines’ seat capacity increased by 11% versus 2016, especially on the European network, following the phase-out of the AVRO RJ100 fleet (100 seater) and its partial replacement by bigger Airbus A319/320 (140/180 seats). The increased capacity on the long-haul sector was realized thanks to the addition of an Airbus A330, which was mainly deployed on the new Mumbai route.

The additional seats have resulted in a 17.3% passenger increase, allowing Brussels Airlines to pass the 9 million passenger mark for the first time in its history (one million above the original 2018 ambition) and leading to a seat load factor of 78.8% (+4.1 p.p. and only 1.8 p.p. under the 2018 ambition), also a record for Brussels Airlines.

An overall growing network and strategic investments fueling the future of Brussels Airlines

The European network

The integration in Belgium of the Thomas Cook Airlines activities and two of its Airbus A320 aircraft, allowed Brussels Airlines to reinforce its position in the important leisure segment. The closer cooperation with tour operator Thomas Cook Belgium allowed Brussels Airlines to add 26 new destinations to its existing leisure network and to further improve its productivity. The integration will increase Brussels Airlines’ customer base by a further one million guests, contributing substantially to the profitability of the highly competitive European network.

By increasing the seat capacity on the European network and, as a consequence, growing the passenger numbers, Brussels Airlines was able to increase its market share. This created an important pressure on the yield, however, which was further reinforced by the capacity increase related to the fleet alignment towards the A320 family in a market that was still in a recovery phase after the March 22nd terrorist attack, impacting the profitability in the earlymonths of 2017. As a consequence, the full profit effect of the up-gauge from Avro to Airbus will hence only by visible as of 2018, as already visible in the financial results of the two first months of 2018.

The African continent

With a very strong performance, despite some political crises, Africa remained the strong-hold of Brussels Airlines in 2017. For the first time ever, the airline surpassed the one million passenger mark on the African network, correspondingto an increase of 14.0% and resulting in an average seat load factor of 87%, a record for Brussels Airlines. Brussels remains a real hub for African passengers,with 65% of passengers connecting to a Brussels Airlines destination in Europe or the US. The Cargo activities of the airline contributed to the positive results on Africa.

US & Canada

On the North Atlantic sectors Brussels Airlines focused on the performance of its three destinations New York, Washington DC and Toronto. During the first semester of 2017 did the traffic still suffer from the impact of the terror attack at Zaventem Airport which affected traffic numbers. Only in the second semester of 2017 did traffic start to recover. Overall passenger numbers grew by 13.7 percent and Brussels Airlines expects further improvements on the North Atlantic routes due to recently signed sales agreements with Lufthansa.

Newcomer India

Launched in April last year, Brussels Airlines’ first Asian destination Mumbai reached an average seat load factor of 75% and financials are in line with the business plan. India is an important economic partner for Belgium with, at the same time, a substantial leisure potential.

A good start of 2018

The first two months of this year show a positive trend in terms of passenger volumes and revenues – even though the pressure on the yield remains very high. With a passenger growth of 15% and 16.5% in respectively January and February, Brussels Airlines could further reinforce its market position. The overall costs per seat are also lower than during the same period last year – especially thanks to the first results of the investments done in 2017.

 

Effective end of this month will long serving CEO Bernard Gustin retire from the airline and the current COO Christina Foerster will succeed him in office.

 

See a related article filed here: https://atcnews.org/2018/02/05/brussels-airlines-gets-new-top-management-team/

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