Brussels Airlines, a subsidiary of the German group Lufthansa (LHAB) (LHA) , is expecting to receive aid from the Belgian state to alleviate the consequences of the coronavirus pandemic on the air transport industry, according to the company’s chairman. In parallel, the company still plans to close eight of its routes and downsize operations.
“The negotiations are underway and they are rather positive. The principle is now established that we will benefit from state aid,” Brussels Airlines chairman Etienne Davignon told La Libre Belgique. No nationalization is planned, as it would “not make sense”. “What would Brussels Airlines do on its own [editor’s note: without Lufthansa (LHAB) (LHA) ] after the crisis?” he asks.
Faced with low demand, Brussels Airlines had to suspend its flights until at least May 15, 2020. The company will enter restructuring, and be downsized by 25 to 30%. Some layoffs are to be announced in the coming weeks. The carrier’s routes towards Seville, Valencia, Bristol, Hanover, Moscow, Billund, Marrakech, and Santorini are suspended until at least March 31, 2021.
The Belgian state remains cautious, however. “The question is what will happen after the end of May, and this until the end of the year. I do not mean that we are putting the file aside but we have room to make a thoughtful decision,” Minister of Finance Alexander De Croo told the Belgian Chamber of Representatives.
The announcement was received with skepticism by some. Air transport “is not the first sector we think of for state aid,” argued federal representative of the Ecolo party Gilles Vanden Burre, as quoted by La Dernière Heure. “It is one of the main emitters of CO2. It leads to a frenzy of travel as well as pollution of all kinds. We also think of the degraded quality of life of all those who live around airports,” added Vanden Burre.
Group-wide initiatives
Lufthansa (LHAB) (LHA) participated in the discussions with the Belgian state, a sign which, according to Davignon, shows that the parent company believes in its subsidiary. Carsten Spohr, CEO of Lufthansa (LHAB) (LHA) , said that his company would seek public aid in Germany, Switzerland, Belgium and Austria, as reported by Reuters on April 8, 2020.
Earlier this week, Lufthansa (LHAB) (LHA) announced several changes to cope with the effects of the coronavirus crisis. Six Airbus A380 double-deckers, seven Airbus A340-600 and five Boeing 747-400 aircraft would not return to the airline’s fleet. Three Airbus A340-300, which were operated by Lufthansa Cityline, would also be retired permanently.
Moreover, Germanwings is to cease its own operations to be merged with Eurowings under one Air Operator’s Certificate (AOC). The low-cost carrier’s fleet will be downsized as well. Including the retirement of 10 Airbus A320 jets, the company’s long-haul fleet is also set to be reduced.
