Brussels Airlines is rebooting: what changes are coming?
During Lufthansa Group’s Capital Markets Day on June 24, 2019, the German airline conglomerate announced a slight shift in strategy – Eurowings will slash its long-haul routes and Brussels Airlines, which has been integrated under Eurowings wing, will operate more closely with the three network carriers, namely Austrian Airlines, Lufthansa and Swiss.
Significant changes are coming to the airline – after a spur of growth these past few years, the carrier is taking a step back, including job cuts. A cost reduction plan, called Reboot, to achieve profit margin goals, was announced.
Current skies above Belgium
Defining the current situation at the Brussels-based airline is fairly difficult. When Lufthansa Group announces its financial or traffic results, the group puts Brussels Airlines under the same wing as Eurowings. In 2018, Eurowings posted a pre-tax loss of $257 million (€231 million) – the financial report wrote-off the loss because of “non-recurring integration costs and irregularities in flight operations”, as expenses increased by 11% compared to 2017.
But, seemingly, performance throughout 2018 sent off alarm bells ringing that something had to change. Cost-cutting measures were implemented – the aforementioned withdrawal from low-cost long haul flights to focus on intra-European flights for Eurowings. For Brussels Airlines – a reboot was needed.
A spokesperson from the airline has confirmed that the airline launched the cost-cutting program, called Reboot, in June 2019.
“After a few years of constant growth, our profit margins fell,'' said the spokesperson, adding that Brussels Airlines “needs to reach a profit margin of 8% in order for us to be able to grow again,” she added.
The growth is evident in the last few publicly available financial reports from the airline.
In 2017, the company increased its capacity by 11% and hired 645 new staff, 160 of which were from Thomas Cook Airlines Belgium, when the latter’s parent company sold its operations to Lufthansa. Throughout 2017, the airline carried 9.1 million passengers on its routes, an increase of 17.3%. But the final line of the financial report was barely green – an operating profit of only $16.6 million (€14.98 million) was achieved.
2016 was a fairly difficult year – following a terrorist attack in March 2016 at its main hub in Brussels Airport (BRU), the airport was closed for 12 days. Still, passenger numbers were up – 7.7 million travelers onboard the Belgian airline throughout the year, up by 3.2%. Yet profits were small – operating profit in 2016 stood at $22.7 million (€20.4 million).
It is fairly clear that while the airline was poised to only grow for the past few years, a stop had to be made in order to stabilize operations and achieve bigger profit margins.
Reboot will, unfortunately, include job cuts at the airline. The airline’s representative confirmed that the plan is to introduce job cuts via a voluntary plan. In addition, the dismissals will not come instantaneously – they will be spread out through three years to minimize the negative impact.
Brussels Airlines’ fleet has 60 aircraft to its name, according to airfleets.net data. Most of the operated jets are narrow-bodies, with four regional aircraft – Bombardier CRJ 900 (operated by an ACMI carrier, CityJet). Additionally, there are 16 wide-bodies flying with the airline’s colors, including one quad-engine Airbus A340. The fleet’s average age is 14.8 years.
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