Contributor - Europe

Cathy Buyck

Brussels Airlines aims to reduce costs by 8&nbsp;to 12 percent to achieve an operating margin (EBIT) of 8 percent in 2022. CEO Christina Foester said that's the level of profitability the company needs to finance its own investments.&nbsp;“We need a margin of 8 percent to self-finance our current and planned investments in fleet renewal, network expansion, and people development” according to&nbsp;an internal communication from management to staff that was leaked by two Belgian newspapers, L'Echo and De Tijd, on Thursday.&nbsp;Although the memo does not mention any concrete measures, such as possible job losses, it&nbsp;points out that the cost savings may be even higher depending the inflation or falling yields. Also, rising fuel prices may require additional measures.

 


Foester's 8 percent EBIT margin target would bring Brussels Airlines in line with the Lufthansa target—of between 7 percent and 9 percent in 2019—for its network airlines unit.&nbsp;Based on IATA data, airlines in Europe earned an average operating margin of 6.2 percent last year.

 


According to the memo, only one seat per flight, of an average of 154 seats&nbsp;per aircraft, yields a profit. Twenty-seven seats are unsold while proceeds from the sale of the 126 remaining seats cover expenses—30 seats cover fuel; 20 are for wages,&nbsp;18 for maintenance, 15 for navigation and landing fees, 10 each for leasing and baggage handling, nine each for catering food and advertising, and five to cover other expenses.

 


Brussels Airlines spokeswoman Kim Daenen confirmed to AIN the existence of the internal memo and noted it was no secret that the airline's profitability was not good, and margins need to improve to secure the company’s future. The “Reboot” turnaround plan, she noted, is part of a wider review of the company’s organization and set-up following Lufthansa’s decision in June <a href="https://www.ainonline.com/aviation-news/air-transport/2019-06-24/lufthansa-reveals-major-shake-eurowings">to drop plans to integrate Brussels Airlines into the group’s low-cost carrier, Eurowings</a>. The new strategy calls for a “closer alignment” of the Belgian carrier with the group’s network airlines: Lufthansa, Swiss, and Austrian Airlines. “As communicated by Lufthansa in June, we will release further details in the third quarter,” Daenen said.

 


Speaking on the sidelines of an Airlines for Europe (A4E) event in Brussels earlier this summer, Foester told AIN that Brussels Airlines reported a profit last year, but she said the profit “was not even enough to buy a spare engine.” The carrier’s fleet renewal in recent years has been fully paid for by Lufthansa, a situation “which is, of course, ultimately unsustainable,” she said, adding that all subsidiaries in the German group have “to earn their investments.”

 


Brussels Airlines posted a €12.8 million ($14.14 million) profit in 2018, owing to an insurance pay-out for the terrorist attacks at Brussels Airport in March 2016.

News and developments about airplanes, helicopters and unmanned air vehicles used in all varieties of operations, including airlines, military, business, commercial, general aviation and private.

Brussels Airlines Prepares 'Reboot' Restructuring Program

The Belgian subsidiary of Lufthansa group targets an 8 percent operating profit margin by 2022.

2024 Corporate Aviation Leadership Summit

Charlotte Bailey

News and issues about aviation maintenance, repair and overhaul (MRO), covering all segments of the aviation industry; and modifications for aircraft and engines. Subjects include product support of aircraft, engines and avionics, MRO company mergers, acquisitions, announcements and personnel, Airworthiness Directives, Supplemental Type Certificate approvals and other topics.

News and information on safety procedures and concerns.

News and issues relating to the aerospace industry that are related to the science, engineering and business of flight in space involving civil, industrial and military applications, and similar topics related to flight in the atmosphere of the Earth that are not covered more directly by other AINonline subject channels. In other words, both astronautical and aeronautical subjects, except for those aeronautical topics that are specifically covered elsewhere on this website.

ATR 72 aircraft performs pre-modification flight in Toulouse

Kepplair Starts Converting ATR 72 Into Water Bombers

Curt Epstein

News and issues relating to business, corporate and private aviation, primarily regarding turbine-engine-powered airplanes and helicopters. Subjects include aircraft, engines, maintenance, operations, personnel, acquisitions, accidents, safety, security, and training.

Only the piston aircraft segment posted a decline

GAMA: Bizjets, T-props, and Rotorcraft Deliveries Up

Hanneke Weitering

Two captains held the prototype 33 feet above the water for 30 seconds

Regent Flies Electric Seaglider with Crew for First Time

News about bills, laws, regulations and other governmental decisions affecting aviation and aerospace. Topics include FAA re-authorizations, taxes on fuel and aviation activities, environmental legislation, ICAO decisions, governmental mediation of labor conflicts and World Trade Organization disputes and decisions.

Icing approval would open year-round service to northern communities

Horizon Begins Icing Tests for Cavorite X7 eVTOL

Kerry Lynch

Deal to close this year

Bombardier To Grow Manufacturing Capacity with MHICA Buy

David Donald

Essential news and analysis on the defense aerospace business. Your trusted source for new and ongoing programs and requirements in military aircraft (manned and unmanned), engines, avionics, weapons and associated systems, including ground-based air defense.

The two NATO allies will purchase seven of the tanker/transport aircraft

Spain and Poland Agree to Buy A330MRTT Tanker Transports

News and developments about aircraft engines, including turbofan, turboprop, turboshaft and piston.

News and issues relating to international air transport and cargo carriers, national airlines and regional airlines, including aircraft, engines, personnel, acquisitions, accidents, safety, security and training.

GE Aerospace has tested the GE9X, Leap 1A, Leap 1B, and more with the 747.

GE Aerospace Flies Boeing 747 To Test New Engine Tech

Charles Alcock

News about commercial airlines, including regulations, aircraft orders, safety, acquisitions, and mergers.

News about environmental issues relating to aircraft operations, including noise issues, emissisions, and regulations. See Fuel for biofuel.

More In Aircraft