Brussels Airlines once again finds itself on the brink, with an uncertain future ahead and a questionable commitment from its Lufthansa overlords. Will Brussels Airlines face the same fate as Sabena?
Sabena was the national airline of Belgium between 1923 and 2001. Swissair took a 49% stake in 1995 and the airline briefly flourished before struggling again. Depressed traffic in the aftermath of the September 11, 2001 attacks plus financial abandonment by Swissair led to the carrier’s collapse.
From the rubble, SN Brussels Airlines was born, with became Brussels Airlines in 2007 after a merger with Virgin Express. But over the years, Brussels Airlines has also struggled. In 2009, Lufthansa acquired a 45% stake in the company and in 2017 took full control of the company via SN Airholding SA/NV, a Belgian holding company.
Like 9/11 hit Sabena, COVID-19 has hit Brussels Airlines even harder. Now Brussels finds itself in need of a financial lifeline to survive.
Brussels currently employees 4,200 people and plans to cut that workforce by about 25% while cutting its fleet by 30% to address weakened demand from COVID-19. Analysts like Wouter Dewulf a Transport Economist at the University of Antwerp, see five possible outcomes for Brussels Airlines:
- Lufthansa folds Brussels Airlines into Eurowings
- Lufthansa allows Brussels Airlines to go bankrupt
- Belgian government grants loan to Brussels Airlines
- Belgian government pour capital into Brussels Airlines in exchange for ownership
- Belgium nationalizes Brussels Airlines
A sixth option would be that Lufthansa sells Brussels Airlines, though no buyer comes to mind. But after a Belgian newspaper quoted an “insider” talking about how Lufthansa is considering bankrupting Brussels Airlines, speculation has mounted.
Reuters and other news agencies reported an emergency meeting on the future of Brussels Airlines was scheduled to take place yesterday in Brussels. But Brussels Airlines spokesperson denied an emergency meeting took place yesterday, telling The Brussels Times:
“We are, of course, in constant contact with our partners.But there are definitely no plans for a crisis meeting as such.”
Lufthansa also downplayed an emergency meeting and expressed hope that it could find an agreement with the Belgian government to secure €300 million with limited strings attached.
> Read More: Lufthansa Breathes New Life Into Brussels Airlines
What Kind of Bankruptcy Would Brussels Airlines Face?
Were Brussels Airlines to declare bankruptcy, it is not clear what type of bankruptcy it would encounter. The so-called Harmonisation Directive (.pdf) passed in June 2019 mandates that all EU member states have a mechanism similar to Chapter 11 Bankruptcy in the USA, in which a company or individual can restructure, not just liquidate. It is possible that Brussels Airlines can shed debt but still emerge.
CONCLUSION
Brussels Airlines once again finds itself on the brink. While most think the carrier will survive, it is anyone’s guess right now in what form that survival will look like.
> Read More: Brussels Airlines A330 Business Class Brussels to New York Review
> Read More: In Defense of Brussels Airlines
image: Brussels Airlines
In the early 80’s I flew for Metro International Airways, whose European hub was Brussels Zaventem Airport. (Billboards in Brussels and Paris cleverly read ‘Prenez le Metro pour New York’, while those in New York read ‘Take the Metro to Europe’).
Positioning of our pilots and cabin crews meant that we frequently deadheaded on SABENA, and we were always treated graciously by their ground staff and cabin crews. Once, aboard a SABENA 747 flight from Brussels to JFK, on which there were no First Class passengers, the purser brought our entire deadheading crew from Business Class (which at the time occupied ‘E’ zone, at the very back of the aircraft) to the upper deck lounge, where we were invited to spend the entire flight and offered frequent refills of Champagne.
SABENA was a classy operation, but one that never made a profit in its entire history. The Belgian government underwrote the airline because of the money its customers brought into the country.
Sadly, Brussels Airlines – which I’ve flown perhaps a dozen times – is an efficient, but characterless LCC, with employees who for the most part seem to just be going through the motions. The shadow of glamorous SABENA – Belgian World Airlines – hangs over the entire, considerably diminished operation.
Great memories!
The trouble with Brussels Airlines is that it has a very small catchment area, is surrounded on all sides by much stronger competitors and has little unique offering meaning a few places in West Africa to which Belgium has colonial connections.
They have positioned themselves as a full service airline charging those fares while offering low cost service.
They should probably disappear and they won’t be missed.
I agree with Phil – I don’t see a way for Brussels Airlines to thrive. There is no way Brussels can become a major international hub like FRA or CDG, nor is it feasible for them to become a focus city for LCC flights given the intense competition on the European continent. Best bet – operate a reliable and cost-efficient shuttle service to FRA or MUC to capitalize on its relationship to Star Allaince and the Lufthansa Group; supplement with short-haul flights within Europe to leisure and business destinations.
If Brussels Airlines goes under, would Air Belgium become the flag carrier? lol
That’s a funny thought!