Brussels Airlines faces massive spending cuts

Brussels Airlines faces massive spending cuts
© Brussels Airlines

If Brussels Airlines could be represented by an average aircraft of 154 seats, 153 of those seats would represent costs, with only one counting towards profits. That’s the striking example of the company’s finances, contained in an internal communication to employees, which was leaked to De Tijd and picked up by Belga.

Brussels Airlines made a profit of €12.8 million in 2018, according to the latest annual report, on a passenger total up 10% to 10.03 million. However, that included a 17 million euro settlement reached with insurance companies for the damage suffered by the airline as a result of the terrorist attacks of March 2016.

CEO Christina Foerster (photo) makes it clear in the memo that profits need to be higher. Owner Lufthansa has cut the airline semi-adrift, allowing it to steer its own course, with the understanding that bail-outs will not be on the agenda should things turn out badly.

In order to raise margins, Foerster is insisting on a cost-cutting exercise to cut expenses by 8-12%. “We require a margin of 8% to finance for ourselves our existing and planned investments in fleet renewal, network expansion, and people development,” the memo says. In the past, fleet renewal was financed by Lufthansa, but that is no longer the case.

The memo includes no concrete measures, such as job losses, but warns that the 8% figure is a minimum, and the real cost-cutting could be tougher still. Seat prices are likely to remain stable or even fall slightly, the airline warns, while inflation and indexation of pay and pensions will require a further tightening of belts.

Alan Hope

The Brussels Times

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