Brussels Airlines sees now as a ‘good time to reboot’
Thursday, 07 November 2019
ClaimCompass ranked Brussels Airlines one of the least punctual in Europe. Credit: Wikimedia Commons
Brussels Airlines feels the time is right to reboot its operations and start anew, the company has announced.
“It’s a good time to reboot,” said Financial Director Dieter Vranckx, referring to the airline’s plan for the future, dubbed Reboot, which aims to increase its profit margin to 8% by 2022, up from almost nothing this year.
To achieve this, Director Cristina Foerster says, the airline needs to set its sights on profitability, particularly in the difficult context of air travel today.
The 8% profitability margin is indispensable if Brussels Airlines is to be able to cover its costs independently. Only after that threshold is reached will it be able to think once more about growth, the company’s management says.
That 8% is not a random figure, Foerster stresses. It’s an “industrial standard” that a company has to meet to cover its costs, whether in terms of renewing its fleet, or investing in IT and staff, she says, pointing to “comparable” businesses such as Aer Lingus and Finnair, which have come up with the same figure.
“In terms of earnings, Brussels Airlines is managing rather well, but on the other hand, costs are much higher than elsewhere,” she notes.
To attain the 8% target, which the company has never been able to do since its creation, it needs to reduce costs, structurally, by €160 million by 2022, whereas it has barely managed to make a profit in the past few years, and will close 2019 on a loss. Its expenses, especially staff costs, continue to rise. Furthermore, the Thomas Cook travel agency, most of whose passengers Brussels Airlines transported, went bankrupt this year. This represented a loss of €12 million for the company.
It is thus a good time to reboot and start afresh, says Financial Director Dieter Vranckx. The company needs to simplify the way it works and jettison some things inherited from the past. The current network of destinations will also need to be assessed, he adds.
“We shall remain a strong company on the Belgian market, for both vacation travel and business travel,” says Foerster, adding that Brussels Airlines will continue its long-haul flights to Africa and North America.
While some changes are possible here and there, the core of the network will not change, she says.