Lufthansa Closes in on Brussels Airlines

The official confirmation is still pending, although meanwhile it's an open secret that LH intends to fully integrate Brussels Airlines. Selling their 45 percent shareholding in SN or prolonging the call option for another year are other viable solutions, but both highly unlikely to get an okay from the board. 
As things stand, the integration strategy is favoured within LH’s top level, as influential LH managers confirmed to CargoForwarder Global. If so, the Belgian company would be the fourth carrier fully belonging to the cranes portfolio of airlines, together with Swiss, Austrian and Eurowings/Germanwings. The integration initiative is further propelled by the 2015 figures presented by Brussels Airlines, posting a profit of 41 million euros after continuous losses in the years before.
However, the positive annual figures were hardly out when Brussels Zaventem Airport was hit by Islamic terrorists, killing 11 and injuring over 100 people, devastating large parts of the departure hall. Meanwhile air traffic gets back to normal but home carrier Brussels Airlines that had to divert its entire air traffic to Frankfurt and Zurich for many days suffered operationally and financially most under the attack.
 
Africa gains attractiveness for air traffic
The question is why LH’s top management obviously intends spending another sum capped at 185 million euros to place themselves in the drivers seats of SN.
It’s mainly their strong African network that appeals to LH, which would boost the entire group’s business and enhance it’s market influence particularly in the western sub-Saharan parts of the continent, mainly the Francophone countries like Senegal, the Republic of Congo or Cameroun. Connecting the European capital Brussels seamlessly with cities like Kinshasa, Lomé, Dakar or Douala is of great commercial and strategic interest for the group that is increasingly challenged by the Gulf carriers and Turkish Airlines that expand their African networks almost at the speed of light.

Hybrid solution is thinkable
“Before discussing any consequences resulting from a feasible integration of SN into LH we first need to take the basic decision to acquire the remaining 55 percent in Brussels Airlines’ stakes,” emphasized a Lufthansa representative. He added to this that the existing cooperation between both airlines is already very close seen in joint fleet purchasing activities and steps to coordinate the carrier’s networks.
Asked about the branding situation, he indicated two basic options: either Brussels Airlines will continue flying under their own name as do Lufthansa’s daughters Swiss and Austrian or they become part of Eurowings, LH’s low cost daughter.
Thinkable is also a hybrid solution, shifting SN’s entire regional European traffic to Eurowings for cost reasons and operate all long-haul routes under its current Brussels Airlines brand as done since its market entry in 2007. 
 
SN Cargo’s future business model remains speculative
As to the fate of SN’s cargo business, much is possible should LH exercise the call option as expected by insiders. It could be left untouched and continue to be mostly managed by collaborating general sales agents, predominantly the Air Logistics Group in Europe or Kales in the USA.
An alternative model would be integrating sales into Lufthansa Cargo’s own organization, as done in the case of Austrian and – only weeks ago – also Eurowings. The last mentioned choice might become very likely in case SN’s single aisle fleet should amalgamate with Eurowings.
By the end of Q2 we all should know more.

Heiner Siegmund