Brussels Airlines’ financial results will be severely impacted by the pandemic as the new CEO takes over the helm
- As expected due to the Covid 19 crisis, Brussels Airlines posted a loss of 293 million euros in the 2020 financial year.
- Losses and payouts are limited by stringent cost saving and cash management measures.
- Revenue decreased 72% to EUR 414 million and operating expenses decreased 53%, mainly due to lower production.
- The number of passengers fell by 77% to 2.4 million.
- The reboot transformation plan was intensified and accelerated in order to counteract the effects of the crisis and to lay the foundation for profitability by 2023.
- 2021 provides for a gradual increase in capacity, but it remains a challenging year. The summer season is essential.
2020 was an unprecedented year for the aviation industry, including Brussels Airlines. With a restructuring plan already in place in early 2020, Brussels Airlines got off to a good start in January and February when demand suddenly began to crumble quickly as the coronavirus found its way to Europe. The second quarter was marked by a worldwide lockdown when Brussels Airlines decided at the end of March to station its fleet for 12 weeks and only operate repatriation and cargo flights. On June 15, the airline resumed a reduced flight schedule with very tight control and very flexible capacity management in order to guarantee a positive cash flow and to protect its liquidity position from further deterioration. Since the restart in June, Brussels Airlines has managed to achieve cash-positive operations every week, ie to cover all flight-related payouts with corresponding income. Nevertheless, fixed costs such as aircraft loans, personnel costs, rent etc. remain and are not covered by the current low flight level.
The summer of 2020 showed a promising resumption of traffic with strong demand on the European leisure network as well as on the African network. However, the second Covid-19 wave after the summer slowed demand again. Due to the restrictive travel regulations worldwide and in order to reach the cash-positive flight destination, the capacity decreased further in October and November and reached a level of -78% compared to the same period in 2019. As the demand on the Africa segment than on the European sector the airline shifted its focus to its Africa portfolio in combination with its European feeder flights for the rest of the winter season. Towards the end of the holiday season, another peak in demand was recorded in the European leisure segment and in the African network. The total annual capacity was severely affected by the crisis with 74% fewer flights compared to the previous year.
As a result of the coronavirus crisis, Brussels Airlines’ revenue fell by 72% to EUR 414 million (previous year: EUR 1,473 million). At EUR 456 million, operating income was 71% below the previous year’s level (previous year: EUR 1,555 million).
Brussels Airlines’ adjusted EBIT fell to EUR -293 million in the 2020 financial year (previous year: EUR -27 million – IFRS standard). The adjusted EBIT margin decreased by 69.0 percentage points to -70.8% (previous year: -1.8%). EBIT decreased to EUR -332 million (previous year: EUR -32 million). The difference to the adjusted EBIT results mainly from impairments on rights of use to aircraft amounting to EUR 33 million.
With 2.4 million passengers, Brussels Airlines carried 77% fewer passengers in the reporting year than in the previous year (previous year: 10.3 million). Capacity had to be reduced by 71% and sales by 75%. At 68.3%, the seat load factor was 13.2 percentage points lower than in the previous year (81.5%). The currency-neutral average return increased 1.0%. Traffic revenue fell by 72% to EUR 384 million (previous year: EUR 1,386 million).
Since March 1st, Peter Gerber has been the new CEO of Brussels Airlines. In addition to his role as CEO and CCO of Brussels Airlines, Peter Gerber also acts as Chief Representative for European Affairs of the Lufthansa Group. His focus will be on ensuring the airline’s continuity, continuing to implement the Reboot Plus plan in order to create a profitable future for the company and to steer the airline through the crisis on a sustainable basis.
“In 2020 Brussels Airlines and the entire aviation industry faced the greatest crisis in their history. I would like to thank everyone involved for their support during this difficult time: employees, partners and our customers. Rapidly changing travel restrictions and hygiene measures, as well as unprecedented declines in demand and production, presented all of Brussels Airlines with major challenges. Since the beginning of the crisis, our employees have shown an incredible resilience, even during the large-scale temporary unemployment in the company that continues to this day. I intend to nurture the passionate spirit at Brussels Airlines in order to keep the company profitable. “
Peter Gerber, CEO Brussels Airlines
Reboot Plus lays the foundation for a profitable future
In order to respond to the crisis and the expectation of a slow recovery in demand and to lay the foundation for a resilient and sustainable company after the crisis, Brussels Airlines has intensified and accelerated its reboot transformation plan and increased its fleet by 25. reduced% and the workforce by 20% thanks to financial support from Lufthansa (EUR 170 million in cash, of which 70 million for the restructuring). As part of the fleet adjustment, the rights of use of two Airbus A330-200s and eight Airbus A319s were written off. Thanks to an agreement with its social partners, the airline was able to keep 80% of its workforce on board. Alternative measures for voluntary departure from the company have reduced forced redundancies to a minimum. 18% of the 20% downsizing is in effect today and all agreements to reduce the fleet have been made. In addition, new collective agreements were negotiated with all employee groups. In addition, a government loan of EUR 290 million was granted by the Belgian government to deal with the crisis, from which Brussels Airlines withdrew the first tranche in December and a second in February.
“In 2020, the focus of the Reboot Plus plan was on restructuring. The second phase of the plan, the improvement phase, will begin in 2021. In fact, the transformation plan is not only focused on reducing costs, but also on changing the way we work and on strategic investments such as digitization projects – e. B. new booking platform, digitization in ground operations, … As part of our transformation into a profitable future, we want to continue our sustainability efforts more than ever, such as fleet rejuvenation, CO2 Reduction and waste reduction. “
Peter Gerber, CEO Brussels Airlines
Outlook for 2021
Brussels Airlines is currently planning to gradually increase its capacities towards the summer, thereby strengthening its position as Belgium’s home airline with a strong focus on leisure and Africa networks. Flexibility remains key, however, as the crisis continues to be very unpredictable and travel restrictions have fundamentally changed customer booking behavior and have shifted towards last-minute bookings. For the full year, the airline plans to almost double capacity by 2020.
“Although we have a limited view of demand recovery due to the short-term booking behavior of the market during the crisis, we hope that 2021 will show a gradually positive development in demand as soon as the vaccination program advances on a larger scale and travel restrictions are gradually lifted. A reliable testing and vaccination strategy remains essential for the entire aviation and tourism industry to recover. It is therefore of the utmost importance that the Belgian government takes the aviation industry into account in its plan to revitalize the economy. It is important to us to offer our employees prospects. The summer season will prove to be very important and we remain cautious as this year will remain very difficult. We will continue to focus on our very strict cash and expense management, including cash positive flying, temporary unemployment and very limited payouts, as well as implementing our Reboot Plus plan to meet our business plan and create a profitable future. “
Nina Öwerdieck, CFO Brussels Airlines