Brussels Airlines have set a target to reduce costs by 8 to 12 percent by 2022. The Belgium based carrier seeks to use the money saved to invest in the development of the business.
AIN Online reports on an internal memo that was leaked by newspapers L’Echo and De Tijd. The document states that on average the airline only makes a profit on one seat per flight. On a general flight of 154 seats, 27 seats remain unsold and the rest of the 126 cover basic expenses. These costs include wages, maintenance, baggage handling, food, marketing, fuel, leasing and fees.
The memo holds a statement from Christina Foester, the Brussels Airlines CEO. Foester stated that the reductions in costs will enable the business to spend money on expansion projects.
“We need a margin of 8 percent to self-finance our current and planned investments in fleet renewal, network expansion, and people development,” Foester stated in the memo.
The document does not give any information on particular cost-cutting measures such as redundancies or restructuring. However, it suggests the percentage of costs cut may be even higher, depending on fuel prices and inflation.
Brussels Airlines spokeswoman, Kim Daenen, confirmed to AIN that the document is genuine. She also shared that profit margins need to improve to secure the future of the company.
Daenen claims that this plan is part of wider project to review the carrier’s organization following their decision to drop its integration project. Earlier this summer, the airline’s parent company, Lufthansa changed their mind on plans to integrate Brussels Airline’s into Eurowings.
Simple Flying also reached out to Daenen, who summarised the group’s plans.
“On 24 June, Lufthansa and Brussels Airlines announced that Brussels Airlines would no longer be integrated in Eurowings, but that it would move closer to the LHG network airlines,” Daenen said.
“On that same day we also announced that Brussels Airlines would work on a turnaround plan in Q32019 to realign the company and bring it to a higher level, as the profitability is not good enough.
“This is what we are currently working on. We will communicate towards the end of the year about our concrete plans, no decisions have been taken so far.”
Lufthansa originally planned to turn Brussels Airlines into the long-haul carrier of the German airline. The Belgian capital was going to be the hub for this project, serving Lufthansa’s European growth strategy. Brussels airport was set to be the base for Lufthansa to expand into Dutch- and French-speaking regions.
However, Eurowings decided to close many of its bases in order to focus on short-haul flights on their Airbus A320 airliners. The Executive Board of Deutsche Lufthansa AG shared their turnaround plan to investors and analysts at its Capital Markets Day, saying in its press release,
“The planned actions should sustainably enhance Lufthansa Group’s value creation. A key element is a comprehensive set of measures to turn around Eurowings, which should be returned to profit as swiftly as possible and sustainably generate value for shareholders.”
Despite the cancellation of the integration, Brussels and Eurowings have been closely linked under the umbrella of Lufthansa. Recently, a Brussels Airlines Airbus A330 was still painted in Eurowings livery when it had to return to Brussels. The aircraft had to return to its departing airport after 9 hours in the air due to a paperwork error.
Last week, Lufthansa announced an alternative measure that may help with the cost of biofuel in the form of Compensaid. This is a sustainability project that will allow passengers on all airlines to offset the carbon emissions of their flight. The tool will enable customers to buy sustainable fuel for their journey.