Earlier this week, Brussels Airlines posted a multi-million euro loss for the first half of 2020. On August 6th, the airline said that it had lost €182m ($214.5m) as a direct result of the pandemic and is now working on reducing costs further to improve its financial standing.
Brussels Airlines losses €182m in six months
Positive financial outlooks are somewhat of a rarity in the present climate. For carriers like Brussels Airlines, the pandemic is taking a toll on revenue while travel demand struggles to recover fully.
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Earlier this week, Brussels Airlines posted a loss of €182m ($215m) for the first half of 2020 and indicted the figure directly related to the coronavirus outbreak. It experienced a 63% reduction in revenue in comparison to the same period in 2019.
Between January and June 2020, the airline was able to generate €252m ($297), unlike the €684m ($806m) produced in the first half of 2019. Passenger revenue dropped by some 67%, and Brussels Airlines transported 1.59m in comparison to 4.86m the previous year.
Similarly, Available Seat Kilometers (ASK) fell by 64%. Between January and June 2019, Brussels Airlines’ ASK was 10.5m whereas this year it was 3.83m.
Brussels prioritizing cost reduction
Despite the losses, Brussels Airlines’ financials are not as low as we have seen from other airlines. That’s thanks to the airline’s ability somewhat to cushion the blow of an even more devastating impact. As the pandemic unfolded, Brussels Airlines responded with immediate cost-cutting.
It suspended all scheduled flights on March 21st and was able to reduce its operating cost by 39% which it said was,
“…primarily due to the volume-related decline and measures in the cost of materials and services.”
Reading through the airline’s recent press release, the sense of disappointment is palpable. Despite making substantial changes to drive down costs, it appears that Brussels Airlines was not able to protect itself as much as it had wanted to.
That said, there is hope for the airline in the coming months.
Emerging as a smaller airline
On July 21st, Brussels Airlines reached a deal to secure $333m in a funding loan from the Belgian government. On top of this, the airline is also the recipient of a $200m investment from its parent, the Lufthansa Group.
Brussels Airlines plans to use this money to reduce the size and cost of its operation going forward in line with the adjustments in travel demand. It will focus primarily on shrinking its operation cost. 30% of the Brussels Airlines fleet is expected to go. At present, it owns 51 aircraft in three variants: the Airbus A319, A320 and A330.
What’s more, the airline also plans to shrink its staff base. It will remove 1,000 employees from its books. As of June 30th, the carrier had 3,729 staff working for it. Its current focus is now to increase its competitiveness and profit outlook while air travel recovers. Part of this strategy will be to focus more heavily on its short-haul offering to bring a seamless travel experience across all Lufthansa Group airlines.
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