Negotiators have today reached a deal for the rescue of Brussels Airlines after more than three months of tough negotiations. The Belgian government will provide a loan of €290 million ($333m) as long as the airline’s parent company Lufthansa can provide firm guarantees about the company’s future.
Belgium and Lufthansa to fund the rescue
As reported by VRT NWS today, negotiating teams from the Belgian government, Lufthansa, and Brussels Airlines have finally reached an agreement for the future of Brussels Airlines. The deal will be presented to the management of Lufthansa and will need to be given final approval by the Belgian government and the European Commission. As a shareholder in Lufthansa, the German government will also have to give its approval.
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The Belgian government will loan the airline €290m that must be repaid by mid-2026. Lufthansa, which owns Brussels Airlines, will provide €170m ($195m). €70m will be going towards restructuring the airline, while €100m will be used to strengthen the company’s capital.
Negotiations for Brussels Airlines were difficult
The lengthy negotiations have not always gone smoothly, and preparations had been made for non-agreement between the parties. From the beginning, the Belgian government made it clear that it would not give a blank check to the airline, which has been in German hands since 2016. Guarantees will be required before any financial support is provided.
Minister of Finance, Alexander De Croo said in parliament last week,
“There must be an absolute commitment to possible financing that we give. We are not naive. This is a foreign company with a Belgian activity. So we ask for guarantees. “
Two years ago, Lufthansa began to fully integrate Brussels Airlines into Eurowings, the low-cost subsidiary of the German company. They eventually shelved those plans, but it had created mistrust between the parties. As part of the rescue deal, Brussels Airlines will continue to exist as a brand.
The airline’s headquarters and decision making will remain in Brussels, and it will fly under a Belgian license. Lufthansa has also committed to developing Brussels Airport as a hub for Brussels Airlines.
Lufthansa will continue to invest in Brussels Airlines
Just last month, there were reports that Lufthansa was preparing to pull the plug on Brussels Airlines. The parent company was said to be resistant to Belgian state involvement and the rescue talks stalled. However, the rumors were dismissed by the airlines as pure speculation.
In May, the ailing airline announced that it would need to restructure at the cost of up to 1,000 jobs or 25% of the workforce. After weeks of talks between unions and management, an agreement was made to limit the layoffs as far as possible. It would instead result in around 300 to 350 job losses.
As a part of the latest rescue package, Lufthansa will have to continue to invest in Brussels Airlines. Agreements are in place to invest in personnel, and expand the fleet and the network, with particular focus on long-haul routes. Also, in line with Europe’s “Green Deal,” new planes will need to be more ecologically-friendly as the airline works toward climate neutrality.
Do you think the rescue package will keep Brussels Airlines in the skies in the long term? Post your comments below.