Lufthansa yesterday announced that Brussels Airlines, an airline it has owned since 2016, would send its Belgian CEO and CFO packing by March 31, 2018, and the airline would be lead by German who is currently holding the chief commercial officer title.
Brussels Airline is part of Eurowings on Lufthansa’s organization chart and the airline would rather have it better integrated with the EW point to point model rather than using Brussels as a hub.
Here’s an excertp from the Financial Times (access their piece here):
The demise of Sabena, with the loss of 10,000 jobs, was a heavy blow to Belgium’s economy and national pride, leading to years of political recriminations and corporate litigation over whether its downfall was preventable. It also means the country is acutely sensitive to any strategic shift at Brussels Airlines, which has some 3,500 employees and operates 300 flights daily, many of them out of Zaventem.
In its most recent annual accounts, published in March 2017, the company recorded an operating profit of €20.4m and a net profit of €15m. It said at the time that revenues had been hit by the March 2016 terrorist attacks in Brussels, which included a double suicide bombing at Zaventem. It estimated that the direct financial impact of the attacks, which led to a temporary shutdown of the entire airport, was more than €100m.
And here’s from Reuters (access here):
Brussels Airlines plans to cut its costs by between 10 and 15 percent in the coming years to remain competitive with low-cost rivals, its Chief Executive Bernard Gustin told Belgian daily De Tijd in December.
Lufthansa took full control of Brussels Airlines in late 2016, expanding its network in Africa, where the Belgian unit flies to many sub-Saharan destinations. Currently, Brussels Airlines has 44 planes, 10 of which are long-haul jets.
Brussels Airlines is rather small airline and they already operate LCC type model, although are part of Star Alliance. The new leadership is apparently seeking further cost reductions.
Having more flights flown by Eurowings just means that there won’t be any benefits for Star Alliance Gold members unless there are reciprocal benefits negotiated outside of the alliance such as those between Lufthansa and United.