Brussels Airlines reported a loss of EUR 293 million in the fiscal year 2020, as was to be expected given the Covid-19 situation. But still they are offering some cheaper Flights from London to Brussels flights.
The strict cost-saving and cash-management methods limit losses and cash-out.
Operating costs decreased by 53% and revenue fell 72% to 414 million euros, primarily as a result of lower production.
The number of passengers fell to 2.4 million, a 77% reduction.
Plan for transformation In order to combat the effects of the crisis and lay the groundwork for profitability by 2023, the reboot process was hastened and increased.
While 2021 is expected to gradually increase capacity, it will still be a difficult year. Summertime is crucial.
2020 was a historic year for the aviation sector, and Brussels Airlines was no exception. Brussels Airlines was off to a strong start in January and February of 2020, with a reorganisation plan already in place, when demand unexpectedly started to decline quickly as the Coronavirus made its way to Europe. The decision by Brussels Airlines to ground its fleet for a period of 12 weeks at the end of March resulted in a global lockdown that lasted into the second quarter, with only cargo and repatriation flights continuing to operate. In order to ensure cash positive operations and protect its cash position from further deterioration, the airline started a limited flying schedule with extremely tight steering and very flexible capacity management on June 15. Since the relaunch in June, Brussels Airlines has been able to maintain cash-positive operations, which means that all cash-outs for flights are covered by the corresponding revenues. However, due to the current low level of flying, fixed costs like aircraft loans, labour costs, rent, etc. still exist.
The European leisure network and the African network both experienced a hopeful revival of traffic in the summer of 2020. After the summer, demand went down once again because to a second wave of Covid-19. The capacity further declined in October and November, reaching a level of -78% compared to the same month in 2019, due to the stringent travel constraints in place throughout the world and the need to meet the cash-positive flying target. The airline moved its focus to its African portfolio together with its European feeder flights for the remainder of the winter season as demand remained significantly more stable on the African segment than on the European sector. On both the African network and the European leisure segment, demand peaked around the end-of-year holiday period. The crisis had a significant influence on the entire year’s capacity, with 74% fewer flights than the previous year.
Due to the Coronavirus outbreak, Brussels Airlines’ revenue decreased by 72% to EUR 414 million (from EUR 1,473 million the previous year). At EUR 456 million, operating revenue was 71% lower than the prior year’s level (previous year: EUR 1,555 million).
In the 2020 fiscal year, Brussels Airlines’ Adjusted EBIT decreased to EUR -293 million (previous year: EUR -27 million – IFRS standard). The Adjusted EBIT margin dropped from -1.8% to -70.8%, a decline of 69.0 percentage points. EBIT fell to -332 million euros (previous year: EUR -32 million). The discrepancy with Adjusted EBIT was primarily brought on by impairment losses on aircraft usage rights totaling EUR 33 million.
Brussels Airlines handled 2.4 million fewer passengers in the reporting year than the year before, a 77% decrease (previous year: 10.3 million). Sales dropped by 75% and capacity had to be decreased by 71%. The seat load factor decreased 13.2 percentage points from the prior year (81.5%) to 68.3%. After taking into account the effects of foreign exchange, average yields increased by 1.0%. Revenue from traffic dropped by 72% to EUR 384 million (previous year: EUR 1,386 million).
Peter Gerber has been Brussels Airlines’ new CEO as of March 1. Peter Gerber serves as the Chief Representative for European Affairs for the Lufthansa Group in addition to his duties as CEO and CCO of Brussels Airlines. His main concerns will be maintaining the airline’s continuity, carrying out the Reboot Plus strategy to build a successful future for the business, and guiding the airline through the crisis sustainably.
The biggest catastrophe in aviation history hit Brussels Airlines and the entire industry in 2020. I want to express my gratitude to our consumers, partners, and staff for their assistance during this trying period. For everyone at Brussels Airlines, the rapidly evolving travel regulations, cleanliness standards, and historically low demand and production levels posed significant obstacles. Since the start of the crisis, our staff have exhibited remarkable fortitude, especially during the prolonged period of widespread temporary layoffs at the business. To keep Brussels Airlines profitable, I want to encourage the company’s enthusiastic culture.
Thanks to the financial support of Lufthansa, Brussels Airlines intensified and accelerated its Reboot transformation plan, cutting its fleet by 25% and its workforce by 20% in order to respond to the crisis and the expectation of a slow recovery of demand as well as to lay the groundwork for a resilient and sustainable company after the crisis (EUR 170 million cash injection, of which 70 million for the restructuring). The use rights of two Airbus A330-200s and eight Airbus A319s were written off as part of the fleet adjustment. The airline was able to keep 80% of its workers on board thanks to a deal with its social partners. Forced terminations were reduced to a minimum thanks to various strategies for willingly leaving the organisation. All agreements to lower the fleet have been obtained, and 18% of the 20% personnel reduction has already been implemented. Additionally, all employee groups participated in the negotiations for new collective labour agreements. Additionally, the Belgian government provided a government loan of EUR 290 million to overcome the issue, from which Brussels Airlines withdrew the first portion in December and the second portion in February.
The Reboot Plus initiative concentrated on restructuring in 2020. The second phase of the strategy, or the period of enhancement, begins in 2021. The transformation plan, in fact, places a greater emphasis on altering how we work than just lowering costs. It also calls for strategic investments in projects like digitization, such as a new booking platform, digitization of ground operations, etc. We also wish to continue more than ever our efforts at the level of sustainability, such as fleet renewal, CO2 reduction, and waste reduction, while we move towards a successful future.
With a heavy emphasis on leisure and its African network, Brussels Airlines currently seeks to progressively raise its capacity toward the summer, solidifying its status as the national carrier of Belgium. Flexibility is still essential, though, because the crisis continues to be highly unexpected and because travel restrictions have fundamentally altered consumers’ booking habits, leading them to make last-minute reservations. The airline intends to run almost twice as many flights over the entire year as it did in 2020.
We are optimistic that 2021 will witness a gradual upward trend in demand once the vaccination programme advances on a larger scale and travel restrictions are gradually lifted, even though we have a limited view on the demand recovery due to the market’s very last-minute booking behaviour during the crisis. For the entire aviation and tourism business to recover, a reliable testing and immunisation strategy is still crucial. Therefore, it is crucial that the Belgian government incorporates the aviation sector into its plan for economic revival. Giving our staff perspective is crucial to us. The summer will prove to be crucial, and we will need to exercise caution because this year will continue to be quite challenging. To fulfil our company goal and build a prosperous future, we will keep putting our attention toward our very stringent cash and cost control, which includes cash-positive flights, temporary unemployment, and very restricted cash-outs.
