The extremely negative impact of the coronavirus crisis on the company’s financials and the ongoing very low demand for air travel urge Brussels Airlines to take substantial and indispensable measures to guarantee the survival of the company.
To grant a future for Brussels Airlines, the carrier needs to structurally reduce its costs to a competitive level. In addition, to overcome the present unprecedented crisis, the company asks for support from both, its shareholder Lufthansa and the Belgian government. Within its turnaround plan, Brussels Airlines is structurally tackling its cost structure and optimizes its network by cutting marginally profitable and unprofitable routes, resulting in a fleet reduction of 30%.
The overall size of the company, and as a consequence of its workforce, will be 25% smaller. As a socially responsible employer, Brussels Airlines will work together with its social partners to reduce the number of forced dismissals to an absolute minimum. The company is confident that with its turnaround plan it will be able to safeguard 75% of its employment and grow again in a profitable way as soon as the demand for air travel has recovered to a new normal, which is expected as of 2023. Achieving structural profitability is essential to secure the company’s future and new investments, while also being able to protect itself against possible new headwinds.
Across the world, the Coronavirus crisis is putting unprecedented pressure on airlines with a total revenue impact expected to exceed €240 billion. Incoming bookings dropped by more than 60% and cancellations reached record heights. As a consequence, many airlines across Europe and beyond are obliged to go for massive job cuts. Brussels Airlines is unfortunately not spared by the crisis. Since the temporary suspension of all its flights (starting on March 21st), the company loses one million euro a day due to revenue losses and costs that cannot not be avoided, such as aircraft leasing and maintenance costs.
On February 28th the company announced for the first time an impact on the demand for air travel. The situation deteriorated week by week, with days where the number of cancellations exceeded the number of incoming bookings. Still today, demand is very low and according to analysts and experts, demand for air travel in 2021 is expected to be 25% lower than before the crisis and the industry can only count on a demand back at 2019-levels by earliest 2023.