Lufthansa Group Slowly Chips Away at European Boundaries With Brussels Airlines Changes

Lufthansa, SN Brussels

Airline consolidation in Europe has gone very differently from how it’s gone here in the US. Unlike the true mergers we have here, Europeans have instead delicately thrown together several different airlines under one larger umbrella. The differences can likely be attributed to the fact that those dotted lines on maps in the US are just state boundaries. In Europe, they’re countries, and that means it gets really messy. Lufthansa Group has been putting its pieces together for years now. It owns, of course, Lufthansa. There’s also SWISS and Austrian as the other full service airlines. Then there’s Eurowings, this Frankenstein-esque monster which is a catch-all for a whole bunch of different pieces, including, eventually, the curious case of Brussels Airlines.

Brussels Airlines itself came together via a merger; one between SN Brussels (successor to the storied-yet-bankrupt Sabena) and Virgin Express. It started flying under its current name in 2007. By 2009, Lufthansa had taken a minority interest and the airline joined Star Alliance. At the end of 2016, Lufthansa opted to buy the rest of Brussels Airlines. But then… what to do with it?

Lufthansa liked Brussels for a couple reasons. One reason was Africa. Brussels may not be a great hub for much, yet despite having limited colonial ties, the city’s namesake airline has developed one heck of an African network. Lufthansa and SWISS don’t really penetrate much into sub-Saharan Africa, especially when compared with Air France/KLM. But Brussels? It sends its A330s to Luanda (Angola), Cotonou (Benin), Ouagadougou (Burkina Faso), Bujumbura (Burundi), Douala and Yaounde (Cameroon), Kinshasa (Congo), Banjul (Gambia), Accra (Ghana), Conakry (Guinea), Abidjan (Ivory Coast), Monrovia (Liberia), Kigali (Rwanda), Dakar (Senegal), Freetown (Sierra Leone), Lome (Togo), and Entebbe (Uganda).

I actually couldn’t believe there were that many sub-Saharan African destinations either, but that’s only part of the equation. The other piece is that Brussels Airlines has a relatively low cost base. That doesn’t mean it’s printing money, far from it. In the last 10 years, it has lost far more than it’s made. But 2015-2016 were the first years of consecutive profit with the latter coming despite the Brussels airport bombing occurring, so there is momentum here.

That’s why Lufthansa planned to put Brussels Airlines into Eurowings, the group’s low cost… blob. I’m not quite sure how to describe Eurowings, because it’s really just a mix of most of Lufthansa’s hopes and dreams in the low-cost world (excluding that goofy long-haul Jump experiment and the Turkish joint venture). Eurowings took over Germanwings flying, and has effectively become Lufthansa’s way of serving nearly everything that doesn’t touch the Frankfurt and Munich hubs. But Eurowings does increasingly touch Munich as well (even using SunExpress-operated widebodies on some routes), and it has grown beyond Germany. The airline absorbed some of airberlin’s remnants, and it is always looking for other airlines to bring into the fold. As for Brussels, it was planned to be a part of the group but to what extent wasn’t clear. It will soon operate some Eurowings-branded flying out of Germany on long-haul routes, but there was always a nagging feeling that it would be merged entirely someday.

It’s all rather confusing, to put it mildly. It sounds like Lufthansa really wants to roll Brussels Airlines into Eurowings, so why all the shenanigans? Presumably it’s because even in the European Union, cross-border mergers are a real challenge. There is still this lingering national pride that makes for a sticky political situation any time a homegrown company is under threat of disappearing.

This week, there’s been a fair bit of drama as Lufthansa moved to replace the CEO and CFO of Brussels Airlines. Locals were up in arms, even taking out an ad in a newspaper begging for Lufthansa to keep Brussels Belgian.

In the release announcing the change yesterday, Lufthansa clearly was trying to avoid land mines. The sub-head read:

Eurowings and Brussels Airlines shaping the European airline industry together. Brussels Airlines will remain a Belgian entity and Belgium’s home carrier and will continue to grow

That’s quite the tap dance there. The previous leadership seemed to want to keep a bit more distance between Brussels Airlines and the rest of the group. Sure, it was inevitable that the airline would be a part of Eurowings somehow, but it wasn’t just trying to operate as a low-fare carrier. It was something of a hybrid, All indications were that Lufthansa wanted tighter integration with Eurowings, and now new management is supposed to help make that happen.

What’s funny here is that closer integration still means Brussels Airlines will have a separate brand at this point, and it will remain based in Belgium. So this change is just another small step for European-kind. Maybe someday there will be a single brand, but then again, maybe not. It won’t matter all that much as long as everything behind the scenes is integrated. That’s what Lufthansa is likely trying to accomplish with this change at Brussels, but the locals will undoubtedly keep fighting every step of the way.

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7 comments on “Lufthansa Group Slowly Chips Away at European Boundaries With Brussels Airlines Changes

  1. The big question has to be whether or not the African network remains sustainable. It’s in a bad place, geographically, for European connections, requiring a backtrack for most destinations and, in addition to the network Turkish has built with the 737-900ER, IAG has made clear that it sees Africa as a big opportunity with A321 NEOs. Whether operated out of Barcelona by Vueling or Madrid by Iberia, they’ll have a big journey time advantage from most of Europe, and, I’d guess, lower costs. I’m sure TAP also has similar ambitions and if Ryanair expands its connecting product…

    1. Couldn’t LH run the African destinations out of FRA or MUC and just leave BRU as mostly O&D traffic?

      1. Bill – Well, there are a few issues there. Most notably, Frankfurt doesn’t have a lot of room. So if they wanted to do that, they wouldn’t really have a place to put all those airplanes without cutting back on existing service. I’m not sure if there are other strategic reasons, but the capacity issue is a big one.

  2. This is a perfect description: “Eurowings – just a mix of most of Lufthansa’s hopes and dreams in the low-cost world.” Spot on.

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