2024-03-07 11:42:00
Brussels Airlines was faced with two strikes in January and February: one by pilots and the other by part of the cabin crew. Actions which cost the company 4 million euros, Nina Öwerdieck, its financial director, explained on Thursday.
The union demands were the same each time: an increase in wages and better working time arrangements. Staff have indeed made concessions during the coronavirus crisis. But now he wants a piece of the pie as the airline returns to better financial health. It returned to profit in 2023, following five years of losses. Operating profit reached a record figure of 53 million euros.
Unions and management, however, are not currently on the same wavelength. “Everyone has explained their position and we are very far from each other,” Nina Öwerdieck conceded on Thursday.
The offer submitted by management to the staff is a limit that the company cannot exceed, insisted CEO Dorothea von Boxberg. The company is offering an average increase in purchasing power of 6% for its approximately 3,400 staff members.
The financial situation remains fragile, management explained. “We must ensure that we remain a viable company, and not lose everything once more following barely a year of profits,” underlined the boss of the company. The profit margin (3.4%) does not (yet) reach the targeted level of 8%.”
Brussels Airlines will not change its position, even under the threat of strikes, it warned. “Even if there are other strikes, we will not go any further,” she said.
Brussels Airlines only makes a profit on one row of seats per plane
Brussels Airlines currently only makes a profit on one row of seats per plane, where only one seat was profitable in 2019, before the coronavirus pandemic. “That’s very good, but it can also easily disappear once more,” Nina Öwerdieck stressed on Thursday, commenting on the company’s annual financial results.
To illustrate her point, the CFO of Brussels Airlines broke down an A320 plane into seats (27 rows of six seats). The entire device represents the turnover, from which all costs are then deducted.
Kerosene alone takes up a quarter of the costs, or seven rows on the plane. Added to this are personnel costs (four rows), handling and air traffic control costs (four rows), expenses linked to the rental and maintenance of aircraft (four rows), etc. The seats that remain empty represent four rows, which therefore bring nothing to the company. Brussels Airlines had an average occupancy rate of 82.5% in 2023.
In the end, only the last row of seats remains profitable, with an average profit of 6 euros per passenger. This is therefore a clear improvement compared to 2019, where only one seat was profitable, recognizes Nina Öwerdieck. But “imagine how fragile this benefit is,” she added. “All it takes is for a few people to stop booking or for costs to increase for the benefit to disappear quickly.”
For the manager, the financial situation of Brussels Airlines must therefore continue to improve. She recalled that between 2020 and 2022, the carrier had accumulated 572 million euros in losses. “I am very proud of the profit we have made, the first in five years, but we are not yet out of the woods,” she insisted.
In 2020, in the midst of the Covid crisis, the company separated a quarter of its staff, or around 1,000 people. “We have reduced our workforce significantly and are back on a growth path.”
The airline is ultimately aiming for an operating profit margin of 8%, a level at which it can sustainably finance all investments and therefore be structurally sound. In 2023, this margin was 3.4%. How to achieve this? “We have to grow, but cautiously,” replied Nina Öwerdieck. “With the right destinations, the right people and the right aircraft” and by making best use of the synergies linked to the integration of Brussels Airlines within the German aeronautical group Lufthansa.
The company already expects to take “another important step” towards the 8% target this year, but does not think it will be able to reach the target before 2026 or 2027.
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