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Brussels Airlines reduces its losses, but yields fall as Ryanair and Vueling enter its Brussels hub

Analysis

In 2013, Brussels Airlines narrowed its losses, mainly as a result of cost reduction, with labour productivity making real improvements. However, unit revenues fell last year reflecting a soft market environment.

Downward pressure on pricing looks likely to intensify in 2014: Brussels Airlines is accelerating its capacity growth, particularly on its long-haul (African) network, and its hub has seen the entry of LCCs Vueling and Ryanair. Its previous target of returning to profit in 2014 may now be in doubt.

Meanwhile (and as predicted by CAPA), Lufthansa allowed its call option over the 55% of Brussels Airlines that it does not already own to lapse in Apr-2014.

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