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Brussels Airlines: the long wait for consummation with Lufthansa – Part 2

Analysis

Accounts filed in Jun-2013 with the National Bank of Belgium show that the operating loss of Brussels Airlines' holding company SN Airholding widened in 2012. It has yet to make an operating profit since Lufthansa acquired 45% in 2009, although its 'Beyond 2012-2013' restructuring programme aims to bring the company back to profitability by 2014.

Analysis of its unit costs (CASK) show that Brussels Airlines is a little more efficient than other Lufthansa Group national carriers, but much higher cost than the LCCs with whom it competes on much of its European network, which accounts for well over 80% of its seat capacity. The strength of its Europe to Africa operations risks being eroded by growing competition in the transfer market.

It seems unlikely that Lufthansa will exercise its option to buy the remaining 55%, unless Brussels Airlines can demonstrate significant progress towards sustainable profitability before the option expires in Apr-2014.

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