Back in 2009 when Lufthansa completed the purchase of a 45% stake in Brussels Airlines, it also retained the option to purchase the remaining 55%. This option is set to expire in 2017, however the decision from Lufthansa is due in the next several weeks according to Lufthansa’s CFO, Simone Menne, who suggested this timeline during Lufthansa’s earnings conference last week. The major stipulation for the exercise of the option was that Brussels needed to demonstrate profitability on its own before LH would acquire the rest of the carrier. In 2015, Brussels finally did demonstrate a profitable year which has now put in motion the process for Lufthansa to potentially acquire the rest of ‘SN’.
What doe this mean for Brussels Airlines?? A lot……
Should LH acquire the balance of ‘SN’, it is widely speculated that Lufthansa would fold Brussels into its Eurowings ‘low cost carrier (LCC)’ and literally would jump to the number 3rd largest ‘LCC’ in Europe, behind only Ryanair and Easyjet which have been a perennial fly in the ointment for Lufthansa. It would also mean that Eurowings would grow exponentially overnight with routes throughout Europe, gain additional routes in North America and inherit a strong presence in Africa where Brussels has spent considerable effort growing its network.
Should this come to pass as I’ve described, I believe it would would have an accretive impact on Lufthansa Group. It’s no secret that Eurowings has had its share of growing pains recently due to small size of its long haul fleet. Adding SN’s existing fleet, staff, and timetable would go a long way in stabilizing Eurowings and make it an important hedge in Lufthansa’s portfolio as LH continues to battle the ‘LCCs’ in Europe. However, anytime consolidation is discussed, there is always the risk of overlap of staff and resources which could result in a re-sizing of SN so that it fits better into the Eurowings template.
The next 90 days could prove interesting…….