COVID-19 pandemic heavily impacts Brussels Airlines 2020 financial results
The airline closes 2020 with an Adjusted EBIT of EUR -293 million
- In line with expectations due to the Covid-19 crisis, Brussels Airlines booked a loss of EUR 293 million in the financial year 2020.
- Losses and cash-out limited by stringent cost-saving and cash management measures.
- Revenue down by 72% to 414 EUR million and operating expenses decreased by 53%, mainly due to lower production.
- Passenger numbers decreased by 77% to 2.4 million.
- Transformation plan Reboot was intensified and accelerated to counteract the impact of the crisis and lay the basis for profitability by 2023.
- 2021 foresees a gradual capacity build-up, but will remain a challenging year. Summer season is essential.
2020 was an unprecedented year for the airline industry, including for Brussels Airlines. With a restructuring plan already ongoing at the beginning of 2020, Brussels Airlines was off to a good start in January and February, when suddenly demand began to crumble fast as the Coronavirus found its way to Europe. The second quarter was marked by a worldwide lockdown, when at the end of March Brussels Airlines decided to ground its fleet during 12 weeks, with only repatriation and cargo flights still operating. On 15 June, the airline resumed a reduced flight schedule, with very tight steering and a very flexible capacity management, in order to guarantee cash positive operations and preserve its cash position from further deterioration. Every week so far since the restart in June, Brussels Airlines succeeded to obtain cash-positive operations, i.e. covering all flight related cash-outs with respective revenues. Nevertheless, fixed costs such as aircraft loans, personnel expenses, rent etc. still remain and are not covered by the current low level of flying.
Summer 2020 showed a promising resumption of traffic with strong demand on the European leisure network, as well as on the African network. However, a second wave of Covid-19 slowed down demand again after summer. As a result of the restrictive travel regulations worldwide and to meet the cash-positive flying target, the capacity decreased further in October and November and reached a level of -78% vs the same period in 2019. As demand remained much more stable on the African segment than on the European sector, the airline shifted its focus toward its African portfolio, in combination with its European feeder flights for the rest of the winter season. Around the end of year holiday period another peak in demand was recorded on the European leisure segment and on the African network. The full year capacity was severely impacted by the crisis, with 74% less flights compared to the previous year.
Brussels Airlines' revenue fell by 72% to EUR 414 million (previous year: EUR 1,473 million) as a result of the Coronavirus crisis. Operating revenue was 71% below the previous year's level at EUR 456 million (previous year: EUR 1,555 million).
Brussels Airlines' Adjusted EBIT fell to EUR -293 million in the 2020 financial year (previous year: EUR -27 million – IFRS standard). The Adjusted EBIT margin decreased by 69.0 percentage points to -70.8% (previous year: -1.8%). EBIT decreased to EUR -332 million (previous year: EUR -32 million). The difference compared with Adjusted EBIT was mainly due to impairment losses on rights of use for aircraft amounting to EUR 33 million.
With 2.4 million passengers, Brussels Airlines carried 77% fewer passengers in the reporting year than in the previous year (previous year: 10.3 million). Capacity had to be reduced by 71% and sales fell by 75%. At 68.3%, the seat load factor was 13.2 percentage points lower than in the previous year (81.5%). Average yields increased by 1.0% after adjusting for foreign exchange effects. Traffic revenue fell by 72% to EUR 384 million (previous year: EUR 1,386 million).
Since 1 March, Peter Gerber is the new CEO of Brussels Airlines. Next to his role as CEO and CCO of Brussels Airlines, Peter Gerber also acts as the Lufthansa Group Chief Representative for European Affairs. His focus will be on guaranteeing continuity at the airline, further implementing the Reboot Plus plan to create a profitable future for the company and steering the airline through the crisis in a sustainable manner.
„2020 confronted Brussels Airlines and the entire aviation industry with the largest crisis in its history. I want to thank everyone involved for their support during this difficult time: employees, partners and our customers. Rapidly changing travel restrictions and hygiene measures along with unprecedented drops in demand and production formed great challenges for everyone at Brussels Airlines. Since the beginning of the crisis, our employees have shown incredible resilience, even throughout the large-scale temporary unemployment still ongoing today in the company. I intend to foster the passionate spirit at Brussels Airlines to continue to turn the company into profitability.”
Peter Gerber, CEO Brussels Airlines
Reboot Plus lays the foundation for a profitable future
In order to respond to the crisis and the expectation of a slow recovery of the demand, as well as to lay the basis for a resilient and sustainable company after the crisis, Brussels Airlines intensified and accelerated its Reboot transformation plan, reducing its fleet by 25% and its workforce by 20%, thanks to the financial support of Lufthansa (EUR 170 million cash injection, of which 70 million for the restructuring). As part of the fleet adjustment, the usage rights of two Airbus A330-200s and eight Airbus A319s were written off. Thanks to an agreement with its social partners, the airline was able to keep 80% of its workforce on board. Through alternative measures to voluntarily leave the company forced dismissals were kept to a minimum. 18% of the 20% workforce reduction is in place today and all agreements have been reached to reduce the fleet. In addition, new collective labour agreements were negotiated with all employee groups. Furthermore, a government loan of EUR 290 million to overcome the crisis was granted by the Belgian government, from which Brussels Airlines has withdrawn a first slice in December and a second one in February.
“In 2020, the focus of the Reboot Plus plan was on the restructuring. In 2021, the second phase of the plan starts, i.e. the improvement phase. Indeed, the transformation plan does not only focus on cost cutting, but also on changing our way of working and on strategic investments, like digitization projects – e.g. new booking platform, digitization at ground operations,… Within our transformation towards a profitable future, we also want to continue more than ever our efforts at the level of sustainability, like fleet rejuvenation, CO2 reduction and waste reduction.”
Peter Gerber, CEO Brussels Airlines
Brussels Airlines currently plans to gradually increase its capacity towards summer, reinforcing its position as the home carrier of Belgium with a strong focus on leisure and its Africa network. However, flexibility remains key as the crisis remains very unpredictable and the travel restrictions have thoroughly changed the booking pattern of customers, shifting towards very last minute bookings. For the entire year, the airline plans to operate almost double the capacity it operated in 2020.
„Although we have a limited view on the demand recovery due to the very last minute booking behaviour of the market during the crisis, we are hopeful that 2021 will see a gradual positive trend in demand as soon as the vaccination programme advances on a larger scale and travel restrictions are gradually lifted. A reliable testing and vaccination strategy remains essential for a recovery for the whole aviation and tourism industry. It is therefore of utmost importance that the Belgian government takes into account the aviation industry in its economic relaunch plan. It is key to us to offer perspective to our employees. The summer season will prove to be very important and we remain cautious, as this year will remain very difficult. We will continue to focus on our very strict cash and cost management, including cash-positive flying, temporary unemployment and very limited cash-outs, as well as on implementing our Reboot Plus plan to meet our business plan and create a profitable future."
Nina Öwerdieck, Chief Financial Officer Brussels Airlines