Brussels Airlines announced a restructuring plan on Tuesday that will see it lay off about a quarter of its staff, reduce its fleet of aircraft by about a third and slash the destinations it offers in an effort to survive the crisis unleashed by the coronavirus pandemic.
“This unprecedented crisis has worsened our financial situation, obliging us to take substantial and indispensable measures,” said Brussels Airlines CEO Dieter Vranckx.
“The company is confident that with its turnaround plan it will be able to safeguard 75 percent of its employment and grow again in a profitable way as soon as the demand for air travel has recovered to a new normal, which is expected as of 2023,” the airline said in a press release.
Brussels Airlines has been losing €1 million a day since normal flight operations were suspended on March 21; it expects demand for air travel to be about 25 percent lower in 2021 than before the crisis.
The announcement comes as Lufthansa, the Belgian airline’s German parent company, is in talks with the Belgian government over a €290 million state support package. The Belgian government wants to impose strict requirements on a rescue, including possibly taking a stake in the carrier, while Lufthansa is leery of governments getting involved with management in return for rescue cash.
Lufthansa CEO Carsten Spohr is due in Brussels this week to meet with Prime Minister Sophie Wilmès and Finance Minister Alexander De Croo, Belgian press reported.
Brussels Airlines currently employs over 4,000 people, and has a fleet of 54 airliners, which will be reduced to 38. It will also cut a number of unprofitable destinations.
Vranckx said that discussions with labor unions over the restructuring started Tuesday morning. The goal will be to avoid layoffs by first ending freelance and temporary contracts and encouraging early retirements as well as voluntary and unpaid leave schemes.
Vranckx told reporters that the airline had already faced difficulties because of the bankruptcy of Thomas Cook last year, as the holiday operator had fed passengers to Brussels Airlines. That, plus the pandemic, “put the airline’s back against the wall. We have to survive, in our current structure we will not,” he said.
That means destinations like Lanzarote, Bristol and Sicily would be cut. The fleet reduction could also lead to lower frequencies on other routes.
As it downscales its fleet, the airline will first get rid of its oldest and most polluting aircraft.
Vranckx stressed that in addition to the restructuring plan, Brussels Airlines needs help from Lufthansa as well as from the Belgian government. If that happens, he said he is confident the airline would be “competitive in the market, structurally healthy and be there to participate in the growth when it picks up again.”