Updated: Jul 22
According to sources for Belgian news agency, VRT NWS, Brussels Airlines is set to receive EUR 290 million after an agreement was reached between the Belgian government and Lufthansa. This comes after months of negotiations which resulted in an ever-stiffening relationship between the Belgian government and German carrier.
The coronavirus crisis has forced Brussels Airlines to slash its fleet size by 30%. Photo by Jero Vida | AeroNewsX
However, this isn't the end of the story. In fact, Lufthansa, the Belgian government and most notably the European Commission need to give their final approval for the deal to go ahead. However, most are quite optimistic, as Brussels Airlines is in an extremely dire situation. The European Commission has been quite generous in recent months, having approved state aid for TAP Air Portugal, which was struggling even before the coronavirus crisis, as well as KLM of which its unions were opposed to the deal.
The reason for this optimism, according to VRT NWS, is that all parties were well-informed about the situation surrounding Brussels Airlines. Belgium's Deputy Prime Minister and Finance Minister, Alexander De Croo is reported to have already given the green light on his side. The Belgian government has been pushing for a deal for its national airline, provided that certain guarantees regarding the carrier's future were adhered to.
Meanwhile, Lufthansa's Christina Foerster, who is in charge of Customer & Corporate Responsibility and is a member of the Executive Board, is a former Brussels Airlines CEO. Foerster was the carrier's CEO since April 2018 and was moved to her current role on 1 January.
Brussels Airlines was represented by CEO Dieter Vranckx who took over from Foerster. Brussels Airlines had suspended all regular operations up until June 15 and was therefore in need of financial aid.
The latest move comes in the form of a loan, which needs to be repaid in 'mid-2026'. Of the EUR 290 million, Lufthansa will provide 170 million euros. The deal includes plans to further strengthen the company's capital as well as provide funds for restructuring. EUR 100 million will be used for the former, while EUR 70 million will be used for the latter.
On 12 May, Brussels Airlines had announced plans to cut its fleet size by 30%, from 54 to 38 planes. Additionally, the carrier revealed its intention to reduce its workforce by 25%. This came as a result of the coronavirus, of course, which has brought travel demand to a minimum. Brussels Airlines says it does not expect demand to return to 2019 levels before 2023 at the earliest.