Lufthansa agrees to rescue Brussels Airlines
Belgian authorities have reached an agreement with Brussels Airlines (SN) and its parent company Lufthansa (LH) regarding the rescue of the Belgian flag carrier. The agreement for the airline to obtain a €290m loan in exchange for sufficient guarantees is still pending the approval of both the Belgian government and the European Commission.
According to Collin Clapson from vrt.be, though the Belgian government’s strict conditions include keeping the company in the country, the stricken airline is now entirely German-owned. While discussions were making little headway between the Belgian government and LH, an agreement has materialized. Now, it is up to the board at LH to see it through.
Last month, The partnership between SN and LH was dangerously close to ending, as the Lufthansa Group was considering putting 55% of its shareholding up for sale, or in the worst-case scenario, SN would go bankrupt. Because of the COVID-19 crisis, all SN aircraft were grounded for 3 months and most of the 4,000 SN workers had to remain idle. Financial woes also meant that in August 2020 the company had to postpone the resumption of some operations.
Now, Brussels Airlines has to repay the loan by 2026. In addition, LH is committed to injecting €170m. €70m will be spent on restructuring the company and the balance on consolidating its finances. The agreement guarantees that the SN brand survives. The deal also states that the airline must stay in Brussels and carry on flying under a Belgian license.
Brussels Airlines had planned to ax 1,000 jobs, but after talks with the unions, it reduced the redundancies to a third of that.The new deal includes commitments by Lufthansa to invest in airport, staff and fleet expansion in Brussels and the company’s wider network. Additionally, any new aircraft will have to be more eco-friendly, lowering ts environmental footprint.Finally, to keep LH from failing said commitments, the Belgian government will appoint two members of the Brussels Airlines board to ensure compliance.
