Air Belgium’s New Business Plan & Funding

Air Belgium’s New Business Plan & Funding

23

Earlier I wrote about how Air Belgium is planning on resuming scheduled flights as of this December, after canceling their sole Brussels Charleroi to Hong Kong route in September 2018, just weeks after launching it.

Since then the airline has just been operating charter flights on behalf of other airlines.

Well, as it turns out the two routes I wrote about earlier are part of much bigger plans for the airline, as they have new funding and a new strategy, and… oh my.

Air Belgium’s four planned destinations

Air Belgium has revealed plans to operate scheduled flights to four destinations from Brussels Charleroi:

  • Fort-de-France, Martinique
  • Pointe-a-Pitre, Guadeloupe
  • Kinshasa, Congo
  • Miami, Florida

I think the operative word here is “announced.” The airline has a record of not following through on their plans. In the past they’ve repeatedly cut flights long after putting them on sale, and up until recently they even said that they planned on flying to several destinations in mainland China.

Air Belgium’s new capital

Perhaps the most interesting part of all of this is just how much money Air Belgium has allegedly burned through up until now. The airline has a new business plan and has done quite a bit of negotiating to get to their current point:

  • Sogepa has converted a €4 million loan into capital
  • Other shareholders, including SRIW, SFPI, and Sabena Aerospace, have invested an additional €1 million combined
  • The company is getting new shareholders from China and Congo, with the latter injecting €3 million
  • Air Belgium allegedly has €5 million of debt with Airbus, which Airbus has forgiven
  • Currently Air Belgium is paying €1 million per month for their four Airbus A340-300s, though Airbus will reduce the price of aircraft leasing to €800,000 per month
  • Air Belgium will have the option of returning an aircraft within five years without penalty, and Air Belgium will be able to exchange an A340 for an A330

Wow, that really gives you a sense of how much money they’ve likely burned through in the past year.

Bottom line

We’ve really now learned the extent to which Air Belgium has burned through money over the past year or so. By some incredible miracle, the airline has secured a ton of new financing, which will allow them to continue to operate.

And somehow they decided that the best way to use that money is to fly to the French Antilles, Congo, and Miami?

Individually none of that is crazy, but:

  • The A340-300 isn’t exactly the most economical plane, so given that they’re a leisure airline they really need ultra low cost carrier operating costs
  • Without partnerships at all of these destinations, there’s simply no way these routes are sustainable (the airline is planning partnerships in Kinshasa, but that’s it)
  • I get the ties to the Congo, but they’ll be going head-to-head against Brussels Airlines
  • Transatlantic fares are already so low, so I don’t really get how they hope to make money in Miami

What do I really know, though? I haven’t run an airline/burned millions of dollars of other peoples’ money…

Conversations (23)
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  1. Brent Usewils Guest

    TUI will cancel their Miami route by the end of August. So there will be no direct flight from Belgium. Currently they fly the Boeing 787-8 twice a week. The route started in 2013 with the 767-300.

    If they can't make it work from Brussels, how is AB going to do it from Charleroi, an airport where you can't even fully load your aircraft because of the short runway.

    Without a supportive Walloon Government,...

    TUI will cancel their Miami route by the end of August. So there will be no direct flight from Belgium. Currently they fly the Boeing 787-8 twice a week. The route started in 2013 with the 767-300.

    If they can't make it work from Brussels, how is AB going to do it from Charleroi, an airport where you can't even fully load your aircraft because of the short runway.

    Without a supportive Walloon Government, Air Belgium would have failed. But don't be mistaken, I think it's a wonderful project. However, the low-cost long haul model is broken. They would better buy some a320's and fly to Turkey or Greece.

  2. John Guest

    That´s stupid. BRU-MIA is one of the cheapest fares already across the pond. Why compete in that space?!

  3. Rob in Canada Guest

    I doubt this latest announced incarnation of Air Belgium will survive, but it is a shame to see the airline disappear. They have been flying a lot of charters for British Airways, replacing flights BA cannot fly due to equipment dispatch issues, and a buddy who flew in J class on a BA flight operated YYZ-LHR by Air Belgium reported that the service was excellent, and better than typically delivered by BA crews on BA...

    I doubt this latest announced incarnation of Air Belgium will survive, but it is a shame to see the airline disappear. They have been flying a lot of charters for British Airways, replacing flights BA cannot fly due to equipment dispatch issues, and a buddy who flew in J class on a BA flight operated YYZ-LHR by Air Belgium reported that the service was excellent, and better than typically delivered by BA crews on BA metal. The subbing for BA on the YYZ-LHR route explains why Air Belgium aircraft are seen so frequently at YYZ these days. Too bad they cannot really run profitably doing these charters.

  4. TommmyCruiseShip Guest

    I see another great investment opportunity for Etihad.

  5. Julia Guest

    JUST STOP with your sarcastic comments saying that Ben is being paid to write about Air Belgium or posting too many credit card articles. Whether it the case or not this is HIS BLOG and HE DECIDES on the editorial line. Pretty sure those whinners are never clicking on Ben affiliate links for cards to support Ben and the blog.

  6. JDS Guest

    Are the rumours true of a potential merger between Baltia and Air Belgium?

  7. Marco TD Guest

    I hope they are getting a lot of money from British Airways and LOT wet lease...

  8. Steve Member

    They sound wildly undercapitalized. You can't start an airline with this level of cushion. Right out of the gate you are a slave to cash flow. There's no room for anything to go wrong meaning absolutely everything has to go right.

  9. Aaron Diamond

    The routes themselves make sense, but the business model - the planes they are using, no partnerships with other airlines, etc. - is very head scratching.

  10. Ivan Guest

    As with @James W above, I'm also beginning to think that Ben is secretly working for Air Belgium's Public Relations Department, with this umpteenth article on this obsecure Belgian airline.

  11. Name Guest

    Just a correction, Kinshasa is the capital and largest city of the Democratic Republic of the Congo, not Congo. The DRC was a Belgian colony and there are heavy ties between both countries, similarly the French Antilles are French colonies and there’s big demand between French speaking Europe and them. As for Miami...no clue

  12. brteacher Guest

    I saw one of their planes at YYZ on Saturday. I must say that the livery is attractive.

  13. Jack Robertson Guest

    @Alex

    Racist much bro? Your black panthers hat is showing. Anti white hate has no place on this site.

    It doubt its Christian conservative men and women making imprudent financial decisions in Brussels and probably out of touch bureaucrats using other people's money mimicking the eu in how they operate.

  14. Dennis Gold

    Or have you ever thought that Air Belgium is doing this because they simply love you for all the coverage, and want to provide you with more options out of Miami?

  15. Dennis Gold

    There you go - your route to Africa to connect up with Peace Air! MIA-CRL-FIH. All you need is a way to get from Kinshasa to Lagos. Should be easy!

  16. Wingslover Guest

    There is a real potential for the Kinshasa flight. Since D.R. Congo is an ex Belgian colony there’s an important Congolese community in Belgium. There’s a very high demand for flights to Congo, including many business travellers and since Brussels Airlines is the sole operator on that route it charges mostly ridiculously high prices.

    Also demand for flights to MIA out of Belgium is quite high and there are no more direct flights so it might work as well.

  17. James W Guest

    Yet another piece on this airline. If Air Belgium weren't so obviously broke, I'd accuse Ben of taking payola to keep this brand in the news.

  18. Michael Guest

    I wish them all the success, but I don’t see how they can sustain this and make profit especially on the Caribbean destinations where you have low cost airlines with new planes with a better fuel efficiency. You compete with Level / Corsair / Air Caraïbes + Air France/KLM. It’s going to be tough !

  19. david Guest

    SRIW, SFPI, and Sabena Aerospace,.... friends of friends

  20. Icarus Guest

    What local partners in Congo? Where local airlines are all blacklisted. This airline doesn’t seem to have any direction. They tried hkg and failed. They have 4 uneconomical a340s. Rely on point to point traffic. No interline partners

  21. EvenSteven Guest

    @Alex Why do you have to be racist and sexist?

  22. EvenSteven Guest

    They could, in theory, do CRL-MIA R/T for 199EUR, à la Corsair (from ORY) and for sure it would appeal to the area around CRL, but other than that, difficult to see how this makes much sense.

  23. Alex New Member

    They're like an equivalent of a white male US senator: everything is forgiven and given a second, third, fourth chance that will probably lead to more disappointment and failure.

Featured Comments Most helpful comments ( as chosen by the OMAAT community ).

The comments on this page have not been provided, reviewed, approved or otherwise endorsed by any advertiser, and it is not an advertiser's responsibility to ensure posts and/or questions are answered.

Brent Usewils Guest

TUI will cancel their Miami route by the end of August. So there will be no direct flight from Belgium. Currently they fly the Boeing 787-8 twice a week. The route started in 2013 with the 767-300. If they can't make it work from Brussels, how is AB going to do it from Charleroi, an airport where you can't even fully load your aircraft because of the short runway. Without a supportive Walloon Government, Air Belgium would have failed. But don't be mistaken, I think it's a wonderful project. However, the low-cost long haul model is broken. They would better buy some a320's and fly to Turkey or Greece.

0
John Guest

That´s stupid. BRU-MIA is one of the cheapest fares already across the pond. Why compete in that space?!

0
Rob in Canada Guest

I doubt this latest announced incarnation of Air Belgium will survive, but it is a shame to see the airline disappear. They have been flying a lot of charters for British Airways, replacing flights BA cannot fly due to equipment dispatch issues, and a buddy who flew in J class on a BA flight operated YYZ-LHR by Air Belgium reported that the service was excellent, and better than typically delivered by BA crews on BA metal. The subbing for BA on the YYZ-LHR route explains why Air Belgium aircraft are seen so frequently at YYZ these days. Too bad they cannot really run profitably doing these charters.

0
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