SN Brussels Airlines and Virgin Express now have a common owner, but the two carriers will still operate as separate brands.
After some four years of talks, the takeover of Virgin Express by the shareholders of SN Brussels has brought the two home-based carriers at Brussels International airport under common ownership. Both SN, formed from the ashes of failed Sabena in late 2001, and Virgin Express have struggled to make money in a secondary hub in competition with Ryanair's Charleroi base.
Bringing the carriers together will mean their head-to-head rivalry ceases, but they will not be merged. "The objective is not to make two smaller airlines," said Viscount Etienne Davignon, president of SN Airholding, the privately held company that owns SN Brussels and now has a 70.1% stake in Virgin Express. The balance of the Virgin Express stake is owned by the Virgin Group, although there are call and put options in place that could see Virgin Express owner Sir Richard Branson sell out completely this year.
The brand and product strategy of each carrier will be retained, with SN continuing as a full-service operation and Virgin Express as a low-fare player. Although Virgin Express generally operates to southern European destinations, while SN flies to European capitals and African cities, the carriers compete on services to Barcelona, Geneva, Nice, Madrid, Milan and Rome. The carriers have adjusted their schedules to these cities to avoid departures that are too close together and SN has pulled off Barcelona altogether.
Between them the carriers are launching eight new routes in the next few months, using capacity freed up from their network optimisation. One of the main network issues for SN is to gain links to the Asia-Pacific via a codeshare partner. At present, no carriers from that region serve Brussels.
There will be an executive management team for the two carriers, consisting of SN executive chairman Rob Kuijpers, chief executive Peter Davies and chief financial officer Michel Meyfroidt and Virgin Express managing director Neil Burrows.
The network planning and support functions for the two carriers will be centralised, but otherwise their staff will remain dedicated to the individual airlines. SN says it is too early to define what cost savings will be made from the new structure and neither carrier has yet outlined its traffic or financial predictions for 2005.
For the last two years SN has made a small net profit, while Virgin Express has lost money.
MARK PILLING LONDON
Source: Airline Business