Brussels Airlines, part of Germany’s Lufthansa (LHAG.DE), said on Tuesday it would reduce its fleet by 30% and its workforce by a quarter to guarantee its survival during and after the COVID-19 pandemic.
The company, which has 4,200 staff, said it needed to cut its costs to a competitive level and was also asking for support from both Lufthansa and the Belgian government.
Company chief executive Dieter Vranckx said the airline already planned restructuring to boost margins after 2019, when it made a net loss of 40.6 million euros. That was before the coronavirus struck.
“Corona has hit us hard and fast,” Vranckx said, adding the airline sector would probably be one of the last to emerge completely from the crisis. “The year 2020 will be a disaster.”
Vranckx said the global industry had seen a 60% decline in bookings and record cancellations and that the coronavirus crisis would strip $240 billion of revenue from airlines.
Next year would see a slow recovery of business, but demand was likely to be 25-30% down from 2019 levels, meaning Brussels Airlines was oversized, Vranckx said.
Brussels Airlines will reduce its planes on European routes to 30 from 39 and those operating long-haul flights to eight from 10. It will also cancelling the five planes it leases from CityJet. It was likely to shed older, less efficient and more polluting planes.
Belgium is meanwhile looking into possible state aid of 290 million euros ($313.9 million) to Brussels Airlines, but wants guarantees that it will continue to operate out of Brussels Airport, which needs the airline to stay viable.
Vranckx said the Brussels Airport hub was key both for Brussels Airlines and mother company Lufthansa
Brussels Airlines already took a hit last year by the bankruptcy of Thomas Cook Belgium, because it operated flights for the travel company, although has since picked up some business from TUI (TUIGn.DE).