A crisis is never far away in aviation. Corona can be digested, Peter Gerber, CEO of Brussels Airlines, fears that new flight restrictions at Zaventem herald the end of its beloved African hub. ‘The airport would become a small provincial airport.’
Profits, new planes, extra jobs, social peace returned and two civil servants fired: Brussels Airlines seems to be on top after the corona pandemic. But in aviation, a new crisis is never far away. Brussels Airlines CEO Peter Gerber (58) knows this better than anyone. He is worried about the sharp wage increases and is angry about the first steps taken by the Federal Minister of Mobility Georges Gilkinet (Ecolo) to solve the decades-long case of noise pollution at Zaventem airport.
The past year has been turbulent anyway. There was a flurry of travel in Belgium after the lifting of corona restrictions. There were start-up problems at the airport. The subsequent social unrest led to a violent confrontation between unions and management, with several days of strike just before the start of the summer holidays. In the end, it did not detract from a top summer for the Belgian Lufthansa subsidiary, which delivered the best quarter in its history. This caused Lufthansa to repay the corona subsidy of 290 million euros from the Belgian state early.
It is a scandal that Zaventem airport is not served by high-speed trains. Those in charge in Europe say they love trains, but they don’t make it possible.
Gerber, experienced at Lufthansa in personnel matters, looks back on it ‘with mixed feelings’. ‘It was very nice that we could fly again after two years. We had our goal back. But there was also a lot of operational pressure. Yes, I underestimated the situation like everyone else in the sector,’ says Gerber now. “So much came together. The start-up from nothing to 100 percent was not easy. A new work schedule was added, and it was also summer. So it’s always a little more than 100 percent commitment. A restaurant in Knokke also kicks things off in the summer . It is no different with us”.
Brussels Airlines canceled hundreds of flights to keep staff workload manageable. Social peace returned, and Gerber looks to the future with confidence. This is also why Brussels Airlines announced this week that they are taking some new planes into service and recruiting 200 extra people.
‘There are still many questions. Do people still have enough money to travel because of high inflation and energy costs? We do not know. But at the moment bookings for the first quarter of next year are going well. You have to be optimistic in this business.’
At the end of October, you promised to repay the corona loan of 290 million euros to the Belgian state this year. Has it already happened?
Peter Gerber: ‘No. But it will definitely happen this month. I am very grateful for the support we received from the Belgian government. And the authorities who gave us that support were right: we are a healthy company again.’
In the first corona year, there was a lot of restructuring. A quarter of the 4,000 employees lost their jobs and 16 of the 54 planes disappeared. Brussels Airlines was already stretched thin. Like the rest of the Belgian business community, you must index the wages. How does Brussels Airlines handle it?
Gerber: ‘In an international company such as aviation, the automatic index adjustment of wages is a disadvantage. If you have a healthy cost structure, as we had after the restructuring, you can manage for a year or two, but after that it becomes more difficult. We need to look at cost savings. One of the ways to do that is to grow, then we achieve economies of scale. That’s what we’re doing now, with the extra units for next summer. There will be more pressure for the years after 2023. We will have to look for more efficiency.’
Does it jeopardize your plans to quickly make Brussels Airlines profitable in a sustainable way?
Gerber: ‘If nothing crazy happens, we should be profitable for the whole year next year. In the Lufthansa Group, the goal is to achieve a profit margin of at least 8 percent. Then you have enough space to invest in renewing the fleet and absorb setbacks. It will take us another two years to get there. This is primarily due to fuel prices. We are protected against major oil price fluctuations. But this year it turned out that the cost of petroleum refining, which we don’t cover, can vary enormously. They have risen from 7 to 50 dollars per barrel due to Russia’s invasion of Ukraine. You can now also see this on the more expensive plane tickets. So far, it has not affected demand. People still like to fly.’
At the same time, Brussels Airport significantly raises the tariffs for landing and departing flights. This was the reason why Ryanair removed flights from Zaventem. It’s harder for you.
Gerber: ‘Of course we are never satisfied with higher rates. We must remain competitive. But I feel that we are being listened to. I have much more problems with small parts of the Belgian government that have lost sight of reality.’
What do you mean?
Gerber: ‘The political memorandum of the federal mobility minister Georges Gilkinet (Ecolo) contains proposals for much stricter noise standards at Brussels airport and the restriction of short-haul flights. I am amazed by his proposal because I always expected us to work together on them. We actually have the same goals, the only question is how to achieve them. Simply banning everything is not a smart or democratic way.’
Gilkinet wants to introduce new noise standards early next year. What are the consequences?
Gerber: ‘If these plans come true, the airport will lose all its competitiveness and it will become a small provincial airport. It is also a serious threat to Belgium: the airport, together with the port of Antwerp, is the country’s economic engine. If you don’t keep it, you’re in big trouble.’
But what would the new rules and the extension of the night mean for Brussels Airlines in particular?
Gerber: ‘They are a serious threat to our African hub at Zaventem airport. For flights to West African destinations, we are dependent on many other flights from Europe that collect passengers for these African destinations. If these flights can no longer continue, the African hub is in danger.’
But what do you have against the cancellation of short flights, such as Brussels Airlines between Zaventem and Paris?
Gerber: ‘We only fly short distances if there is no other option. And it can be different if there is a good high-speed connection. At Lufthansa I worked on the cooperation with Deutsche Bahn, which meant that we canceled all flights between Frankfurt and Cologne as soon as there was an HSL connection between the two airports. It works very well’.
“But travelers coming from Paris to catch our flight to Africa cannot do so by high-speed train. They then have to move to Brussels South with all their luggage. It is a scandal that Zaventem airport is not served by high-speed train. I the heart of Europe, there are people at the wheel who say they love trains, but somehow they don’t make it possible’.
Why can’t Thalys, Eurostar or ICE stop in Zaventem?
GerberYou should ask the minister about that. I do not understand. It is a matter of costs and prioritization. We want to talk about everything.’
So Brussels Airlines wants to contribute to such a connection?
Gerber: ‘I definitely think we will contribute. We make no money on extremely short flights. We pay our share in such an HSL connection. I would love to cancel flights to Paris and replace them with trains. But I also understand that the French railways do not want to. Their main airport would lose passengers because of it. But Belgium must also assert its own interests. If everyone does their part, we can be light years longer than we are now. It would be much better than telling others what not to do’.
1983-1992: studies law and business management.
1992: Starts in Lufthansa’s legal department.
2009: director of finance and HR at Lufthansa Cargo.
2012: Director HR and IT at Lufthansa.
2014: CEO of Lufthansa Cargo.
2014: Member of the board of Frankfurt Airport.
2021: new CEO of Brussels Airlines.
2021: Chief representative of the Lufthansa Group in the EU and the Commission.