SN Brussels, Virgin Express to merge by next year

SN Brussels Airlines and Virgin Express announced they will merge into a single carrier with a new name and two distinct products, a basic service for price-sensitive passengers and an upgraded service for time-sensitive customers seeking greater convenience and flexibility.

The new airline, expected to be in business by the start of the 2007 summer schedule, will expand its long-haul operations, most likely in North Atlantic but also in Africa, possibly through a stake in Cameroon Airlines. The group is in talks to replace its three 280-seat A330s with five or six 220-seat long-haul aircraft. Further details, as well as the new name and logo, will be unveiled later this year.

"We will be a so-called 'new generation carrier' applying a modified traditional business model," said Neil Burrows, presently CEO of both SN and Virgin Express. "Other [European] carriers have made this move very successfully over the years, most recently SAS."

By striking a balance between the low-cost and network models, the new airline aims to stake a leadership position in Europe through its influence at Brussels Airport, where it will control 40% of the slots. It will revise its European network and expand long-haul services. "We will operate a profitable network of over 40 routes, with a priority to strategic routes," Burrows said, acknowledging some current destinations might be dropped.

SN Airholding, which has controlled both carriers since April 2005, reported net income of €12 million ($14.5 million) on revenue of €946 million for last year. This compares with a restated consolidated net loss of €6 million and revenues of €906 million in 2004, when Virgin Express was not part of SN Airholding. CFO Michel Meyfroidt said the group enjoyed a one-off dividend of €12 million from SIC.

Virgin Express boarded 1.95 million passengers last year with a load factor of 79.4%, a 4-point improvement on 2004. SN transported 3.2 million passengers and achieved a load factor of 63%, a 1.8-point gain. SN did not provide separate figures for its European and African networks, but Meyfroidt said its "very profitable African routes barely cover the losses of the European network."