Société Luxembourgeoise de Navigation Aérienne S.A. History

Company Perspectives:

The landscape of the world air transport industry has profoundly changed, especially since the liberalization of air travel. Here also, Luxair is meeting the challenge by positioning itself as a company governed by private law and facing competition with its head held high. This new approach is perfectly expressed in the new design bearing the "corporate" image. An image that has made Luxair a benchmark company in Luxembourg and the border regions. A success achieved by emphasizing, at all times, the spirit of quality, safety and security.

Key Dates:

1948:

Luxembourg Airlines Company is formed.

1961:

The airline is reorganized as LUXAIR--Société Luxembourgeoise de Navigation Aérienne.

1968:

LUXAIRTOURS is formed.

1970:

The first jet airliner, a Caravelle, enters the company's fleet.

1977:

Boeing 737s are added to the fleet.

1989:

Luxair and Lufthansa form Eurocargo freight handling venture.

1996:

Luxair CargoCenter opens.

1998:

Embraer ERJ-145 regional jets enter fleet.

1999:

Annual passenger count exceeds one million.

2002:

Luxair's 40th anniversary is marred by a crash.

2003:

Luxair enters the freight handling market at Frankfurt Airport.

Company History:

Société Luxembourgeoise de Navigation Aérienne S.A. (Luxair) is the national airline of the Grand Duchy of Luxembourg. Every year, more than a million passengers fly the airline, which connects 60 destinations across Europe and beyond. Regional jets made up Luxair's fleet of 16 aircraft in 2003; the airline also had four medium-haul Boeing 737s and three Fokker F50 turboprops.

Luxair's network of 60 destinations stretches north to Stockholm, southeast to Egypt, and southwest to the Canary Islands. While the airline's traditional strength has been its convenience for business travelers, Luxair also operates charters for tourists. The company's tour division carried 173,000 passengers in 2002. Luxembourg State is the company's largest shareholder, owning 23.1 percent. Luxair itself owns one of the largest air cargo centers in Europe, as well as a stake in Cargolux, Europe's largest all-freight carrier. In addition to the airline and ground handling, Luxair operates shops and restaurants at the airport at Findel, Luxembourg, and provides catering of in-flight meals.

Taking Wing in the "Golden Sixties"

Construction of Luxembourg's airport, located at Findel, began in 1937 but was not completed until 1946. Luxair traces its origins to the Luxembourg Airlines Company, founded on January 9, 1948. In 1961, this was reorganized and became "LUXAIR--Société Luxembourgeoise de Navigation Aérienne S.A." Luxair began operating a single leased Fokker Friendship F27 turboprop between Luxembourg and Paris in April 1962. Routes to Frankfurt and Amsterdam soon followed.

Based at Luxembourg's Findel Airport, the airline carried 12,000 passengers during 1962. The new airline aimed to offer its clientele of business passengers great service and excellent connections to larger intercontinental airlines, recounted Le Mensuel d'Agéfi Luxembourg, a regional business monthly.

Luxair benefited from the growth of European economies during the "Golden Sixties," which led to increased business and pleasure travel. Two more Friendships and a larger Vickers Viscount were added by 1967. The popularity of Luxair's charter flights to the Mediterranean led to the formation of LUXAIRTOURS in 1968.

Flying Jets in the 1970s

Another important factor in Luxair's development was its diversification. In March 1970, Luxair, along with the Salen Shipping Group (Sweden), Loftleidir (Icelandair) and private local investors, established Cargolux Airlines S.A., one of Europe's first cargo airlines. Luxair also operated duty-free shops and established food services subsidiaries (AIRREST S.A. and Catering Services S.A.) responsible for in-flight meals on Luxair and client airlines as well as restaurant concessions at the Findel Airport.

Luxair began operating its first jet aircraft, the French-made Caravelle airliner, in 1970. By 1972, the annual passenger count was up to 240,000. Boeing 737s, which would be the mainstay of the fleet, were first added in 1977. The company gradually replaced its Friendships with Fokker F50s and Embraer Brasilia turboprop aircraft.

1980s Emphasis on Cargo

Luxembourg was liberal with its fifth freedom rights, allowing foreign airlines to pick up local passengers for flights to other international destinations. Icelandair had built a thriving United States to Europe business using Luxembourg as a hub, while other governments aggressively protected their own national carriers' shares of the transatlantic trade.

Luxembourg Airport's runway was extended to four kilometers in 1986, making it the longest in Europe. This reflected the duchy's new emphasis on air cargo, reported Britain's Financial Times. Luxair raised its stake in Cargolux from 10 percent to 24.5 percent in late 1987. In 1989, Luxair joined Lufthansa Commercial Holding to create a freight handling operation, Eurocargo S.A. This would form the basis for Luxair CargoCenter six years later.

In the late 1980s, Luxair was carrying 500,000 passengers a year. In 1989, the airline was relatively early to join the Amadeus computer reservations system, becoming its fifteenth partner carrier.

Luxair ended the 1980s with 1,050 employees. The fleet consisted of one Boeing 747 jumbo jet, three 737s, five Fokker turboprops, and one of the Embraer Brasilias.

Network Expands in the 1990s

Major European destinations such as Frankfurt, London, Paris, and Amsterdam were the first layer of Luxair's network. The airline had also been adding second tier locations, including Berlin, Madrid, Hamburg, and Nice. There were also long-range charter flights booked under the auspices of Luxair Tours, which was selling 150,000 vacation packages a year.

Luxair was one of the few airlines not to post losses during the Gulf War, due to additional military troop and cargo flights. The airline completed a LUF 7 billion fleet renewal program in 1992. Towards the end of the year, the German carrier Lufthansa acquired a 13 percent stake in Luxair. Lufthansa and Luxair were both already shareholders in the Cargolux freight airline.

Turnover was LUF 7.29 billion in 1995; the airline carried about 730,000 passengers during the year. The Luxair CargoCenter at Luxembourg Airport opened in 1996. Luxair financed its LUF 3 billion cost itself. Luxair raised its stake in Cargolux from 24.5 percent to 30.5 percent in January 1997.

Luxair's first ERJ-145 Embraer Regional Jets entered the fleet in August 1998. Dubbed "Eurojets" by Luxair, these small (50-passenger), efficient aircraft were suited for the continent's short hops and preferred by passengers who found them more comfortable than turboprops.

Regional destinations Bologna, Florence, Dublin, London (City Airport), Stuttgart, and Stockholm were added in 1998, reported Air Transport World. Luxair had marketing arrangements with Lufthansa, Air France, and Austrian Airlines, and VLM Airlines; a deal with United Airlines was signed in May 1999. Icelandair stopped operating transatlantic flights through Luxembourg in January 1999, after 50 years of operations there, in order to develop Reykjavik as a hub. This led Luxair to offer a 767 service to New York beginning in March 1999, using a Boeing 767 leased from City Bird, a Brussells-based commuter airline. However, the route was not profitable and was soon dropped. Luxair also flew to resorts in the Canary Islands and Egypt. Within a few years, losses curtailed Luxair's plans to add more long flights and prompted the carrier to focus on its core short- and medium-haul European routes.

Luxair carried more than one million passengers in 1999. According to Air Transport World, the airline was pursuing a quick growth strategy to ensure its survival in a consolidating marketplace. The company aspired to develop a route network beyond its traditional home in west central Europe. The company was pitching the relatively uncrowded airport of Luxembourg as a quicker alternative to larger ones.

Celebration and Tragedy in 2002

By the time of Luxair's 40th anniversary in 2002, the airline was the third-largest employer in Luxembourg, with nearly 2,100 employees. Revenue was EUR 318 million, up nearly 6 percent. Net profits rose 46 percent to EUR 29.6 million.

In the same year Luxair celebrated 40 years of successful flight, Luxembourg suffered the worst air disaster in its history when one of Luxair's Fokker 50 turboprops crashed while attempting to land in the fog at Findel on November 6, 2002. The wreck, which killed 20 people, was ultimately attributed to pilot error.

Luxair had a 70 percent market share at Findel Airport, reported Le Mensuel d'Agéfi Luxembourg. The airport was undergoing a EUR 324 million ($320 million) modernization.

Luxair had a new rival in cargo handling at Luxembourg Airport, CS-Lux, which was acquired by Swissport Cargo Services in October 2002. Soon after, it expanded into a new market, opening the ground handling service Luxair Cargo Deutschland GmbH (LCDG) at Frankfurt Airport in July 2003. The company was expanding its Luxembourg facility, which employed 1,000 people, in 2004. Swiss-based freight forwarder Panalpina acquired a 12.1 percent stake in Luxair in late 2002.

A Luxembourg-London City Airport codeshare arrangement with VLM Airlines ended in July 2003. The partnership had begun five years earlier. Tourist and business traffic were both down in 2003, when Luxair carried 1.1 million passengers. Turnover was EUR 289.1 million ($363 million) for the year.

Principal Subsidiaries: Air Pub S.à.r.l.; Airrest S.A. (99%); Luxair Cargo Deutschland GmbH (Germany); Luxair Commuter S.A. (99%); Luxair Deutschland GmbH (Germany); Luxair Executive SA (51%); Luxair Finance S.A.H.; Luxair France S.A.

Principal Divisions: Airline; Tour Operating; Cargo Handling; Passenger Handling; Airport Shops; Catering Services.

Principal Competitors: KLM; Martinair; SN Brussels Airlines; Virgin Express; VLM Airlines.

Further Reading:

• Cooper, Richard, "Luxair Orders EMB-145s--Regional Jets to Replace Fokker 50s and Brasilias," Airclaims, October 9, 1997.
• Crols, Bart, "Luxair to Increase Flights, Set up Two New Bases," Reuters News, November 23, 2001.
• Daly, Kieran, "Bitter Dispute at Luxair Blocks Safety Data Programme," Air Transport Intelligence, December 16, 2003.
• De Wulf, Herman, "Losses Prompt Luxair to Re-Focus on Europe," Flight International, March 6, 2001, p. 25.
• ------, "Luxair Kills Sabena's Luxembourg Pilot-Pool Plan," Flight International, January 25, 1995, p. 8.
• ------, "Luxair Looks to Tie-Up with Sabena," Flight International, July 31, 2001, p. 23.
• Evans-Pritchard, Ambrose, "Twenty Killed as Commuter Plane Crashes in Fog," Daily Telegraph (London), November 7, 2002, p. 18.
• "Fliegender Wechsel Bei Der Luxair," Luxemburger Wort, October 3, 2000, p. 25.
• "Gulf War Had Positive Effect on Luxair," Aviation Daily, May 21, 1992, p. 3.
• "Happy Birthday Luxair," Le Mensuel d'Agéfi Luxembourg, June 1, 2002.
• "Luxair," Airliner (Frankfurt, Germany), April 2000, p. 22.
• "Luxair Can Survive Among the European Giants, Says Managing Director," Trends, June 10, 1993, p. 56.
• Luxair Corporate Communications, Annual Report 2003, Luxembourg: Luxair S.A., 2004.
• "Luxair Joins Amadeus as 15th Partner Carrier," Aviation Daily, November 20, 1989, p. 336.
• "Luxair to Increase Its Stake in Cargolux," Reuters News, December 3, 1987.
• Nelms, Douglas W., "Reaching Out," Air Transport World, August 1, 1999, p. 86.
• Penney, Stewart, "Flandre Air Takes Luxair's Last Brasilias," Air Transport Intelligence, October 8, 1998.
• "Swissport Acquires Luxembourg-Based CS-Lux and Gains Access to One of Europe's Key Air Cargo Hubs," Hugin, October 15, 2002.

Source: International Directory of Company Histories, Vol.64. St. James Press, 2004.