Mirk

I'm wondering how this will translate for the LHR hub. Some suggest AF/KL will move from T4 to T3 but that would be dramatic in term of lounge since VS clubhouse and No1 lounges are overcrowded already.

Lewis42

the only thing I can foresee is T4 becoming exclusively SkyTeam (including VS).

kicking out all non SkyTeam airlines to T3 and take delta / VS gates.

irishguy28

There will be no movement. BA and AA have a longer, deeper relationship and have never* been co-located at LHR. (Perhaps if this had happened before DL quit T4 there would have been a more compelling case to get VS to move to T4. Not sure AF/KL/MU(?) will all want/be able to move from T4)



*not in recent times, anyway

dodgeflyer

Not sure what the quantum of debt is in VS but implicitly a decent return on equity for DL (especially within the airline business) given they acquired SQ's share for Ł224m (49%) in 2012, and assuming no increase a debt, an increase in equity valuation of close to 50% implying 10-12% cagr on equity.

Does this mean SRB is leaving VS as its chairman?

ANstar

Branson remains as Chairman. (for now)

irishguy28

Beardy apparently retains the remaining 20% of VS in a personal capacity; the 31% sold to AFKL was in the name of the Virgin Group. And he remains as its figurehead, a bit like those floozies painted on the side of VS's fleet

https://www.theguardian.com/business...irgin-atlantic

irishguy28

And the VS deal will only go through if a post-Brexit scenario doesn't require majority UK ownership of the UK airline...

Zarmakuizz

A random though. AF, KLM and AZ (if still applicable) have close to no direct European flights from LHR, except to the 3 hub capitals. I don't see the point of taking a, let's say, IND->ATL->LHR->CDG/AMS->MUC, compared to IND->ATL->CDG/AMS->MUC, apart from qualifying flights collectors.

At the same time, Flybe is already a AF/KL partner, is UK based, and could offer the Europe connectivity that VSc is looking for. On top of that, the added cash flow from this operation could help acquiring FlyBe from IAG. Flybe&VS combined, would they join SkyTeam, would make a strong UK presence for the alliance.

Any thoughts? Still mere suppositions, but, how viable would that be?

irishguy28

Acquiring FlyBE from IAG would be difficult, as IAG does not own them. Neither do I think IAG has any interest in acquiring them.

And, as you rightly point out, the transaction was not based on the sole logic of having two transfers (at LHR and again at AMS/CDG, though such routings may appeal to segment runners.

Zarmakuizz

My bad. Due to FlyBe using Avios as their ffp, I though they were linked.

irishguy28

BA (or rather IAG) once had about 15% of the airline as a result of their sale of most of BA Connect to Flybe in 2006, but IAG sold the entirety of their holding in Flybe just over 3 years ago.

Zarmakuizz

VS and BE are already in a codeshare that has recently been extended to cover more of the UK.

If VS wanted a better European coverage, I believe they would have looked at BE instead of AF/KL?

irishguy28

It is unlikely that BE would be able to afford, or want to buy, 31% of VS from Beardy.

Besides, VS can obtain feed from BE without the need for either airline to invest in the other. VS and BE will continue to work together, regardless of whether the AFKL investment goes ahead or not.

You are making the mistake of thinking that VS, and their quest for "European feed", is behind all this. This almost certainly came from DL (who own 49% of VS and are in de-facto control of the airline) rather than this being any manifestation of VS wanting feed from Europe. DL wants to tighten its grasp on VS - it cannot buy any more under European Union rules, and should the Virgin Group have sold a stake to any other party, then that could spell trouble for DL. That the stake instead goes to AFKL, with whom they already have a close working relationship, common alliance membership, and a transatlantic immunised joint venture - to say nothing of DL's own investment in AFKL, meaning they are winding themselves ever more tightly together - means that DL is securing their share of the lucrative UK-USA market by having their preferred partner come on to VS's share register and lock out any outsiders from taking control of, or even just a substantial stake in, VS. Together, AF/KL/DL will own 80% of Virgin Atlantic if the transaction is approved.

(The issue of feeding VS flights at LHR is not the issue here. Flybe only flies from Scotland to Heathrow, so there is no scope for BE providing European feed to VS at Heathrow, anyway. VS also sells tickets with other carriers that provide feed at LHR, including Aer Lingus and BA [the latter being legally required as part of the remedies for allowing BA to takeover bmi]. Feed may be more welcome at MAN, though VS has a smaller network from there. London alone is a strong enough market with lots of premium traffic to allow for VS to focus on O&D - or longhaul to longhaul transfers - rather than this being some kind of desperate attempt to obtain feed from Europe).

Zarmakuizz

I see. Thank you for all the clarifications.

brunos

Makes a lot of sense.
Furthermore DL was restricted on its onward connections to Europe in order to get approval of the DL-VS JV. I believe that they cannot sell tickets to Europe with a connection in LHR.