Qatar take 9.99% stake in IAG (BA Owners)

Old May 17, 2016, 2:54 pm
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Originally Posted by BApilotinsider
There's a delicious irony to see the US airlines whinging about the ME3 state subsidies. All the legacy US carriers wouldn't be flying today if it wasn't for Chapter 11 bankruptcy protection.
Careful! I brought this point up in another thread and was roundly shouted down on the basis that Ch11 is a private markets solution that does cost the taxpayer anything!
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Old May 17, 2016, 3:19 pm
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Originally Posted by LondonElite
Careful! I brought this point up in another thread and was roundly shouted down on the basis that Ch11 is a private markets solution that does cost the taxpayer anything!
Neither does free oil

This is not a serious post please don't write in
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Old May 17, 2016, 4:14 pm
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Originally Posted by BApilotinsider
There's a delicious irony to see the US airlines whinging about the ME3 state subsidies. All the legacy US carriers wouldn't be flying today if it wasn't for Chapter 11 bankruptcy protection.
I wonder how many companies would refuse if offered the perceived benefits of their competitors.

From what I can see companies are only interested in taking everthing which is for their benefit whilst seeking to deny their competitors of it; ultimately wanting to gain a monopolistic position in their market, I am sure this is as much the end game for the ME3 as it is for BA/AA.

Unfortunately, as witnessed on here, a large proportion of their customer base also thinks the same way and seems to want everything to go in their favour.
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Old May 17, 2016, 7:06 pm
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Here is what Forbes think of the deal - http://www.forbes.com/sites/martinrivers/2016/05/13/friend-or-foe-american-airlines-partner-british-airways-deepens-ties-with-qatar/#66bbf4666fb9
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Old May 18, 2016, 5:47 am
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Not a bad article, actually. But I think it is time for the US airlines (and especially American) to smell the coffee with cardamom.

Trying to fight the ME3 (and Turkish) is going to be a pointless exercise, doomed to fail. I think AA should simple accept QR (and ditch Gulf Air which has lost the battle anyway) and together with BA,IB and AY include QR in the transatlantic JV. In that way they will have a much stronger position against others - be they Star, Skyteam, Norwegian or Emirates.
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Old May 18, 2016, 5:49 am
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Originally Posted by BlackBerryAddict
Not a bad article, actually. But I think it is time for the US airlines (and especially American) to smell the coffee with cardamom.

Trying to fight the ME3 (and Turkish) is going to be a pointless exercise, doomed to fail. I think AA should simple accept QR (and ditch Gulf Air which has lost the battle anyway) and together with BA,IB and AY include QR in the transatlantic JV. In that way they will have a much stronger position against others - be they Star, Skyteam, Norwegian or Emirates.
AA already has a close relationship with EY. I don't see them alienating EY for the benefit of QR.
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Old May 18, 2016, 6:01 am
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Originally Posted by Calchas
AA already has a close relationship with EY. I don't see them alienating EY for the benefit of QR.
Why not? What do they get out of EY they couldn't get out of QR?

Isn't it slightly hypocritical they have the EY relationship, but still complain about the ME3?

Anyway, things change. The EY relationship predates QR coming into oneworld. AAB already complained about that. "why does AA deal with EY, and not with fellow oneworld member QR?" He has a point, but then QF went with EK ditching BA in the process.
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Old May 18, 2016, 6:06 am
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Originally Posted by BlackBerryAddict
Why not? What do they get out of EY they couldn't get out of QR?
A CEO who can be quiet and an existing business relationship.

Originally Posted by BlackBerryAddict
Isn't it slightly hypocritical they have the EY relationship, but still complain about the ME3?
Yes.

Originally Posted by BlackBerryAddict
Anyway, things change. The EY relationship predates QR coming into oneworld. AAB already complained about that. "why does AA deal with EY, and not with fellow oneworld member QR?" He has a point, but then QF went with EK ditching BA in the process.
Oneworld is just a marketing arrangement. I think the relevance of alliances is overstated.
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Old May 18, 2016, 6:22 am
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Originally Posted by Calchas
A CEO who can be quiet and an existing business relationship.


Yes.


Oneworld is just a marketing arrangement. I think the relevance of alliances is overstated.
James Hogan isn't always quiet, but maybe the Americans find it easier to deal with a bunch of expats in the Middle East.

Oneworld is indeed just a framework for marketing agreements, but they can lead to more substantial relationship - see the JVs on the Atlantic and Europe-Asia. I think further JVs are mooted for the Pacific and LATAM, AA and IAG are in the process of deepening their relationship on the markets to and from Latin America.

Short of full foreign ownership of airlines (which outside the EU isn't going to happen for a long time, if ever), alliances and their JVs are the next best thing to getting some form of global presence.
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Old May 21, 2016, 3:52 pm
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There's an article on the front page of The Sunday Telegraph's business section quoting "industry sources" who suggest that QR may now push for a seat on the board

http://www.telegraph.co.uk/business/...ilding-in-iag/

Concerns are growing about mounting Qatari influence at International Airlines Group after the Gulf states airline boosted its stake in British Airways parent company for the second time in the space of a few weeks.

Industry sources said IAG was watching state-owned carrier Qatar Airways closely amid growing speculation that Qatar, which now owns 15pc of IAG, could comfortably push for a board seat.

For a FTSE 100 stock with no major shareholders, thats a very serious number, one source said, adding that Qatar airlines intentions were unclear. If they wanted to get [a board seat], it would be pretty straightforward.
I'm not sure how much there is to read in this - the suggestion at the end of the article that IAG may bid for Wizz Air, Monarch or Norwegian is, I expect, way off the mark.
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Old May 23, 2016, 9:49 am
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Talking IAG for Wizz?

I don't think speculation for an IAG bid for Wizz should be dismissed out of hand.

Why? Former Vueling CFO Sonia Jerez Burdeus moved to Wizz (officially starts her new role June 1). And by having an ex-IAG airline senior executive moving to another LCC could be a masterstroke by way of having someone on the inside so to speak.

Also, profitable. FY estimate to the tune of around US$230m last year. More profitable than Vueling (I think?) And low debt and free cash flow of US$650m.

Importantly, IAG able to capture a huge share of traffic in Eastern Europe where it is currently underserved. It could consolidate IAG's LCC portfolio from Spain and Italy in Southern Europe to conquer Eastern Europe.

Plus fleet commonality of A320s. Not so sure about common fleet for engines though.
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Old May 23, 2016, 10:36 am
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Originally Posted by ian001
There's an article on the front page of The Sunday Telegraph's business section quoting "industry sources" who suggest that QR may now push for a seat on the board
They obviously don't share the same opinion about BA's 'race to the bottom' seats as some of their customers.
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Old May 23, 2016, 11:58 am
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Originally Posted by BlackBerryAddict
Not a bad article, actually. But I think it is time for the US airlines (and especially American) to smell the coffee with cardamom.

Trying to fight the ME3 (and Turkish) is going to be a pointless exercise, doomed to fail. I think AA should simple accept QR (and ditch Gulf Air which has lost the battle anyway) and together with BA,IB and AY include QR in the transatlantic JV. In that way they will have a much stronger position against others - be they Star, Skyteam, Norwegian or Emirates.
Does Qatar even want to be in the joint venture?

The "if you can't fight them, join them" thing seems quite self-contradictory in this scenario. If Qatar can out-compete AA etc., why would it want to join the JV and therefore hand over a share of their profits to them? (Assuming my understanding of how joint ventures work is correct anyway)
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Old May 23, 2016, 12:52 pm
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Originally Posted by callum9999
Does Qatar even want to be in the joint venture?

The "if you can't fight them, join them" thing seems quite self-contradictory in this scenario. If Qatar can out-compete AA etc., why would it want to join the JV and therefore hand over a share of their profits to them? (Assuming my understanding of how joint ventures work is correct anyway)
Quite possibly, yes. The ability for QR to compete on the North Atlantic routes between the US and Europe is very difficult. Only by launching their own Fifth Freedom flights, which would be challenged to the bitter end by the Big 3 in the US (not least driven by QR's ability to staff their aircraft using cheaper, non-unionised labour), despite the irony of legacy carrier's protections via the anti-trust monopolies in place on those routes.

The reality is the North Atlantic market is the most profitable in the world right now. Particularly for premium traffic. If this was a free and competitive market, you can bet QR would be operating multiple flights a day on many of the routes. But, given QR's barriers to direct entry to that market, a JV is entirely likely. I'd see their increased stake in IAG, and soundings for a seat on the board, as a sign of exactly that.

It's a crying shame. Actual increased competition on these routes would actually force BA's hand to up its game on its product offer, particularly its hard product. JV's have a nice way of locking in monopolistic tendencies in the market. Never good for the end-customers as the desire to innovate and invest in the product and service simply isn't there. It's one massive cash cow for BA, at least for now.
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Old May 23, 2016, 1:39 pm
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Originally Posted by London_traveller
Quite possibly, yes. The ability for QR to compete on the North Atlantic routes between the US and Europe is very difficult. Only by launching their own Fifth Freedom flights, which would be challenged to the bitter end by the Big 3 in the US (not least driven by QR's ability to staff their aircraft using cheaper, non-unionised labour), despite the irony of legacy carrier's protections via the anti-trust monopolies in place on those routes.

The reality is the North Atlantic market is the most profitable in the world right now. Particularly for premium traffic. If this was a free and competitive market, you can bet QR would be operating multiple flights a day on many of the routes. But, given QR's barriers to direct entry to that market, a JV is entirely likely. I'd see their increased stake in IAG, and soundings for a seat on the board, as a sign of exactly that.

It's a crying shame. Actual increased competition on these routes would actually force BA's hand to up its game on its product offer, particularly its hard product. JV's have a nice way of locking in monopolistic tendencies in the market. Never good for the end-customers as the desire to innovate and invest in the product and service simply isn't there. It's one massive cash cow for BA, at least for now.
Oh I agree, but that flies in the face of the previous, and frequent, claim that AA/BA cannot compete with Qatar across the Atlantic so they need them in the venture.
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