Could IAG/BA takeover Virgin like they did with bmi?
 

This may seem like a crazy idea, but could IAG takeover Virgin within the next few years? If they can’t get government support and start to edge nearer to failure, could a deal be struck similar to the bmi one where it’s integrated into British Airways?

It would give BA lots more slots at LHR and possibly allow them to move all LGW long haul routes to LHR. Operationally, BA already operate from T3 so no problems there.

Fleet wise, the 787s and A350s would fit into the fleet nicely and even make a good 777 replacement. The A330s and A330neo orders could be transferred to IB, EI or LEVEL too.

The competition authorities would probably have a thing or two to say though.

You seem to forget that DL own 49% of VS they are unlikely to allow VS to fold if they can help it and do so at minimal cost.

VS could just sell it’s slots to DL or AF-KL and that would prevent IAG getting their hands on them.

And would BA want to cede LH at Gatwick to the likes of Norwegian? Probably not. Gatwick has a particular market of its own and many people won’t go to LHR.

as to the fleet of the 20 Neo’s 8 are firm VS orders, 6 ordered via a lessor and 6 are options.

a of VS planes are leased rather then owned.

It’s worth remembering that Virgin Atlantic are a tiny airline (5.5m passengers) v’s 115m for I.A.G

Delta complications aside; I’d question if it was worth the time & effort.

I agree but Delta aren’t going to keep pumping money into VS if it becomes unviable and costs them their profits. Lufthansa had a big stake in bmi and were financially sound yet they sold off the business when they decided it was a lost cause.

I agree LGW has a different market, hence the overlapping of some flights (NYC, LAS, AMS) but I’m sure there are routes at LGW which BA would prefer to be at LHR.

I’m sure there are BA slots at LHR that is kept by flying to a not so profitable destination.

Integrating cost for VS would outbalance the benefits surely. Slots can be bought from any airline.

If VS is such a loss maker, why take it over? Buy some slots from another failing airline and operate excess aircraft if desired.

IAG wouldn’t be too bothered about the A330noes, so 8 would probably be a good number for them.

As for the leases, they can easily be extended. BA leased back a lot of bmi frames after the deal was complete.

Manchester would be a funny one though, would BA really want to do Long Haul from there again...

It is obvious that there will be restructuring in the airline industry and that there will be excess plane capacity in the coming years.
Don't forget that AFKL (and indirectly the French State) owns 31% of Virgin.
But what restructuring will take place worldwide is anyone's guess and depends how government will support their flag carriers.

they don’t, that deal never actually happened. 51% virgin group and 49% delta is still the ownership

They’d have to hand over so many LHR slots as a condition of any takeover (as a condition of takeover / monopoly rules) I don’t see how any purchase of VS would give IAG much

Virgin Atlantic mortgaged its Heathrow slots in December 2015. The debt raised has a 10 to 15 year maturity. Senior notes take priority over unsecured loans, and in the event of a default will be paid back to creditors first.

The only value in Virgin are some of its well-timed LHR slots. Otherwise its a loss-making business with few assets. IAG would rather let the airline go bust then bid for those valuable slots off whoever owns them after bankruptcy. The owner of the slots would need to offload them quickly (or lease them out) to avoid losing them to the 80-20 rule so pricing could well work in IAG’s favour in an open market for a distressed sale.

It appears that Virgin has used its LHR slots as security for loans so they couldn't sell them now. I don't think currently Delta are in any position to support VS financially for sometime under its US bailout conditions.
Out of a total fleet size of 42 approx 15 are owned by VS the rest are all leased. Most of the owned ones are fairly new so probably not even fully paid for.

Current rules on takeovers will have to change in the current situation to keep jobs

I suspect that SRB would rather re-domicile to the UK and pay his full complement of taxes than cede VS to IAG, even in a distress sale. :D

Accepting that there are complications around the mortgaging of VS’s LHR slots, if they ended up being bankrupt I could see what assets they do having being sold as follows: 1) Virgin Holidays, together with LGW and MAN fleets as one entity which would retain the Virgin name and operating licence. 2) Their LHR ‘assets’, which IAG may have some interest in.

Will slots at LHR become as cheap as chips in a few months time, if the airline crisis continues?
Airlines with money in the bank might be able to pick and choose as they wish.