NickB

The asssumption here is that BA might be interested in BD as a business. If BA is interested in BD, it is primarily for one thing: LHR slots (with the added bonus of eliminating a small competitor on domestic routes). Are you seriously suggesting that BA has no interest in additional slots at LHR and that it would be stupid for them to acquire such additional slots?

bernardd

Loss making business are no automatically valueless if a new owner believes they can become profitable with less investment that starting with a clean sheet.

There are many other several circumstances in which the combined business can potentially be worth more than the sum of the parts, one obvious possibility being a reduction in competition allowing BA to achieve higher average prices for tickets on some routes. That would obviously attract the attention of the anti-monopoly authorities. It is, however, fair to point out that historically a lot of mergers and acquisitions prove that 2+2=3 not 5!

The circumstances here are a little more confused because Lufthansa did a deal some years ago that gave BMI the right to require LH to buy them between certain dates according to a price formula. LH is now forced to exercise that right and finds itself buying something it doesn't really want at a higher price than it allegedly feels is reasonable. LH is already stuck with buying BD and they may wish to recoup some of that cost by re-selling all or part of the BD assets, though whether they will want to sell to BA whom they see as a competitor is another matter.

There will almost certainly be other vested interests, for example while Lufthansa competes less directly for long haul services with BA, it's relationship with both United and Singapore Airlines will not be ehanced by improving BA's competitiveness, particularly as SQ is saddled with 49% of VS that it has said publicly it would like to unload for a halfway decent price.

Shona

Thanks for that.

Seems that they might have plenty to chat about.

I wonder how many history books you might find on Sir Michael Bishop's bookshelves? (Maybe he gets a reading list from Warren Buffett).

Perhaps BD/LH and their advisors prefer to spend their spare time woodworking-and are familiar with that useful tool, the vice.

Dont know much about the machinations of competition regulation-but would it be more palatable, at least in presentational terms, to show that any acquired assets such as slots were still vested in a business that continuined to provide competition in the air travel market "in the round".

If BD has a low cost element-that itself provides an element of competition in that segment of the market-if that element were retained in being in some form-and as necessary slots were part of that acquisition-would this make a better presentation to anybody required to make a determination upon that acquisition?

Of course I suppose that anything that happened after that sanctioned acquisition might be beyond the effective reach of the regulatory authority.

globalste

Im sure its been mentioned before, but I was reading on Reuters yesterday where I BA spokesperson said that "BA would be very interested to purchase BMi"

ba273

It's been widely reported that BA would be very interested. I think WW commented on it in Vegas recently.

The issue would be the competition authorities - I'm sure they would have to give up routes, and then there'd be the outcry over landing slots at Heathrow (although I think BA are talking to Lufthansa about buying some of these).

It would be good to get more regional services, rather than just back and forth to London!

toothy

Apart from the fact that BMI have been following BA's lead and becoming LHR centric.

cornishsimon

i suppose it would depend what the deal was, if it was bmi mainline or if baby and BMIR was included in the deal !

would be nice to see some emb135 and 145's back in the BA scheme! especially considering some of the bmir fleet are now ex flymaybe, ex ba!

uk1

DC Miles > BA Miles

Jenbel

It's ok, I'm sure if BA did buy BD, they'd be the first to go. BA simply isn't interested - maybe they could sell them off to Flybe, but Flybe has already bought many of those routes when they bought BA Connect

m600

The third runway at LHR is on hold, there is increasing political pressure to develop high-speed rail links and the UK's committed to reducing carbon emissions by 80% by 2050 - is there a future for domestic flights?

Furton

Yes, unless High speed rails link major cities with the airports, as opposed to city to city connections. The only reason I use domestic flights is for transfers.

Mutu

And what if:

ATI with AA/IB is not granted or the carve outs are just too great?
The IB merger falls over because IB decides to turn its shorthaul ops into a true loco operation which doesnt fit with BA vision?
What if you assume LHR 3rd runway just won't happen?

Then if you were BA, alone amongst the big euro mainline carriers who benefit from deep rooted alliances with ATI, would you not go right back to fortress Heathrow mentality and buy as many slots as you can to put some profitable growth into the BA network....even if giving up 20% of BD slots was required, there are enough empty or low yield seats on BA shorthaul that could be filled, and longhaul operations could get a network boost with the retained slots (where would you like BA to fly? WW says 2 more US and 3 asian routes are being planned for 787 intro, .......I assume these slots will come from somewhere , hopefully not dropped routes or frequencies)

uk1

Or (as others may be doing) declare an insincere interest in BMI so that the cost of acquisition for whoever eventually takes BMI increases, thus making the cost base of your "competitors" acquisition of LHR slots even more expensive?