Furton

http://business.timesonline.co.uk/to...cle6823331.ece

Interesting development, even if it is just to buy the LHR slots it would be a wise move for when the market picks up again.

KenJohn

Surely it must be against the public interest on competition grounds; both for domestic and european routes. Thought LH was keeping BMI dangling. BMI would be a better fit for VS than BA.


The Iberia bid is still outstanding and they are waiting for clearance with the AA link-up; there should be enough on BA's plate at the moment.

CT-UK

I can't see it happening for 2 reasons.

1. They don't have the cash
2. It would never be allowed to happen
3. Branson would cry

ian001

This is already being discussed on the BD forum.

It's a Sunday newspaper story, so take it with a pinch of salt, along with the rest of the speculation with BD.

BA (along with lots of other airlines) may well get into substantive talks with LH. They would be fools not to look at the opportunity. There are plenty of reasons why a buyout of the company is unlikely. If there was any deal with LH, it would most likely be a deal to acquire slots that LH is keen to offload.

flyer16

http://business.timesonline.co.uk/to...cle6823331.ece

I would love to see the intergration costs if this was to happen especially with repaints, new interiors,r e-designed uniforms, moving the whole of BMI into T5, dealing with unions from both sides and what to do with BMIs A330s. The poor BMED A320s have just left BA livery and now they could be going back lol (do the ex BMED planes still have BA LH interiors?)

Furton

Would it be blocked though? BMI only have 11% of the landing slots at LHR, combined with BA would give around 55% of the landing slots. I fail to see how this would be blocked when LH can purchase Swiss, Brussels & Austrian and utterly dominate FRA and the EU don't make a whisper?

flyer16

I think it would be great for BA in the longer term however like I have said I think the intergration would be a hard job and T5 would have to be expanded in some way to house the new BA owned BMI. I think BA are intrested most in the long-haul section most of which was formerly BMED of BMI which the AC already have BA interiors I cant see them keeping the A330s. But then the question gets asked why BA let BMED go to BMI in the first place instead of bringing it in-house itself.

continentalclub

I agree wholeheartedly with ian001 and CT-UK.

VS hate not being mentioned in an aviation story, so their modus operandi always seems to be to make a comment, even when they have not a hope of following through. This is a perfectly common sense approach though, for three reasons:

1. It may drive the final price paid by a 'competitor' for any acquisition up
2. Any comment is free column inches for the media
3. They have learnt over the years that the mass media almost never questions the fact that so little of what they PR actually ever happens

Accordingly, even if they have no real intent, BA may as well at least give point one above a whirl too.

The fact remains, though, that VS is 49% SQ-owned, and nothing in their strategy appears to suggest that they would support an acquisition, while the markets appear to think that BA could indeed raise the capital.

And I don't agree that VS/BD is a good fit for the air passenger. It may have been 10 or 15 years ago, but look at the route network, the fleet and the broader competitive landscape now. Why would VS (if there's any joined-up thinking) maintain a MAN route to compete with their own rail JV? If they win the ECML franchise, or Stagecoach buys Nat Ex, then they'd have a monopoly on all non-sleeper London to Scotland rail (oh yes, they do like the idea of monopolies!) So watch GLA, EDI and LBA get further downgraded BD frequencies and equipment. This would effectively create far more of a transport monopoly within the UK than BA buying them would.

VS have no domestic aviation experience either but would have to largely close BD corporate ops to get any kind of cost savings out of the acquired business. Neither would VSBD be of anything like the size needed to really compete against LH et al, and AF/KL.

That said, VS are still pursuing an eminently sensible strategy with a non-expert mass media and public-at-large, based on past experience at least.

flyer16

It also depends on who gives members of the BMIs board job offers too
Why didnt BA make a move for BMI in the past?

graraps

so...you're a loss-making airline trying to find ways to save pennies here and there, and saving it all up in order to buy another loss-making airline.
sounds real clever! ^

Prospero

or consider this alternative perspective...

You're a loss making airline that has committed itself into a EUR 1B cost saving programme and during which time you've been forced into purchasing an overpriced airline that has not turned a penny in profit in living history. Whilst there may be opportunities to turn this into a lucrative asset, it is doubtful this could be achieved without chipping away at the yields of your *A partners.

OPebble

I thought that LH had fired most of the BMI board anyway?

srbrenna

Erm, that's 3 reasons Of these only 1) is correct.

Shona

If there have been discussions as reported I had the following thoughts of what conceivably they might have been chatting about (with a starting point of very little detailed knowledge or understanding of such matters).

If an entire business is losing money why would a buyer wish to pay anything for it? Could a buyer be expected to be compensated for acquiring such a loss making business? Does the business or parts of it, as opposed to some of its assets, have a negative value?

Is there any reason to suppose that the entire targeted business wont lose more money in the future and have retained liabilities that might increase? (Why is acquiring an airline different from acquiring a bank in this respect-save that banks seem to engender State support)

The target business may have notionally valuable individual assets-in which case buy the assets as and when they become available and might be needed (or are necessarily tied to acquisition of just part of the business sought).


Would the "low cost" element within BM be of interest if BA doesnt have a separated and branded low cost arm? Rather than integrate assets of the acquired business why not keep them separately branded but invest in ( and enhance) the ready made separate brand.

Could it make sense to keep a "low cost" element clearly separated and branded from the existing business of BA?

Is that "low cost" element of interest to BA? (In which case who would be paying who any cash?)

MAN Pax

Rail runs from centre to centre -plane is for connections and destinations to the west of (and around) LHR