Raffles

Oooh, FT is working again!

So I can be the first person to post this.

Links here:

http://news.bbc.co.uk/1/hi/business/7061246.stm
http://www.ft.com/cms/s/705ccf84-82d...0779fd2ac.html
http://www.britishairways.com/main/f...s?p_faqid=3028
http://www.easyjet.com/EN/news/easyj...b_airways.html

I had an investment bank analyst note an hour ago which sees this as a great result for EasyJet. The aircraft have a net value after debt of £80m, which covers the bulk of the £100m purchase price. Whilst GB is only marginally profitable at present, it will save £10m of BA franchise fees going forward. It is also worth noting that GB has a back-office structure that employs 50% of the staff numbers at EasyJet despite only flying 10% as many passengers.

My initial views revolve around a) whether Gatwick still makes sense for BA now that there are fewer pax to spread the overhead across and b) what routes will be cut elsewhere as BA frees up short-haul planes to take over the GB routes it wants to keep serving.

Comments below, please!

edi-traveller

Got the email this morning!

On the day of the first A380 revenue flight and the sales of GB Airways - FT has been down for most of the day!

GB Airways consistently give better service in Club Europe that BA Mainline - so this is a further erosion of BA's service and product from LGW. They say they will service some of the GB destinations........but at what level of quality....

I'll be sad to see GB painted orange.

jabrams72

someone else has spent the morning on a.net?

It looks like BA will keep the LHR slots however, and will run many of the routes themselves...

spanishflea

Grr, I wanted to get in there first!

I'm very surprised easyJet have bought GB, less so that the franchise has gone. Note also the Loganair franchise expires in a years time also.

The list of destinations BA are keeping is a bit weird too, I would have expected some like MLA and PFO to be kept, less so AGP and FAO.

Oh well.

lgw29

FROM: Willie Walsh, Chief Executive

I have announced today that British Airways is to end its franchise agreements with both GB Airways and Loganair.

We will end our relationship with GB Airways in March 2008. easyJet has made an offer to buy GB Airways and this has enabled us to end the franchise agreement, two years early.

We had an option to buy GB Airways but we have chosen not to. Instead, we intend to start our own services from Gatwick to Malaga, Faro, Gibraltar, Ibiza, Tunis and Palma and from Heathrow to Malaga and Faro, some of the routes operated under the GB Airways franchise.

We have a significant base at Gatwick and our focus will be on maintaining and developing it as an integral part of our business. Our employees at Gatwick have worked hard to improve profitability at the airport and we will continue to have a strong presence there with a fleet of 43 aircraft flying to 54 destinations.

Regrettably, the loss of our ground handling activity for GB Airways at Gatwick will mean a reduction in staff numbers. We want to achieve these reductions using voluntary means and discussions with the trade unions and our staff at Gatwick will begin today.

We will end our franchise with Loganair from October 2008 and begin a codeshare arrangement with them after that date.

Today’s announcement means that from next October, we will no longer have any UK-based franchise partners.

Franchises were established to provide transfer passengers for our mainline operation and increase the reach of our brand. But they have now outlived their purpose for us.

There will be a transition period until the end of the franchises. GB Airways will continue to operate as BA’s franchise partner on its existing network to destinations in Europe and North Africa until March 29, 2008. Loganair will continue to operate as a franchise partner on Scottish routes until October 25 next year.

We are committed to an orderly transition of the franchises to minimise any impact on customers. The sale of GB Airways should be completed within four to six weeks. During this period, flights will operate normally. After then, passengers can rebook on easyJet or get a refund.

Our overseas franchises, Comair and Sun Air, continue to make a valuable contribution to our business and are not affected by today’s announcement.

Kibison

I think you were the first person to post on all of FlyerTalk after the shutdown.

Anyway, this is bad news to me. The only business class flights direct to the UK from Malta will now be Air Malta.

Raffles

That's how I first read it as well but - if you look at the small print - EasyJet HAS acquired the LHR slots. However, it has agreed to sell them to other airlines as quickly as possible and pass the money to the GB owners. Of course, BA may well buy them ....

IAMORGAN

You just beat me to it!!

So those of you on the Malta DO will be some of the last pax on GB airways flights then.


It's another sign that BA doesn't care about their LGW operations -look after the Heathrow slots and they can have the rest. GB Airways is widely regarded as a great little airline, still retaining service levels that BA mainline would do well to look at.

Of course, '10% cuts' is the magic phrase -so as well as costs, maybe they also mean 10% of their route network?!

Seriously, BA has reduced in size dramatically in the past years and I am becoming slightly concerned that they really don't have the direction or leadership to succeed. It seems to me that their attitude towards any loss if profitability is simply -offload it as quickly as possible, without trying to troubleshoot. I think that there is room for profitability in GB Airways -easyjet certainly seem to think so. It's like their regional operations; their reaction was firstly to copy/mimic easyjet/fr with a half-hearted attempt at an LCC, expecting it to be profitable within 12 months, and then paying flybe to take it off their hands.

-Gets off soapbox!

Edited to include the fact that when I began typing this, there was just Raffles' post!

Dave_C

It appears that the LHR slots are going to be sold, so may not necessarily go to BA.

SmilingBoy

I always thought there is no ownership of slots as such; that's why you need complicated legal procedures to trade slots.

adrianjc32

Bit of a suprise for everyone really. Must have been in the pipeline for a while though. I feel for the crew at GB who must be rather upset at the thought of selling scratch cards and wearing orange!

Raffles

Correct. But then many of us in Britain claim to own a house or apartment when all we actually own is a 900+ (or often 90+) year leasehold ....

Cyba

I am somewhat surprised by this decision particularly as this further reduces the size of BA's network.

I suppose most of these routes were mostly O&D traffic.

I'm also surprised by the list of destinations they're keeping. IBZ stays but CMN doesn't ? And they'll be serving AGP and FAO from LHR in a year when they're moving WAW to LGW?

Some of these decisions seem perplexing to me

The Saint

I shall bitterly miss the SSH route. Looks like I shall have return to the ghastly charters.

Raffles

There goes the '240 TP's for £500' as well - although it was a LONG way in CE. EZ may keep the route, though, given the lack of competition.