British Airways buys BMI

[fjc]

Heard about this on the very early news.
British Airways owner IAG seals deal to buy BMI for £172.5m - Telegraph

And Virgin isn't happy.
http://www.dailymail.co.uk/news/art...ys-BMI-giving-lions-share-Heathrow-spots.html

Forbes' comments
http://www.forbes.com/sites/heather...-for-bmi-stirs-up-airline-competition-battle/

 

[leemin]

SRB has vowed to appeal to the UK's version of the ACCC to stop the deal going through.


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[elbarto]

SRB has vowed to appeal to the UK's version of the ACCC to stop the deal going through.


Sent from my iPhone using Aust Freq Fly app

Branson should have made a better offer. Apparently he's had a standing offer, for around £50 million, with Lufthansa for several years. Which seems like a price that's very opportunistic.

 

[skywalkerLAX]

Of course Branson isn't happy. He essentially lost his feeder that provided him with passengers from whole Britain without any significant overhead & exposure to a domestic loss market. Not sure how problematic it will be for Virgin Atlantic to operate exclusively ex LON. When I checked in for SYD-HKG-LHR-FRA they couldn't even print an electronic baggage tag because their system is not compatible with Lufthansa. :evil:

Offering 50 mio GBP is living in a dream world. He might have gotten through many deals with such a strategy but of course LH isn't as stupid and money needy as a bankrupt railway company that you can swallow for a couple cents. Given that, I'm sure LH would have preferred to sell it to VS over BA but in the end money talks.

 

[JohnK]

Without looking at the fine print this is not good news at all.

Need to quickly make 2 redemptions to Thailand for April and June and that may just about be it if not major changes to Diamond Club.

I shall let the experts digest all the information before commenting further....

 

[The Rok]

I am not convinced this deal will get regurlatory approval. I would imagine they will be required to off load some of the LHR landing slots in order to complete the purchase which is complety contrary to their reasons for purchasing BMI.

Expect a few major objections to the regulator re this deal.

VS will object,

As a majority shareholder in EY I would expect Michael O'Leary to have an objection, not to mention a few others.

I don't think we have seen the end of this, i think its only the beginning.

 

[anat0l]

I agree that this purchase is not going to be without a fight nor regulatory hurdles.

Not sure if it's bad or good per se. It won't matter who bought bmi - that's one less British player and hence "higher air prices". The landing slots issue is a more pertinent one, however why is it that SBB/VS has really only been making a big noise now about slots, i.e. where has been his plans or ambition to try and jockey for and utilise additional slots in the past.

The network of bmi is inconsequential, unless your business is significant in Eastern Europe or North Africa. Diamond Club, on the other hand, is a different matter - many members might do well in burning off their points, unless you have a very big total and possibly might be able to transition to Avios (assuming that Diamond Club will translate to this on handover).

In general I also agree that VS offered too little to make a good deal for bmi/LH group. LH needs some cash after the "bmi experiment". If VS successfully instigate a block via the regulator, I wouldn't think that automatically gives them the sole exclusive right to buy bmi.



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[The Rok]

I actually thought that after all the big mouthing Ryanair did over the last 5 years about setting up a long haul LCC that they would put in an offer, they certainly have the cash.

Easy-jet would also be another contender for the airline should IAG not be successful.

It still baffles me just how important LHR is to Euro travel. London has 5 major airports, does LHR really justify the value assigned to its landing/takeoff slots?

 

[anat0l]

It still baffles me just how important LHR is to Euro travel. London has 5 major airports, does LHR really justify the value assigned to its landing/takeoff slots?

LHR is a victim of its "success" so to speak. It was a major hub and every airline (exceptions exist) wanted to be based there. The airport's popularity snowballed and now it is where we are now where it is still a "popular" airport but movements must be strictly slot controlled.

In fact, the other London airports except LCY weren't much to talk about until LCCs started making a mark on air travel significantly. STN comes to mind. Now some of them are facing crowding issues let alone the complex London airspace.

LHR also happens to be the closest airport to London proper. Except for LCY, no other airport can reach the inner city within 15-25 minutes.

Any significant restructure about the other London airports would require the groupings to be somewhat compatible. For example, alliances want to be co-terminal as much as possible, let alone at the same airport. The changes required would be significant and you'd want the other airports to be suitably improved to LHR standards before moving.

Begs to wonder why VS can't take greater advantage of say LGW where there might be more scope for expanding than at LHR. I know the whole London airports and airspace issues are far more complex than that......



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[The Rok]

VS are quite active in Gatwick, and I prefer flying out of there than Heathrow. Gatwick has a fantastic Clubhouse, Drive Thru Check In which is freakin awesome at Gatwick and Heathrow......

If you are in economy the best feature of Gatwick is twighlight check in.... drop your bags the night before and head to the airport in comfort on the day of departure, knowing that your luggage is already checked in.

To be honest I would love it if VS pulled out of Heathrow all together and set up Gatwick as their official base. It would also be a lower cost base than Heathrow, allowing them to offer increased inflight service. I think had VS bought BMI they could of done so much more with it than British Airways can...

 

[clifford]

Without looking at the fine print this is not good news at all.

Need to quickly make 2 redemptions to Thailand for April and June and that may just about be it if not major changes to Diamond Club.

I agree completely. I need to get rid of all my BD points quick smart too.

And as for other posters suggesting that FR or EZY should buy BD, they's just fantasyland stuff. It's not the business they're in, and why would they want to buy a loss-making company with many slots at a very high-priced airport?

Just think about it.

 

[The Rok]

I agree completely. I need to get rid of all my BD points quick smart too.

And as for other posters suggesting that FR or EZY should buy BD, they's just fantasyland stuff. It's not the business they're in, and why would they want to buy a loss-making company with many slots at a very high-priced airport?

Just think about it.

Because the slots are basically worth more than the airline as a whole. Buy the airline, sell off the valuable Heathrow slots as that is not your end of the market, recoup a substantial portion of your investment, rejig the existing airline, strike new employment agreements while reducing the work force, gain significant cost synergies and whoopsie do, you now have a very very cheap capital purchase of planes and associated equipment....

You have now doubled you fleet and route network with very little cash up front and very little risk to your investors. Its a damn sight cheaper then going to Boeing to buy 100 new planes.......

 

[clifford]

Because the slots are basically worth more than the airline as a whole. Buy the airline, sell off the valuable Heathrow slots as that is not your end of the market, recoup a substantial portion of your investment, rejig the existing airline, strike new employment agreements while reducing the work force, gain significant cost synergies and whoopsie do, you now have a very very cheap capital purchase of planes and associated equipment....

You have now doubled you fleet and route network with very little cash up front and very little risk to your investors. Its a damn sight cheaper then going to Boeing to buy 100 new planes.......

Sounds good, but it's not the business they're in. If it was such a great deal, you'd have all sorts of airlines lining up. And don't forget that Ryanair is a foreign airline.

 

[elbarto]

I doubt Ryanair would object too much since they have no interest in LHR. Ryanairs time is going to be better spent fighting the EU carbon tax on airlines.

 

[Noob]

If Branson wanted it that badly he should have made a more decent and more competitive offer! It is a real shame that VS didn't get BMI and they have no one to blame but them selves.

However, I think regulatory bodies are going to given BA a run for the money, and as they should!

 

[Flashback]

I am not convinced this deal will get regurlatory approval. I would imagine they will be required to off load some of the LHR landing slots in order to complete the purchase which is complety contrary to their reasons for purchasing BMI.

Expect a few major objections to the regulator re this deal.

VS will object,

As a majority shareholder in EY I would expect Michael O'Leary to have an objection, not to mention a few others.

I don't think we have seen the end of this, i think its only the beginning.

The deal would see BA with 53% of all slots at LHR.. that's certainly what seems to be causing the most uproar.

Like others, my partner and I have close to 100k BMI miles so need to have a think about what to do with them (Honeymoon sounds like a good idea!).

It would be a shame to see them go, their current deals like LHR-NCE return for 149 GBP is damn good, amongst some of the other specials they have going right now.

 

[anat0l]

Like others, my partner and I have close to 100k BMI miles so need to have a think about what to do with them (Honeymoon sounds like a good idea!).

Is that each? If so, there's a decent lot of places you can go with that! (Yes, YQ hurts, but it doesn't quite reach the price point of a J ticket....yet)

It would be a shame to see them go, their current deals like LHR-NCE return for 149 GBP is damn good, amongst some of the other specials they have going right now.

I'm surprised how they had those deals all the time. Really was a cash bleed, although often BA were going toe-to-toe with them too (but BA deals disappeared much faster).

 

[Flashback]

Is that each? If so, there's a decent lot of places you can go with that! (Yes, YQ hurts, but it doesn't quite reach the price point of a J ticket....yet)

Altogether. Pondering....... better ponder fast though, I guess. Time for +1 to cancel her BMI AMEX too me-thinks and just attribute points to my Plat Charge Card

I'm surprised how they had those deals all the time. Really was a cash bleed, although often BA were going toe-to-toe with them too (but BA deals disappeared much faster).

Yeh, when possible I'd book the BA matched price for OW SC :mrgreen:

 

[Flashback]

If this does go through, I wonder where I should start crediting next year's *A C class flights (approx 7k miles return trip), which I'll be doing rather regularly.

 

[anat0l]

If this does go through, I wonder where I should start crediting next year's *A C class flights (approx 7k miles return trip), which I'll be doing rather regularly.

A little O/T now....

A3 for fast status, and that's pretty much it. Balanced options can include TK and OZ.

None of those have a local Amex to credit points towards, I believe. Not sure if UA or LH have such a credit card in the UK, otherwise they are also options. UA has decent award redemption; *G is pretty solid level to obtain. LH is even harder for *G, but if flying lots of *A C particularly some long haul / medium long haul and especially on LH group airlines, it is worth considering (top tier redemptions are expensive but very good range and options).

Basically check the status accumulation rates and see which will get you *G faster, as a start. I know that, for example, OZ only ranges status mile accumulation up to 1.5x (I believe) for F, perhaps 2.0x - quite small. LH is very generous on J and F - usually 2x and 3x respectively, and also gives some points for even cheap intra-Europe fares in Y (which others will give you little or nought). I can't remember A3, although I think from memory they semi-nerfed it a bit from the *A membership commencement.

Also keep in mind that TK has a cheap requalification, and OZ and LH give status for 2 years (OZ gives you 2 years to get your status again, LH gives you 2 x 1 year (chances)).