londonmet

Vueling and Clickair to merge-08 July, 2008!

I wonder how many we'll see in the UK this summer?

L Met

CaptainSandL

That will give easyJet one less job to do when they take them over

2Planks

Given the inaccuracies in the detail (Clickair is only 20% owned by Iberia - source Clickair.com) can this article be trusted?

uklad007

Clickair is only 20% owned by Iberia but Iberia has 80% of the voting rights so has more of a say than the stake it owns (a good deal when they struck that one!!) That said i did hear Iberia were going to end up with 40% of the merged company (not sure how that works out from the original 20% of one half!) - which it now has to apply for an exemption on the EU rules which state if a company owns more than (29.9%??) it must bid for the remaining shares - this isnt what Iberia wants to do at this stage.

One other thing though, i would have thought when these two merged that the Clickair name would survive rather than Vueling but thats just my personal opinion!

68+iou1

Pax polls show that Vueling has a higher pax approval.

VAFFPAX

UKLAD is correct. Iberia has 80% of the voting rights at Clickair. In April they announced that they were moving several of their routes out of BCN to Clickair, so there's a distinct relationship between the two airlines.

If Vueling and Clickair merge, that would make the merged entity a very large presence at BCN...

S.

malagajohn

Iberia have applied to the CNMV , the Spanish stock exchange regulator to permit them NOT to make a bid for the 100% of the company - following the merger they will have 40% of the capital and are obliged to make a bid for 100% once their shareholding reaches 30% - the exemption is expected to be granted

Seat62K

From a commercial art point of view (i.e., paint scheme, advertising, Website etc.) I much prefer Vueling to Clickair (but then again, I thought the same about Go and easyJet..... ).
Has anyone considered the ramifications of this merger if Iberia were to develop closer links with BA?

Morbid

Iberia have played the game very well in relation to Vueling. Unfortunately that cant be said for the business as a whole...

Vueling

Upstart low cost set up in BCN to directly attack what has always been seen as Iberias failure to establish a hub there and instead make the Catalans fly to Madrid first. Vueling was set up with backing and business model of Jetblue with quite a few ex Virgin staff...

Needless to say Iberia didn´t like this so set up Clickair cleverly diverting both Ac and resources to the new company which helped the IB bottom line by reducing liabilities. Putting in an "airline analyst" from Accenture (not sure - might be one of the other big finance houses) as CEO and you could see from day one what the deal was... Transfer loss making routes and Ac to Clickair and let them attack Vueling at the same time. (Note: Any new airline in Spain is hounded by IB or its affiliate Air Nostrum until he who has the biggest pockets wins).

Coming to the present day... Vueling and Clickair have been losing money constantly since day one. Who has the deepest pockets... IB. Who takes control of a large and well entrenched low cost airline with a Barcelona base and no incumbent competition??? IB... So jonny foreigner who wanted to take some of Spains market from IB... its time you went home. All of which being perfectly legal within the somewhat "young" Spanish business legal system.

So Iberia won the "battle"...

BUT...

Iberia appears to have lost the "war", whilst their little fun and games in BCN have worked out well their big gameplan to produce record profits and sell the company to another airline or investment house has come tumbling down. In much the same way as the housing market in Spain has been growing at 20-30% a year so has everthing else.... all based on CREDIT... Acuasitions of companies like BAA have been financed through credit which is now begining to bite. How does this affect IBeria?

Iberia has not invested in just about anything for the last 4 years and where it did order A320´s these were quickly sold on to Clickair at a paper profit (anyone remember the new 320´s that were in storage in TLS a few yrs ago... IB´s). Everything that could be sold, has been sold or spun off... The share price climbed and climbed, the Spanish banks piled in... and then the crunch came:

No one wants to buy Iberia... why? Old aircraft, over inflated share price, long haul fleet renewal due shortly, short haul fleet needed urgently (replace those MD 80´s). They played high stakes and lost. So whats left now:

- Fuel hungry Ac
- No assets left to sell
- Spanish domestic market collapsing

Interesting times.... especially when they still talk about how they´ll need the A380!!!

PS: Caja Madrid, one of Spains biggest banks, has lost over €M240 in the 55% decline in Iberias share price since Jan... Ironic really as it was them that scuppered any sale by wanting an ever higher price for the company.

Morbid

Forgot to add that Vueling has the stronger branding and greater popularity in Barcelona and the minds of the Catalans for one reason only... its not IBERIA!!

VAFFPAX

The Catalans (and I know a few) are very very strong on what they want and how they want it. Vueling-Clickair will have to play this game very carefully to not alienate them.

S.