Virgin/easy/BMI merge possibility

[atmosphere]

There has been a lot of rumour and speculation in the easyJet camp regarding the possible tie up between Virgin Atlantic, BMI, and easyJet now that Stelios has threatened to pull the easy name from easyjet...

Galley FM has reported that Virgin Atlantic would remain as it is, but BMI and easyJet would be branded Virgin Europe and BMI would adopt the low cost business model used by easyJet and both be used to expand the presence of "easyJet/Virgin Europe" within Europe and the Middle east and work as a feeder airline into LHR and LGW for Branson and his long haul ventures to better compete with BA, AA, etc.

Simply curious to see if the same rumours are circulating around the VS and BD camps?

Sphere!

[Serenity]

And don't forget the confirmed rumours of virgin f/d and Flybe to be exchanging roles.
Would think the uk's largest regional carrier could offer a good feeder service when it is finally up for sale!!!

[spocla]

"Simply curious to see if the same rumours are circulating around the VS and BD camps?".... Not in VS

[Capetonian]

Is there any truth in the rumour that the new airline will be called : EasyVirgin?

http://www.mobile-phone-links.co.uk/free-wallpapers/funny-pictures/images/virgin-slut.jpg

[ericlday]

B Mi Easy Virgin !!!!

[dead_pan]

What about Citrus Air? An orange (sleazyJet), a lemon (BMI), and a limey (Richard Branson).

Flyorange would work too. At least it ties in with their CC's skin tone.

[davidjohnson6]

Ignoring the operational aspects of merging 3 very different airlines, the financing of such a merger would be extremely difficult.
Easyjet has shares traded on a stock exchange, making a merger with another plc fairly easy. BMI however is part of Lufthansa, and only Lufthansa shares are traded on an exchange. Virgin is essentially a private company, and neither it nor its parent have shares traded in a credible way on an exchange.

Lufthansa would be extremely unlikely to want a major equity stake in Easyjet. Virgin do not have the cash to purchase Easyjet. Easyjet probably have the cash available to purchase bmi from Lufthansa should they so wish. I suspect that Virgin would cost considerably more to purchase than bmi. Buying Virgin alone in cash would be a very considerable stretch for Easyjet, incurring all the risks that come with significant expansion. Easyjet most certainly do not have the cash to buy both bmi and Virgin in the same year.

The financial aspects sounds like an absolute mess - although it's the kind of thing that a large bank would happily promote, while salivating over the potential fees that could be charged for such a complicated financing.

[racedo]

"Simply curious to see if the same rumours are circulating around the VS and BD camps?".... Not in VS

Presume combined it would be either VD or BS :)

[Facelookbovvered]

I can't see any benefit for any of the players, as was pointed out LH hold bmi and have no plans to sell. Easyjet have known for some time that they might loose the Easy brand name due to disputes over revenue splits, a re-branding is no big deal, hey they could pick up bmibaby for not a lot which is known around Europe, having flown to most European airports before canx the route a few months later, but it is known!!

No on balance this thread is going nowhere

[Anansis]

Not sure if I believe this will ever hapen, but rebranding easyJet as Virgin short haul would be an interesting development if Stelios withdraws permission to use easy branding on the aircraft (maybe clever maneuvering by the easy board to keep him in line!?).

Apparently there was serious talk a few years ago of easyjet providing direct connections to/from Oasis Hong Kong flights at LGW (before they sadly went bust). IMO even some sort of agreement which stops short of a merger would be mutually beneficial, Virgin getting increased feeder traffic and easyjet benefiting from higher ticket sales and loads (think of all that extra ancilliary revenue!!). Even simply allowing passengers to rebook on the next available flight without paying a fee if one of the connections is delayed would probably encourage many more people from a much wider catchment area to fly with both airlines.

[beauport potato man]

I actually disagree with most the comments above - i think its got a high chance of happening.

(as quoted in The Times approx 3 weeks ago) SRB was saying VS could probably not stay an independant for much longer. Who could they possibly merge with? Buy out?

easy might shortly be in need of a brand thats recognisable europe wide, with huge popular customer appeal, and that can easily translate across the many borders of europe where it operates.

Virgin.

The chat about share listed companies/plc's/private companies etc is interesting but not a barrier. These tie ups ARE possible.
Look at the TCX's/Thomson's/Monarch's... they operate a near overlap of EZY flights bar the longhaul. Who's to say VS can't provide that longhaul missing link on their Airbuses?
It could be a modern day BA beating, charter crushing, low cost/hybrid airline.

Crazy? Maybe not...

[INKJET]

Easy-Virgin may have some mileage, apart from one small problem, access to LHR, the third runway is now history so the current slots will become ever more valuable to the current owners, these being BA LH(BMI) & Virgin so short haul feed by Easy is a non starter at least at LHR LH would want more money than either Virgin or Easy could afford for its LHR slots and they will go to Swiss/Austrian and LH before selling any.

Easy are in a mess right now with shortages of crew and low moral amongst them not helped by importing Ryanair manager/policies into a different airline route structure.

Virgin are fast becoming the last girl at a dance and no takers, next Tuesday budget changes to APD could kill long haul flights for all but the wealthy and Virgin will be very exposed to any increase.

[stansdead]

The Virgin brand is not as strong in Europe as many of you imagine.

It is a huge brand in UK, USA and many other territories. Mainly due to airlines, phones, TV etc.

But, if you ask an average Austrian (for instance) if they know of Virgin Atlantic Airways you will likely get an "err, no" reply.

Don't kid yourselves. VS is a niche airline that has realised it has no longer got a niche. It's in trouble going forward unless it merges with someone like Lufthansa/BMI.

As for easyJet: Losing the easy brand would be a MASSIVE blow. They may not even be allowed to use the same shade of distinctive Orange - in all seriousness, mean it - as all major corporations protect not just the brand name, but also the brand IMAGE!!!!

easyJet as another name? The airline may well go bust.

But, Stelios is no mug. Why kill the Goose that laid the Golden egg and end with nothing? He won't. What he wants is more value (i.e. dividends) for shareholders (i.e. him ).

easyJet/Virgin tie up latest odds: to happen 5/1, not to happen 1/7

Virgin/Lufthansa to tie up odds: to happen 5/4, not to happen 4/6

Anyone fancy a flutter?

[MUFC_fan]

I think if it were to happen it would form one hell of an airline.

However, you have to ask what form the airline would take? The Virgin name would certainly be the permanent one but what service would be offered as it would have to be pretty standard across both long and short haul.

Assuming BD's fleet would be integrated with U2s, I just cannot see U2s business model working at airports such as LHR where quick turnarounds are impossible, fees are high etc.

It would be very interesting to see though!:ok:

[EI-BUD]

Set aside the issues of the make up of such a merged airline (ie Low cost or Long haul etc) my view is that the Easyjet brand is strong and as such I would think changing the name is a bad idea.

If they want to change Easyjet or ramp up the brand in some way they could revise the livery or somethink like that. In these recessionary times its all about cost cutting and driving price perception and often the brand building is forgotten about. The way go marketed itself was fun and innovative and Easyjet was much like that.

I could see a place for Easyjet at LHR operting across Europe just as they do at LGW, but the Virgin piece I am not sure about.

Richard Branson is well regarded and most would regard him as the ultimate entreprenaur but I dont see that most of the Virgin ventures have been that successful in their own right in the long run. Eg Virgin megastore (Music), Virgin Nigeria. So my point would be the Easy brand is more forward thinking and therefore I would not like to see it disappear.

EI-BUD

[Anansis]

Correct me if I'm wrong, but isn't Virgin Atlantic already 49% owned by Singapore Airlnes?

[MUFC_fan]

Correct me if I'm wrong, but isn't Virgin Atlantic already 49% owned by Singapore Airlnes?


Correct.

However, SRB owns 51% which is obviously more important.

If anything were to happen, it would be VS purchasing the rest:

"The airline is not for sale and will never be for sale. It is my baby and it is something I am enormously proud of." SRB

[atmosphere]

Surely you could create "Virgin Europe" and keep it's business model the same and keep the current management structure CEO the same and run the two businesses separately......

I think it could be a winner, I do think it would be bad news for easy to lose it's brand, but realistically, which brand could it adopt to keep it ahead in the market, and recognisable....?

[pwalhx]

Just to throw a spanner is the works isnt Virgin a brand loosing its lustre and has been said less well known in Europe, Easy is in reality the stronger brand.

[ConstantFlyer]

All three airlines could work closely together while being run as separate business units. Both bmi and easyJet could adopt the Virgin Europe identity, but the ex-bmi unit could feed VS flights from LHR, while the ex-easy unit fed VS flights from LGW. I'd expect bmi Regional not to be part of the deal, though. Perhaps they'd go it alone or link up with another regional like Eastern.

[Deep and fast]

Constant F

The group is going to be pulled together if anything, not merged sold(just yet) or anything else.

The synergies with other airlines will be from Lufthansa group and the star alliance.

The Germans won't let this tommie airline beat them!

D and F :8

[Anansis]

I agree. Adopting Virgin branding is not the same as completing an out and out merger. Maybe this will happen if the dispute with stelios over the easy brand gets ugly (although as he is the majority shareholder, it would be surprising if it came to this).

With regards to Virgin Atlantic, surely if they are forced to merge with another airline it would be a skyteam member given Singapore Airlines stake in the company.

I think it is also worth noting the similarities between the situations at virgin and easy. Virgin might be SRB's baby but it is not his airline, a reality being felt all too painfully by Stelios at the moment.

[TwinAisle]

a skyteam member given Singapore Airlines stake

Think you mean Star Alliance...

FWIW, I cannot for a single second see any business merit in combining easyJet and Virgin Atlantic. Other deals are much, much more likely and more sensible.

TA

[davidjohnson6]

Part of the rationale for this debate seems to be the possibility of easyJet losing the right to use 'easy' branding. Why would the airline company want to then sign up to a branding agreement paying royalty fees every year to another company and risk ending up in the same situation in 5 or 10 years time ?

easyJet is no longer a fledgling airline that may go bust any day, but is now a major company earning substantial profits and more than capable of standing on its own two feet.

[Anansis]

Think you mean Star Alliance...

You're quite right- my bad :}

As Davidjohnson06 points out, my opinions on this matter are based on the hypothetical scenario of easyjet losing the right to use the 'easy' brand. I don't believe the outright merger of Virgin, Easyjet and BMI is likely but I am intrigued by the possibility of easyjet rebranding as virgin.

This is not as far fetched as it seems. Virgin Blue in Australia is only 25% owned by the Virgin Group. Their biggest shareholder is Patrick Corporation, who have a 65% stake (according to wikipedia). An identical state of affairs exists in the USA, where Virgin America is only 25% owned by the Virgin Group, the rest being owned by BLack Canyon Capital. Neither airline offers connections to Virgin Atlantic and they all have their own seperate independent corporate structures.

I appreciate that most of what is being written is speculation, but it is informed speculation about something which could possibly happen. However, I'm reasonably certain that neither side in the easyjet dispute would let such a thing happen (though big ego's can often get in the way or reason!) :ok:

[LD12986]

Part of the rationale for this debate seems to be the possibility of easyJet losing the right to use 'easy' branding. Why would the airline company want to then sign up to a branding agreement paying royalty fees every year to another company and risk ending up in the same situation in 5 or 10 years time ?

easyJet is no longer a fledgling airline that may go bust any day, but is now a major company earning substantial profits and more than capable of standing on its own two feet.


And if anything, operating under the Virgin brand under licence would far more restrictive (and expensive) than licensing the Easy same (for which Easyjet pays £1 a year).

I cannot see any form of deal between the three happening. Easyjet should stick to what it does well - low-cost short-haul point to point.

Some form of deal between bmi and Virgin has been mooted for years and nothing has come of it. LH holds all the cards and it should be remembered that its business model is based on feeding traffic into its own hubs at FRA etc. Why would LH want to use its ownership of bmi to enter into some kind of deal with Virgin to divert traffic into Virgin's own network where it doesn't get 100% of the benefit?

[citadel]

When Virgin moves into expansion mode again, it will be easier and cheaper at Gatwick than Heathrow. Gatwick is leisure and Heathrow business. The likes of Tui and Thomas Cook are actively booking away from Virgin Holidays/Atlantic, so it makes sense for Virgin to look for a new source of traffic feed. Easy's routes into Gatwick from Eastern Europe could provide a nice source of holidaymakers, looking to try destinations such as Florida and the Caribbean. No need to merge though, but you have to work out how to make the connection work for Easy, i.e. no expensive/complicated interlining and think about what happens if its flight is late and the Virgin connection is missed.

[LD12986]

This presentation on bmi at the LH Investors' Day sets out their strategy for bmi:

http://investor-relations.lufthansa.com/fileadmin/downloads/en/charts-speeches/bmi-Online-2010-06-28-e.pdf

No mention of any partnerships with other airlines, apart from fellow *A partners.

[eagle21]

Neither airline offers connections to Virgin Atlantic

True but...

Virgin Atlantic sells connection from Sydney with Virgin blue

[xray one]

Far as I'm aware SRB owns 51% of VAA... So still his baby, and if rumours are true Singapore wants out?

[boris]

Why doesn't a mod place this thread into the spotters corner as it really is where it should be. Not a rumour, neither news! :ugh::ugh: