The Lufthansa / BMI Thing (merged)

[acbus1]

13% of the slots going to LH at LHR would be a serious threat to BA and VS.

Which could also be expressed as "healthy competition".

(OK, "healthy" may be slightly optimistic! Lets say some way towards being as healthy as it gets in the favouritist, bizzare, wasteful, strangulated world of the Heathrow slot system)

[mutualswap]

i think if Lufty were reading this their 1st move would be to find
acbus1 and sack him,therefore removing the company of atleast 1 member of deadwood!

[AirLCY]

Regardless of how much people like / dislike BA,BD,VS - surely it would be better if BA were to buy BD - Britain needs a national carrier with slots comparable to German and French flag carriers who have far greater slot majorities at their hub airports than BA. I think enough British Airlines have fallen into German hands already this year!

[king surf]

I Think Sir Michael might lose the Sir bit if he were to sell all to LH!!

[skiesfull]

LH would probably scrap the domestic and near-European destinations that can be served by train. I suspect they want the LHR slots to operate to the USA, similar to BA's intention to do so from Europe. As to the BMI workforce T's+C's, ask SWISS employees if Lufthansa ownership has meant an improvement or otherwise.

[BMEDFO]

Personally, I only see Lufty buying BD, they have first option- why wouldn't they? BA are putting 757s into Europe and treading on their turf, Lufty etc won't take this lying down.....

So my bets are on Lufty buying BMI, limited shorthaul (GLA/MAN/EDI) and The rest for Longhaul........

The big issue is who will fly the Jet's.....personally I can see another KLM UK style take over...a few bmi people will have jobs but In Lufthansa regional....the rest will told to

A very uncertain time indeed for bmi staff

[SinBin]

The only person who knows what is going on is SMB, and he won't tell anyone what's going on (why should he it's his shares), I think it's not all doom and gloom for us yet! All this is pure speculation and rumour control. There seems to be little truth to any of this.

[king surf]

The FT surely would not just dream up a story like this to sell the Newspaper.Leave that up to the daily mail!! Let's not forget that if BMI were to sell to LH 1 in 6 aircraft would be LH at LHR.Combined with many slots alwready they would dominate LHR alongside BA.

[skyman771]

AirLCY

surely it would be better if BA were to buy BD - Britain needs a national carrier

Can't have been too much thought gone into this comment. BA would simply be buying out the competition on its premium UK domestics such as GLA. For starters problems with monopolies commission, then again on other routes why on earth would BA want a stronger UK route network (other than to acquire more LHR slots) when it has been their policy over the years to transform their product from a national carrier into 'London Airlines' and sell off their regional op's !

[AirLCY]

LH will surely use the majority of slots to expand long haul from LHR which will damage both BA and Virgin - the British Carriers. Surely it would be far better if BA or even VS get the slots and expand long haul, rather than a non UK airline. I'd be very surprised if LH kept anywhere near the current level of European and Domestic ops from LHR if they take the slots. BA would end up with the majority of domestic ops from LHR, but if you look at the whole London market including STN / LTN and LGW - Easy are a fairly large carrier, who BA would still need to compete effectively against.

[SinBin]

Don't write off bmi just yet!! As I said earlier, only SMB knows what will happen, and the sell off is only an option that LH has given him. He is incredibly passionate about his baby, so would he really want to see everything he's built up over the years just disappear into thin air without a trace regardles of the money. I doubt it. LH are most probably just flexing their muscles in case he sells, but will he? Only SMB truly knows.

Management are using the word predator to describe the business at the moment. Somehow I think something else will happen, of which no-one can predict.

[22/04]

I still think a VS aquisition is the best option. Merge the long haul ops, operate a separate Virgin Brand on the mainline short haul, both from T3 LHR.

Sadly this would probably spell the end fo Baby abd Regional as both would be sold ( to EZY FR etc and FlyBe respectively, although I'd like to see a Jet2/Globespan/Baby merger)

All in all though ( leaving FR who I don't think would buy anyway) this would lead to strong UK compettion at LHR

[Ian Brooks]

I`m not so sure that the regional arm would be sold as there are quite a lot of trans ats from Manchester by both BMI and Virgin with the promise of
China by Virgin and of course the Star Alliance hub which Manchester is which are all fed by regional
The main question would be would Virgin/BMI be a Star Alliance or go it`s own way

Ian

[TopBunk]

IF Lufthansa exercised it options to buy BMI, I don't think that they would want the whole business and slots.

Personally, I would see their best option as being to keep sufficient LHR slots to operate a domestic feeder service to a LH/BMI operated LH network of say a dozen destinations. Lets say that this would require 50% of the existing BMI slots. They would then fund this whole venture by selling off the rest of the slots acquired to airlines desperate under open skies to get a toe in the door of LHR (ie. US carriers).

For LH to buy BMI and to operate LHR-Europe would be self defeating.

In this way, if it worked, great, if not, then it is a standalone operation easily severed. I'm not convinced that integration (a la AF/KLM) is necessarily on their plan at present.

[Ian Brooks]

According to Lufthansa they carry more long haul transfer pax through MAN than London especially to India, China and Pakistan

Ian

[PAXboy]

From various comments by various folks, I'll use this one:

Surely it would be far better if BA or even VS get the slots and expand long haul, rather than a non UK airline.

Before we even consider BA and VS, remember that the slots can be acquired on the grey market by anyone with the route licences and cash. Whether it might be 'better' for the slots to go to one carrier or another (UK or not) is irrelevant as there is no longer a central control over them. Now, to the main point.

1. BA are not in buying mode.
2. BA are selling (have sold) their domestic network.
3. BA could not buy it if they wanted as the Monopolies folks would be crawling all over them. Which is why, in the past, they have just bought up small fry Like Brymon and Manx Air to get their LHR slots and then dumped the routes to LGW and then, eventually, the whole carrier.

1. VS have tried in the past to buy SMB's share of BMI - SMB rejected them each and every time.
2. A VS + BMI strategic partnership makes sense to everyone except SMB who rejects it every time.
3. VS have now done other things and concentrated on their long haul product from the UK. Realising that the UK market was now rapidly maturing and the window was closing, the Virgin Group started domestic carriers in Europe, Africa, OZ and USA. Had they started in the UK, they would have had to do so from scratch and that would have been a waste of money. SMB/BD could have linked to make a UK/Euro/Global carrier and he decided not to.

Which is why I said - the only likely purchaser of SMB's shares are LH. I might be wrong as I have only been reading about BD/VS/BA for 20 years, during which time SMB has danced around the garden and ALWAYS rejected ANY British purchaser. He then failed to achieve his long haul objectives.

[6chimes]

Can BA afford to let bmi go to anyone else? Particularly if that other company were more efficient than bmi (not hard) and had the size to compete with BA financially. Bmi have never been able to really have an impact on BA other than on a few domestic and european routes. Another large company would be to much for BA to deal with.

BA has a huge cost base and as we all know and envy, their staff are much better looked after and paid than more for working less. Something that the top brass at BA know well and are keen to resolve.

Here is a scenario. Buy bmi rename it BA europe or something else it really doesn't matter what, transfer the Saudi routes into their L/H operation and slowly intergrate THEIR eurofleet into bmi thereby in one fell swoop reduce a massive cost base of crew and operations. Ending up with a LGW style operation for their european/middle east network on the cheap. It would create a lot of unrest and probably industrial action but the longterm outcome would be worth it for the boss. Or done over a few years with the odd route moving to the new LO CO operation, it will be to late by the time it gets noticed.

Farfetched? Maybe. Possible? ...............Thoughts anyone?

Oh and by the way Paxboy, there isn't much of a case to stop BA buying bmi as far as monopolies and mergers are concerned, just look at the rest of europe and see what percentage of slots are held by the dominant flag carriers at their main hubs. You will see BA is well down the list.

6

[MarkD]

6chimes

BA can't just "buy bmi" - there has to be a willing seller.

As for the cost base at LHR - a big competitor putting it up to BA would give Willie W much more leverage over the unions to implement his slash and burn obsessions.

[brian_dromey]

I think LH are the frontrunners here, mainly because they have an option on the shares owned by SMB. That could be a prime reason why he keeps rejecting VS. Now, with SQ selling 49% of VS, perhaps LH could perform a double whammy and merge VS and BD as one. SRB will sell if the price is right, and allow the Virgin brand to disappear.

"All" they would need to do is recover the Y seats, paint the aircraft, rename both FFPs as "Miles and Less" send the LHR A330 to MAN and work with the A340/A380 from LHR and the 744 from LGW.

Baby gets merged into GermanWings, operationally at least, regional stays the way it is (thy might get E-Jets though).

At lot of the European routes would be dropped, these are well served by FRA/MUC/ZRH but most of the domestics would be kept. LHR concentrates on B|MED, VS and Domestic territory. MAN has some room to grow a select number of US services, and perhaps India as well.

Brian.

[Re-Heat]

Regardless of how much people like / dislike BA,BD,VS - surely it would be better if BA were to buy BD - Britain needs a national carrier with slots comparable to German and French flag carriers who have far greater slot majorities at their hub airports than BA. I think enough British Airlines have fallen into German hands already this year!

Certainly not - healthy competiton breeds better conditions for passenger, more choice, lower prices and better service. The days of national champions are recognised in all economically-literate countries to be far in the past.

It benefits nobody other than vested interests and shareholders to hold as many slots as possible at one airport; while connections in some areas might be improved, competiton far more quickly identified new routes, aids passenger experience, and permits greater flexibilty in changing circumstances.

(So exclude from the above - Alitalia etc)