The Lufthansa / BMI Thing (merged)
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The Lufthansa / BMI Thing (merged)
Not seen another thread, but may be more appropriate here than in Airports/Airlines, considering the effect it may have on the UK market...
Lufthansa said to have briefed UBS on BMI takeover
Lufthansa is in talks to acquire a majority stake in UK airline British
Midland (BMI) and is said to have briefed UBS to advise on negotiations,
it is understood
A person following the matter suggested the German carrier, which has 30%
minus one share of BMI and is believed to have used UBS for several
projects over the last two years, had briefed the Swiss bank to work on
the complete acquisition of BMI.
Both UBS and Lufthansa, which this morning abandoned plans to bid for
Italian carrier Alitalia, declined to comment.
A Lufthansa's spokesperson added that it was already publicly known that
BMI owner Sir Michael Bishop had two put options to sell his 50% stake in
BMI to Lufthansa. The first of these must be exercised by next year, the
other by 2009.
Lufthansa chairman, Wolfgang Mayrhuber said in August that the airline
wanted to buy two more carriers and when asked by German press confirmed
BMI would be an option.
SAS, the Scandinavian airline, owns a 20% stake in BMI. SAS chief
executive Mats Jansson said at the end of October that SAS would sell its
BMI stake next year (2008).
What makes BMI particularly attractive is the advent of the US and Europe's
Open Skies agreement next year, which will allow more European airlines
(including BMI) to fly to and from a wider range of US and UK airports.
Prior to the agreement only British Airways, Virgin, American Airlines and
United Airlines have been allowed to fly between London's Heathrow airport
and the US
A deal would also forward Lufthansa's wider corporate strategy of
appealing to a wide range of customers through different brands. The
company is already in talks over a link-up between its budget airline
German Wings and TuiFly, the charter and budget carrier of tour operator
Tui Travel.
But Lufthansa is also likely to have competitors. As recently as October
it was reported that British Airways was also in talks with Sir Michael.
According to its website, BMI had a turnover of GBP 905m in 2006 and
carried 10.5m passengers at a profit of GBP 29.7m. Lufthansa had a
turnover of EUR 19.8bn (GBP 14.3bn) in 2006.
By Thomas Williams (mergermarket.com)
Lufthansa said to have briefed UBS on BMI takeover
Lufthansa is in talks to acquire a majority stake in UK airline British
Midland (BMI) and is said to have briefed UBS to advise on negotiations,
it is understood
A person following the matter suggested the German carrier, which has 30%
minus one share of BMI and is believed to have used UBS for several
projects over the last two years, had briefed the Swiss bank to work on
the complete acquisition of BMI.
Both UBS and Lufthansa, which this morning abandoned plans to bid for
Italian carrier Alitalia, declined to comment.
A Lufthansa's spokesperson added that it was already publicly known that
BMI owner Sir Michael Bishop had two put options to sell his 50% stake in
BMI to Lufthansa. The first of these must be exercised by next year, the
other by 2009.
Lufthansa chairman, Wolfgang Mayrhuber said in August that the airline
wanted to buy two more carriers and when asked by German press confirmed
BMI would be an option.
SAS, the Scandinavian airline, owns a 20% stake in BMI. SAS chief
executive Mats Jansson said at the end of October that SAS would sell its
BMI stake next year (2008).
What makes BMI particularly attractive is the advent of the US and Europe's
Open Skies agreement next year, which will allow more European airlines
(including BMI) to fly to and from a wider range of US and UK airports.
Prior to the agreement only British Airways, Virgin, American Airlines and
United Airlines have been allowed to fly between London's Heathrow airport
and the US
A deal would also forward Lufthansa's wider corporate strategy of
appealing to a wide range of customers through different brands. The
company is already in talks over a link-up between its budget airline
German Wings and TuiFly, the charter and budget carrier of tour operator
Tui Travel.
But Lufthansa is also likely to have competitors. As recently as October
it was reported that British Airways was also in talks with Sir Michael.
According to its website, BMI had a turnover of GBP 905m in 2006 and
carried 10.5m passengers at a profit of GBP 29.7m. Lufthansa had a
turnover of EUR 19.8bn (GBP 14.3bn) in 2006.
By Thomas Williams (mergermarket.com)
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I think WW would either remian as WW, and have a new fleet (319s shed from LHR as a start) or else be integrated into Germanwings.
I dont see why everyone says WW would be sold off, LH has spent a lot of effort getting into the LO-CO sector. I would not expect them to be rushing out of it any time soon. LH likes to have its finger in several pies.....WW fits the strategy...with a bit of work, granted, but it is profitable.
Regional has its niche as well, and might be used as a vehicle to connect the regional airports to the German and Swiss hub(s), as Im pretty sure most of the domestic LHR network will be dismantled, with the possible exception of Scotland.
Brian.
I dont see why everyone says WW would be sold off, LH has spent a lot of effort getting into the LO-CO sector. I would not expect them to be rushing out of it any time soon. LH likes to have its finger in several pies.....WW fits the strategy...with a bit of work, granted, but it is profitable.
Regional has its niche as well, and might be used as a vehicle to connect the regional airports to the German and Swiss hub(s), as Im pretty sure most of the domestic LHR network will be dismantled, with the possible exception of Scotland.
Brian.
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baby
One of 4 things.
Keep it as mentioned.
Sell it as a going concern.
It may not form part of the takeover.
Close it down.
My money would be on 2 or 4
Centre cities
Keep it as mentioned.
Sell it as a going concern.
It may not form part of the takeover.
Close it down.
My money would be on 2 or 4
Centre cities
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Why close an airline down that makes money?
I stand to be corrected...but I'm not convinced that baby is profitable and the likely trading conditions over the winter and next year are not likely to help (not just WW but all competitors also).
Frankly, the sooner these guys, LS, GSM and probably XL cut to the chase and merge to form a decent sized airline with fair prospects for critical mass in the market and ability to drive down costs through efficiency of size the better!
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Me think's that Baby may become the next aquisition of a certain west country airline that has allready stated that it would not rule out another "european airline aquistion within the near future"....
I mean look at it - similar route structure and based at BHX, need i say more....
Watch this space as they say - interesting times ahead....
I mean look at it - similar route structure and based at BHX, need i say more....
Watch this space as they say - interesting times ahead....
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Baby/LH
LH takeover - the real reason why BMI are not flying LHR-USA in 2008?
Baby to Flybe.........I hope no ****** way
We need more choice at
BHX not less and flybe are no LCC and as for low fares
although they have got a bit more competitive recently.
As Brian has stated above LH appear to have no aversion to LCC's. Again transferring the 319's to baby a few years down the line sounds plausible.
JET2 would be a good match re aircraft and bases but if you believe some on the JET2 thread they won't be buying anyone.
For the Midlands - Easy would be sweet for the customer. Strong competition for FR at EMA, a walk-over at BHX, Cardiff if they want
and a walk-over at Manchester with JET2 appearing to going in a different direction. Okay it won't happen but they would get some great crews and
the aircraft could get replaced as leases run out.
As for summer 2008, Baby's EMA & CWL schedule is tight but more routes to come for BHX and MAN going by the gaps in the timetable at present.
Pete
Baby to Flybe.........I hope no ****** way
We need more choice atBHX not less and flybe are no LCC and as for low fares
although they have got a bit more competitive recently.As Brian has stated above LH appear to have no aversion to LCC's. Again transferring the 319's to baby a few years down the line sounds plausible.
JET2 would be a good match re aircraft and bases but if you believe some on the JET2 thread they won't be buying anyone.
For the Midlands - Easy would be sweet for the customer. Strong competition for FR at EMA, a walk-over at BHX, Cardiff if they want
and a walk-over at Manchester with JET2 appearing to going in a different direction. Okay it won't happen but they would get some great crews and
the aircraft could get replaced as leases run out.
As for summer 2008, Baby's EMA & CWL schedule is tight but more routes to come for BHX and MAN going by the gaps in the timetable at present.
Pete
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The Lufthansa take-over of bmi is bound to happen, it's more a question of when rather than if. They have the right to take-over the company, it will bring them a wealth of LHR slots to play with and fits in line with LH's strategy of building up medium-sized European airlines.
Regarding baby, considering LH has successfully built up germanwings - they could theoretically do the same in the UK. The major difference is that germanwings dominate their markets, this isn't the case for baby anywhere other than BHX (and to a lesser extent CWL), and that baby's markets face much more direct LCC competition. I'm not convinced that regulators would even allow a BE/WW merger, let alone whether BE would want to inherit a fleet of geriatric 737s. LS don't have the financial clout for a take-over, even though strategically the two airlines would fit nicely. EZY would make a lot of sense to grow their base at EMA and expand into BHX & MAN - which is what they're rumoured to want to do, but think they have their hands full with the GB buyout.
Regarding baby, considering LH has successfully built up germanwings - they could theoretically do the same in the UK. The major difference is that germanwings dominate their markets, this isn't the case for baby anywhere other than BHX (and to a lesser extent CWL), and that baby's markets face much more direct LCC competition. I'm not convinced that regulators would even allow a BE/WW merger, let alone whether BE would want to inherit a fleet of geriatric 737s. LS don't have the financial clout for a take-over, even though strategically the two airlines would fit nicely. EZY would make a lot of sense to grow their base at EMA and expand into BHX & MAN - which is what they're rumoured to want to do, but think they have their hands full with the GB buyout.
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Lufthansa already have a large MAN operation which links in very well with BMI
commuter and Atlantic flights and have only about 2 weeks ago announced that MAN will get a large expansion due to the way it has performed for them.
Based on that I think that they would try and push as much through MAN as
possible due to easier connections than London, even maybe offering passengers from Southampton area via MAN on the new BMI flight due to start in the spring
Ian
commuter and Atlantic flights and have only about 2 weeks ago announced that MAN will get a large expansion due to the way it has performed for them.
Based on that I think that they would try and push as much through MAN as
possible due to easier connections than London, even maybe offering passengers from Southampton area via MAN on the new BMI flight due to start in the spring
Ian
Baby's Future
Lee,
I know you are besotted with Mr O'Leary's outfit (for good reasons), and I am no supporter of Baby myself...but, why should BMI Baby suffer as a result of LH buying a majority stake in BD - supposing there is actually any substance to the story in the first place.
Baby, unlike many LOCO operators flies routes from major UK cities (EMA excepted) on a mix of popular business and leisure destinations, not unlike Germanwings business model.
Of course, they might become integrated into Germanwings, or kept independent under the LH umbrella - as is Germanwings. If neither of these happened, then I fancy another European airline might be interested in expanding outside their own borders (a red and white liveried German once perhaps springs to mind - though they have been on a shopping spree themselves recently).
Orphaned - I doubt it!
I know you are besotted with Mr O'Leary's outfit (for good reasons), and I am no supporter of Baby myself...but, why should BMI Baby suffer as a result of LH buying a majority stake in BD - supposing there is actually any substance to the story in the first place.
Baby, unlike many LOCO operators flies routes from major UK cities (EMA excepted) on a mix of popular business and leisure destinations, not unlike Germanwings business model.
Of course, they might become integrated into Germanwings, or kept independent under the LH umbrella - as is Germanwings. If neither of these happened, then I fancy another European airline might be interested in expanding outside their own borders (a red and white liveried German once perhaps springs to mind - though they have been on a shopping spree themselves recently).
Orphaned - I doubt it!
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Just with regards to some of the airlines touted at buying baby - why would any of them want to? FR and EZY could potentially price them out of markets, with a fare war being considerably cheaper and less time consuming than a purchase - both airlines preferring organic growth. BE may have suggested they want to buy another carrier, but would they really want to try to integrate a second seniority list at BHX and MAN, as well as taking on a fleet of old 737s, when they're trying to move quickly to a dual-fleet. Air Berlin makes no sense at all, the airline is not expanding in the UK market having just dropped some routes, and would they really want to arrive in a market where they're suddenly faced with strong LCC competition? More than likely, Lufthansa will keep baby as a marginally successful stand-alone entity and try to find ways of maximising profits. Or, leave the LCC markets alone, given that the cost base is never going to be like FR's, and go back to niche flying like regional.
In response to Bmibaby.com's comments about Germanwings dominating its markets, I have to say that is not the perception of the press here in Germany. In fact the recent speculation about a merger between Tuifly (Germany) and Germanwings was explicitly linked by the Handelsblatt newspaper to Lufthansa's disappointment with Germanwing's development.
However given Lufthansa's apparently positive experience with Swiss, one could understand the management board warming to further takeovers. There is of course the additional factor that taking over BMI would be sweet revenge for BA's temerity in setting up DBA. It brings to mind the old saying 'revenge is a dish best tasted cold.'
However given Lufthansa's apparently positive experience with Swiss, one could understand the management board warming to further takeovers. There is of course the additional factor that taking over BMI would be sweet revenge for BA's temerity in setting up DBA. It brings to mind the old saying 'revenge is a dish best tasted cold.'
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I can't see Flybe wanting Baby or the ageing 737's that come with it, BMI Regional however is a different matter altogether and that route network could be very attractive for Flybe with very little overlap.
An undisclosed European airline ordered Q400's (10 firm + 10 options) on 23rd October with Bombardier stating that it was for a new customer who doesn't already operate the type. Could this be an order from BMI Regional????
It'll be an interesting year ahead in European aviation!
An undisclosed European airline ordered Q400's (10 firm + 10 options) on 23rd October with Bombardier stating that it was for a new customer who doesn't already operate the type. Could this be an order from BMI Regional????
It'll be an interesting year ahead in European aviation!