Virgin/BMI merger
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Y-shaped seniority
I agree with jacksparra's post.
BMED was a smart move for bmi and despite more than a few teething problems, they are starting to make the mid-haul routes pay [a VERY important point]. Of course SMB with not say anything, we all agree that he is shrewd and by the nature of business it WILL go to the 11th hour before something [if anything] happens.
This year bmi have to prove to the industry that they are not all just spin/marketing and that they are able to support themselves without the European Agreement previously in place. [This is where profitable mid-haul routes come in!]
However, having spoken to VS people, I understand that VS are confident that things will work out their way.....supposedly to the point that they have discussed ways of levelling crew remuneration and even the implementation of a Y-shaped seniority list.
IMHO I think that a tie-up between the two would be healthy for the consumer, LHR and of course the staff! But, without knowing who will end up with SMB shares/Singapore's 49% in VS and what LH has in mind, I might suggest that VS are a little premature!
An interesting time for all........
BMED was a smart move for bmi and despite more than a few teething problems, they are starting to make the mid-haul routes pay [a VERY important point]. Of course SMB with not say anything, we all agree that he is shrewd and by the nature of business it WILL go to the 11th hour before something [if anything] happens.
This year bmi have to prove to the industry that they are not all just spin/marketing and that they are able to support themselves without the European Agreement previously in place. [This is where profitable mid-haul routes come in!]
However, having spoken to VS people, I understand that VS are confident that things will work out their way.....supposedly to the point that they have discussed ways of levelling crew remuneration and even the implementation of a Y-shaped seniority list.
IMHO I think that a tie-up between the two would be healthy for the consumer, LHR and of course the staff! But, without knowing who will end up with SMB shares/Singapore's 49% in VS and what LH has in mind, I might suggest that VS are a little premature!
An interesting time for all........
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y shaped seniority list....
do me a favour, VA might have agreed it amongst their own CC but I would bet my mortgage that it will never happen that way. BALPA head office will be forced (if only by the bmi CC) to insist on the "precedent" set by bmi/Bmed seniority merger. that was an alignment on DOJ.
do me a favour, VA might have agreed it amongst their own CC but I would bet my mortgage that it will never happen that way. BALPA head office will be forced (if only by the bmi CC) to insist on the "precedent" set by bmi/Bmed seniority merger. that was an alignment on DOJ.
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Interesting to note that there is very little mention of baby or Regional in any press extracts that link a potential tie up between bmi and Lufty. This seems to be confirmed by the noises from those that I know at bmi as well, since I am led to believe that Lufty have no interest in keeping baby or Regional if they acquire bmi.
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Jacksparra has it exactly right - IMHO
With no active partners, no alliance and no more slots VS has nowhere to go.
If SMB is astute (and he is very astute) then he just has to wait.
With no active partners, no alliance and no more slots VS has nowhere to go.
If SMB is astute (and he is very astute) then he just has to wait.
Last edited by moebius; 7th Apr 2008 at 08:22.
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Get real.
bmi still exists for the same reason everyone wants a slice --- Heathrow slots.
Don't pretend it has anything to do with hardware, staff and certainly not management at any level.
Buy the slots, move in, clear out the dead wood, manage it properly and watch the profits multiply at last.
Don't expect zero redundancies amongst the poor common folk, though. Much bloodshed, I think. Very sad (with some deserving exceptions).
bmi still exists for the same reason everyone wants a slice --- Heathrow slots.
Don't pretend it has anything to do with hardware, staff and certainly not management at any level.
Buy the slots, move in, clear out the dead wood, manage it properly and watch the profits multiply at last.
Don't expect zero redundancies amongst the poor common folk, though. Much bloodshed, I think. Very sad (with some deserving exceptions).
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acbus - Perhaps a few years ago you would have been correct. The the thing is that bmi nowadays are actually turning a fairly decent profit in pretty crappy operating conditions (high fuel, security costs and fog at LHR last year). in 2007 their pre-tax profit was £29.7m, and from what I've heard looks to continue this year. Also lets not forget the bargaining power of a couple of billion worth of LHR slots...
Virgin's profits, however were only £3.5m, dramatically reduced from the few years previous. Jacksparra has it right - they have all their eggs in one basket - transatlantic. With openskies beginning to take effect Virgin could see their one niche market severely eroded.
I doubt we'll see the bmi name disappear too soon, especially not under the banner of Virgin. At the very most, I think we'd see a 'bmi-Virgin' sort of airline (which I'm not saying is necessarily a bad thing). Or things could trundle along as they always have but with perhaps a bit of ownership change here or there (which I'm not saying is necessarily a good thing, but perhaps the most likely).
Sources:
http://news.bbc.co.uk/2/hi/uk_news/e...re/6616419.stm
http://www.travelmole.com/stories/1121367.php
Virgin's profits, however were only £3.5m, dramatically reduced from the few years previous. Jacksparra has it right - they have all their eggs in one basket - transatlantic. With openskies beginning to take effect Virgin could see their one niche market severely eroded.
I doubt we'll see the bmi name disappear too soon, especially not under the banner of Virgin. At the very most, I think we'd see a 'bmi-Virgin' sort of airline (which I'm not saying is necessarily a bad thing). Or things could trundle along as they always have but with perhaps a bit of ownership change here or there (which I'm not saying is necessarily a good thing, but perhaps the most likely).
Sources:
http://news.bbc.co.uk/2/hi/uk_news/e...re/6616419.stm
http://www.travelmole.com/stories/1121367.php
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Why do I get the feeling there are many BMI employees posting here 
The name may be Virgin Atlantic, but I think you will find that Virgin has a route network extending in all directions. Certainly not just to the US, they learned that lesson after 911.
Someone mentioned brand awareness. As an independant observer (and an international one), I have to say that BMI may be a well know brand in the UK (possibly), but internationally hardly anyone actually has even heard of it. Virgin is a well known brand all over the world.
Anyway, just some points to make to put some balance back into this argument.
The name may be Virgin Atlantic, but I think you will find that Virgin has a route network extending in all directions. Certainly not just to the US, they learned that lesson after 911.
Someone mentioned brand awareness. As an independant observer (and an international one), I have to say that BMI may be a well know brand in the UK (possibly), but internationally hardly anyone actually has even heard of it. Virgin is a well known brand all over the world.
Anyway, just some points to make to put some balance back into this argument.
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Pelican your points are all correct. But proportionally Virgin is very heavily weighted towards the USA. Under the Bermuda 2 USA routes from Heathrow were afforded significant profits to underight more challenging (yet prestigious) destinations. I'm sorry to say that the profit levels are down because the Bermuda plug has been pulled, and it shall not be replaced.
Virgins other routes were chosen largely to increase the image and move Bransons brand further around the globe. They were underwritten by the transatlantic flights.
bmi is appalling at PR and advertising. I'm amazed it's lasted 70 years, but I think a new dawn has arrived.
Virgin on the otherhand is in it's sunset. There will be big changes there soon in order to last through the night.
Virgins other routes were chosen largely to increase the image and move Bransons brand further around the globe. They were underwritten by the transatlantic flights.
bmi is appalling at PR and advertising. I'm amazed it's lasted 70 years, but I think a new dawn has arrived.
Virgin on the otherhand is in it's sunset. There will be big changes there soon in order to last through the night.
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My, there are some interesting posts here - but not a lot of facts.
On company size, Virgin Atlantic is approximately twice the size of bmi measured by staff. It has around 40 large longhaul aircraft, with a further 21 on firm order, compared to bmi's 34 (with, I believe, 3 on order) predominantly short and medium haul fleet. Revenues at VS are considerably larger than at bmi. Profit at VS last year was hurt badly by losses at Virgin Nigeria (which is owned 49% by Virgin Atlantic, not Virgin Group), but the 07-08 results (and the pure VS 06-07 results) are expected to be strong. Trading is currently very good. Virgin continues to slowly obtain slots at LHR, and is expanding its operations at other UK airports. Like bmi, it has refused to rush into reacting to the interim Open Skies agreement, preferring to wait until full ratification and the opening of the US market - if it ever happens. If it doesn't, Open Skies is dead.
If any merger is to take place between bmi and Virgin Atlantic, the value of bmi's slots will feature highly in the deal. How they are valued and paid for, and proposals for their use in the future, will have to be very carefully handled. There is no regulatory guarantee that bmi's slots would be available for expanding VS's longhaul operation, even if Virgin managed a cash buyout of Bish's, SAS's and Lufty's shares.
Interestingly, it's being reported today that SRB and Virgin people are in Dubai trying to raise capital for a range of possible deals. Inevitably, bmi is being postulated as one of the potential targets for that money. However, that's pure speculation and there's no news from either Virgin or bmi to confirm or deny the rumours.
On company size, Virgin Atlantic is approximately twice the size of bmi measured by staff. It has around 40 large longhaul aircraft, with a further 21 on firm order, compared to bmi's 34 (with, I believe, 3 on order) predominantly short and medium haul fleet. Revenues at VS are considerably larger than at bmi. Profit at VS last year was hurt badly by losses at Virgin Nigeria (which is owned 49% by Virgin Atlantic, not Virgin Group), but the 07-08 results (and the pure VS 06-07 results) are expected to be strong. Trading is currently very good. Virgin continues to slowly obtain slots at LHR, and is expanding its operations at other UK airports. Like bmi, it has refused to rush into reacting to the interim Open Skies agreement, preferring to wait until full ratification and the opening of the US market - if it ever happens. If it doesn't, Open Skies is dead.
If any merger is to take place between bmi and Virgin Atlantic, the value of bmi's slots will feature highly in the deal. How they are valued and paid for, and proposals for their use in the future, will have to be very carefully handled. There is no regulatory guarantee that bmi's slots would be available for expanding VS's longhaul operation, even if Virgin managed a cash buyout of Bish's, SAS's and Lufty's shares.
Interestingly, it's being reported today that SRB and Virgin people are in Dubai trying to raise capital for a range of possible deals. Inevitably, bmi is being postulated as one of the potential targets for that money. However, that's pure speculation and there's no news from either Virgin or bmi to confirm or deny the rumours.
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The last comment isn't exactly that factual either! VS may have 40 laonghaul aircraft but easch departure from LHR usually will not return until the following day. each of bmi's shorthaul fleet will arrive /depart LHR numerous ( perhaps upto five times a day. On a similar vane VS may have more employee heads however what % on a daily basis are sunning themselves downroute by the pool wheras a bmi Captain may be on his 5th working day out of LHR. You cannot compare these two companies in this way. If you use the slot portfolio at LHR as a guage then indeed bmi is a much bigger company than VS.
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Some pretty strange ways to measure 'size'.
Try using a normal industry standard of tonne-kms performed. That would make VS exactly five times as big as BD (AEA 2006 data).
Yield per tonne-km is two and a half times bigger on shorthaul than on longhaul. So VS operating revenues would be about double BD's.
Try using a normal industry standard of tonne-kms performed. That would make VS exactly five times as big as BD (AEA 2006 data).
Yield per tonne-km is two and a half times bigger on shorthaul than on longhaul. So VS operating revenues would be about double BD's.
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Gentlemen aren't we missing the essential point
As SLF a Virgin/BMI merger would be a positve move for the UK creating a complementary carrier possibly within the Star Alliance.
Sale of BMI to Lufthansa or virtually anyone else (including God forbid BA) would not.
As SLF a Virgin/BMI merger would be a positve move for the UK creating a complementary carrier possibly within the Star Alliance.
Sale of BMI to Lufthansa or virtually anyone else (including God forbid BA) would not.
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Oooooooo... LH and VS possibly cooperating in purchasing BMI to create a European super carrier? Novel concept, just a question of whether SRB would want to give up his significant stake for a diluted stake in the new one... after all, it'd be LH, DIC, SRB and SIA who would have a stake in this new organisation (provided they pull it off). How much value an organisation like LH would see in gaining access to the Virgin brand remains to be seen.
Thanks sidestick, this is really intriguing.
S.
Thanks sidestick, this is really intriguing.
S.
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All this mines bigger than yours bollox is really missing the point. The pilots at Virgin and bmi will have to go with the flow come a merger/takeover whatever it may/may not be. Pilot seniority will be low on the agenda for the movers and shakers at the centre of such a deal. Doesn't matter on the size of your plane or what you do with it. I think VS are in a potentially precarious position with the ensuing financial crisis with the world economy(especially US)/open skies/high fuel costs/lack of alliance partner. bmi also suffer from a couple of these factors but to a much lesser extent. Virgin are hurting as the subtle cutbacks become evident but all airlines are entering what will be a difficult time. A tie-up would make sense for for both but I just can't see SRB & SMB seeing eye-to-eye on this one. The backdoor route for Virgin through LH seems much more likely.