Airline mergers
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Airline mergers
We've heard about DL/NW tieing the knot, but who is next? UA/CO?
Also, is anybody on this side of the Atlantic to do the same? There has been afew buyouts noticeably by AB and EZY but could there be any movements from the 'big boys.' ie)BA, LH, AF-KLM etc?
Also, if the true openskies comes into effect in 2010, could BA and AA merge or would the commissions have a field day?
Also, is anybody on this side of the Atlantic to do the same? There has been afew buyouts noticeably by AB and EZY but could there be any movements from the 'big boys.' ie)BA, LH, AF-KLM etc?
Also, if the true openskies comes into effect in 2010, could BA and AA merge or would the commissions have a field day?
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1) BA+AA: there is neither logic nor equality in denying anti-Trust Immunity to the Oneworld Alliance, while conceding it to LH/UA and AF/DL-NW. When BA+AA are ready, they will take this head-on and, ah, "win" (any such immunity is of course profoundly contrary to the public interest, in condoning cartels).
2) An overlooked aspect of Deregulation is that a suffering carrier has little to offer a buyer. Airlines no longer enjoy "ownership" of routes; they have debts and liabilities, but their sole asset is slots, which Sir M.Bishop recognised three decades ago. But some believe these should not be treated as balance sheet assets (who "owns" them?). MOL took Buzz gratis, but passed on GO, because no asset underlay any upfront price. So, rumour of LH interest in Silverjet. Why? A poster offered "live" AOC - well, how much is that worth to LH! No sane airline would buy AZ because most pearl routes they may currently fly are open to new EU entrants anyway. If the LCCs choose to enter long haul they will just do it, avoiding the baggage of an incumbent's processes, procedures and lessor/Union contracts (see: post on the VS/BMI merger thread where a BMI poster is proud that he flies 5 days, even 6 consecutively and omits to tell us how that rosters into 900hr.p.a. When will you all learn? You provide a commodity. No cause for privilege.)
3) In 1988 academic L.Gialloreto, Strategic Airline Management, foresaw 4 world carriers - Royal Ameripore, plus local minnows. Protectionism, misplaced "security", and drag has made the process glacial. Like a glacier it is unstoppable.
2) An overlooked aspect of Deregulation is that a suffering carrier has little to offer a buyer. Airlines no longer enjoy "ownership" of routes; they have debts and liabilities, but their sole asset is slots, which Sir M.Bishop recognised three decades ago. But some believe these should not be treated as balance sheet assets (who "owns" them?). MOL took Buzz gratis, but passed on GO, because no asset underlay any upfront price. So, rumour of LH interest in Silverjet. Why? A poster offered "live" AOC - well, how much is that worth to LH! No sane airline would buy AZ because most pearl routes they may currently fly are open to new EU entrants anyway. If the LCCs choose to enter long haul they will just do it, avoiding the baggage of an incumbent's processes, procedures and lessor/Union contracts (see: post on the VS/BMI merger thread where a BMI poster is proud that he flies 5 days, even 6 consecutively and omits to tell us how that rosters into 900hr.p.a. When will you all learn? You provide a commodity. No cause for privilege.)
3) In 1988 academic L.Gialloreto, Strategic Airline Management, foresaw 4 world carriers - Royal Ameripore, plus local minnows. Protectionism, misplaced "security", and drag has made the process glacial. Like a glacier it is unstoppable.
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US restrictions on foreign organisations owning more than 25% of a US carrier would put a stop to any AA-BA tie-up. That's what nearly stopped Virgin America from taking off (the DoT and other airlines had the concern that Virgin America's share structure hid a majority stake for SRB in the airline, and that the CEO was unduly influenced by SRB decisions).
UK regulations allow a more generous stake, but still no outright purchase/merger. So a BA-AA merger is not possible.
Apparently DL owns a bit of CO, so a New DL (DL + NW merged) would mean that either DL could divest its stake in CO, or ask the new partner in the airline (KL, since KL owns a stake in NW) to help finance a takeover of CO to merge into the New DL. UA is not in a position to be attempting takeovers considering how they begged everyone to cut their salaries to stay afloat.
LH-VS (especially in the light of some rumours aired in a piece linked to in the BMI thread) could work based on a 50/50 approach, together with a merger/purchase of BD.
Berlusconi is trying to keep AZ independent, even though AZ has been begging for years to join up with AF-KL, and the latest bid nearly got that done (and got scuppered by the Italian unions). If no domestic bidders come out of the woodwork, AZ will either go to the wall, or Berlusconi will have to let AZ merge with AF-KL... Will the new entity be called AirFranceKLMAlitalia then? Or AKA perhaps? I know... I'm being silly now.
Interesting times...
S.
UK regulations allow a more generous stake, but still no outright purchase/merger. So a BA-AA merger is not possible.
Apparently DL owns a bit of CO, so a New DL (DL + NW merged) would mean that either DL could divest its stake in CO, or ask the new partner in the airline (KL, since KL owns a stake in NW) to help finance a takeover of CO to merge into the New DL. UA is not in a position to be attempting takeovers considering how they begged everyone to cut their salaries to stay afloat.
LH-VS (especially in the light of some rumours aired in a piece linked to in the BMI thread) could work based on a 50/50 approach, together with a merger/purchase of BD.
Berlusconi is trying to keep AZ independent, even though AZ has been begging for years to join up with AF-KL, and the latest bid nearly got that done (and got scuppered by the Italian unions). If no domestic bidders come out of the woodwork, AZ will either go to the wall, or Berlusconi will have to let AZ merge with AF-KL... Will the new entity be called AirFranceKLMAlitalia then? Or AKA perhaps? I know... I'm being silly now.
Interesting times...
S.
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Not quite. Northwest have a 'golden share' in Continental which up to now has blocked any merger by CO with one of NW's rivals - namely United. This share, which apparently has a nominal value of $100, is no longer effective in the event of NW merging with anyone else, which now leaves UA and CO free to get together.
An American/Alaska get-together has also been touted. Which would seem to leave US Airways out in the cold.
An American/Alaska get-together has also been touted. Which would seem to leave US Airways out in the cold.
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XG/VY
Clickair are to take over Vueling knocking out a competitor.
FR/EI
Ryanair will surely get their hands on Aer Lingus eventually... ... could be the start of serious transatlantic low fares.
BA/IB
It makes sense for BA to merge with Iberia, dunno why they haven't yet!
Clickair are to take over Vueling knocking out a competitor.
FR/EI
Ryanair will surely get their hands on Aer Lingus eventually... ... could be the start of serious transatlantic low fares.
BA/IB
It makes sense for BA to merge with Iberia, dunno why they haven't yet!
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US restrictions on foreign organisations owning more than 25% of a US carrier would put a stop to any AA-BA tie-up. That's what nearly stopped Virgin America from taking off (the DoT and other airlines had the concern that Virgin America's share structure hid a majority stake for SRB in the airline, and that the CEO was unduly influenced by SRB decisions).
UK regulations allow a more generous stake, but still no outright purchase/merger. So a BA-AA merger is not possible.
UK regulations allow a more generous stake, but still no outright purchase/merger. So a BA-AA merger is not possible.
BA/IB
It makes sense for BA to merge with Iberia, dunno why they haven't yet!
It makes sense for BA to merge with Iberia, dunno why they haven't yet!
I think BA will merge with IB and will be refused a merger with AA.
Obviously I am making a lot of assumptions and would love to hear what you all think.
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BA/IB cannot merge due to similar ownership rules in Spain that prevent foreign companies owning xx% in a US company.
However there have been grumblings from those involved, that those laws/regulations could be illegal under EU laws...
However there have been grumblings from those involved, that those laws/regulations could be illegal under EU laws...
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FR/EI
Ryanair will surely get their hands on Aer Lingus eventually... ... could be the start of serious transatlantic low fares.
Ryanair will surely get their hands on Aer Lingus eventually... ... could be the start of serious transatlantic low fares.
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That is what will become history in 2010 IF the US allows the 2nd phase to go through. If it doesn't, then we will go back to where LHR is protected for only 2 US and 2 GB airlines to fly. I think that if the DoT in America were to say no, CO, DL/NW and US would have something to say - aswell as AF!
The only ones NOT making a massive drama were - surprise, surprise - SWA... why? They said "we pioneered it... bring it on".
Even if the DoT were to relax restrictions, it would still be less than a majority (50/50 perhaps, if you're lucky), but it would still take a long long time to pass through the appropriate committees and channels before approval. It wouldn't happen in GWB's time... and who knows who will be at the wheel afterwards?
Re: BA/IB - Actually that tie-up would also be interesting. They could potentially do what AF and KL did when they merged - keep their distinct cultures, but owned by the same holding group (in AF/KL's case AirFranceKLM). HQ/Share listing would probably be dual (like Abbey post-takeover) between Madrid and London. But it won't happen. Indesa vs E.ON being a prime example of Spanish protectionist stance. The competition board in Spain made the conditions of an Indesa-E.ON merger so onerous that it was not cost effective for E.ON to merge. Instead a bunch of Spanish investors bought into Indesa with the sole purpose of ransoming their stake to E.ON (like certain hedge funds did with Northern Rock pre-nationalisation).
An American/Alaska get-together has also been touted. Which would seem to leave US Airways out in the cold.
FR/EI
Ryanair will surely get their hands on Aer Lingus eventually... ... could be the start of serious transatlantic low fares.
Ryanair will surely get their hands on Aer Lingus eventually... ... could be the start of serious transatlantic low fares.
S.
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That is what will become history in 2010 IF the US allows the 2nd phase to go through. If it doesn't, then we will go back to where LHR is protected for only 2 US and 2 GB airlines to fly.
Individual EU States *may* turn back the clock to 29/3/08 if the second stage does not materialise. The chances of the UK, alone of the EU27, taking this action are ... slim