BA/AA/CO/IB Merger/cooperation (Merged)
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Economies of scale....
Manpower:
Donīt see much scope here for concessions on the Spanish side... Highly unionised. Offices in joint destinations. In Europe certainly possibilities. In SA as well although weīre talking minimal salaries.
Fleet:
Long haul: BA Boeing IB Airbus
Short haul: BA Airbus IB Airbus & MD... possibilities here
SA:
South America... not exactly the continent one would go after if your model is business pax. Look at the number of frequencies weekly between the two.. Not many and not many business pax. Its a very cost sensitive market and very much a Y class operation.
Indeed it is interesting times... I think maybe BA has come to the party late and if you look around Europe any carriers worth merging with, of comparable size, are few and far between.
Manpower:
Donīt see much scope here for concessions on the Spanish side... Highly unionised. Offices in joint destinations. In Europe certainly possibilities. In SA as well although weīre talking minimal salaries.
Fleet:
Long haul: BA Boeing IB Airbus
Short haul: BA Airbus IB Airbus & MD... possibilities here
SA:
South America... not exactly the continent one would go after if your model is business pax. Look at the number of frequencies weekly between the two.. Not many and not many business pax. Its a very cost sensitive market and very much a Y class operation.
Indeed it is interesting times... I think maybe BA has come to the party late and if you look around Europe any carriers worth merging with, of comparable size, are few and far between.
Dysag...I think you're referring to Charles de Gaulle's comment about Brazil?
That old (& doubtless justified) view of S America has been somewhat overtaken by events, I'd suggest. Brazil's GDP alone is now forecast to be 3x that of UK by 2050 (PWc report). In 2007 BA were outcarried by IB in the Europe/Brazil market by over 3 to 1 and have very little presence elsewhere in the continent so the network fit makes sense. Product and culture are something else.
I see that QF's new boss Alan Joyce claims to have made the tea for WW when both were at EI - now there would be an interesting reunion...
That old (& doubtless justified) view of S America has been somewhat overtaken by events, I'd suggest. Brazil's GDP alone is now forecast to be 3x that of UK by 2050 (PWc report). In 2007 BA were outcarried by IB in the Europe/Brazil market by over 3 to 1 and have very little presence elsewhere in the continent so the network fit makes sense. Product and culture are something else.
I see that QF's new boss Alan Joyce claims to have made the tea for WW when both were at EI - now there would be an interesting reunion...
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After two instances of particularly awful customer service from Iberia - including their cancellation of a reservation without any attempt to inform me
- I have a particularly low opinion of Iberia and question the wisdom of BA doing this.
- I have a particularly low opinion of Iberia and question the wisdom of BA doing this.
Claims for maintaining two separate brands might last for a year or two, then all bets would be off.
Two different mindsets of the investors.
Iberia investors want a huge nationwide operation which sees off all competition, burning through company cash regardless as they do so. They think they are still in the 1960s and that's the way to greatness. Merging with BA allows a greater pile of funds for such empire building, based on Madrid.
BA investors want anything that allows them to sell out to Iberia, or anyone, provided they make 10% on the deal. All the M&A advisers in the City of London will absorb another 10% of the BA value and thus be right behind this. Willie can take a huge payoff and go home to succeed Michael O'Leary, right on plan.
Two different mindsets of the investors.
Iberia investors want a huge nationwide operation which sees off all competition, burning through company cash regardless as they do so. They think they are still in the 1960s and that's the way to greatness. Merging with BA allows a greater pile of funds for such empire building, based on Madrid.
BA investors want anything that allows them to sell out to Iberia, or anyone, provided they make 10% on the deal. All the M&A advisers in the City of London will absorb another 10% of the BA value and thus be right behind this. Willie can take a huge payoff and go home to succeed Michael O'Leary, right on plan.
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Morbid
Economies of scale....
Manpower:
Donīt see much scope here for concessions on the Spanish side... Highly unionised. Offices in joint destinations. In Europe certainly possibilities. In SA as well although weīre talking minimal salaries.
Fleet:
Long haul: BA Boeing IB Airbus
Short haul: BA Airbus IB Airbus & MD... possibilities here
SA:
South America... not exactly the continent one would go after if your model is business pax. Look at the number of frequencies weekly between the two.. Not many and not many business pax. Its a very cost sensitive market and very much a Y class operation.
Indeed it is interesting times... I think maybe BA has come to the party late and if you look around Europe any carriers worth merging with, of comparable size, are few and far between.
Economies of scale....
Manpower:
Donīt see much scope here for concessions on the Spanish side... Highly unionised. Offices in joint destinations. In Europe certainly possibilities. In SA as well although weīre talking minimal salaries.
Fleet:
Long haul: BA Boeing IB Airbus
Short haul: BA Airbus IB Airbus & MD... possibilities here
SA:
South America... not exactly the continent one would go after if your model is business pax. Look at the number of frequencies weekly between the two.. Not many and not many business pax. Its a very cost sensitive market and very much a Y class operation.
Indeed it is interesting times... I think maybe BA has come to the party late and if you look around Europe any carriers worth merging with, of comparable size, are few and far between.
Good notices of this merge, Iberia donīt find a Asian & African rentable routes and need create new markets... British, will increase his representation in South American.
I compare with Air France & KLM alliance
KLM: 112 planes
Cityhopper: 55 planes
Air France: 256 planes
British Airways: 236 planes
Iberia 126 planes
Air Nostrum (Iberia Reg.) 63 planes
And donīt count the Clickair & Vueling merge, Iberia, will go a great part of control of this...
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Curi,
For IB its a great merger... for BA... not so sure. Realistically BA should be taking over IB BUT Zapatero would step in in the same way as the Endesa fiasco.
IB= Winner
BA= Remains to be seen but I donīt see it too positively...
IB MD80īs ... I can see three on the remote stands at T4 from my office and theyīre different from those that were there at the begining of the day.
IF everything goes through I hate to think what the reaction will be from the first BA Executive accounts that use Iberia business class intercontinental or pan european.
For IB its a great merger... for BA... not so sure. Realistically BA should be taking over IB BUT Zapatero would step in in the same way as the Endesa fiasco.
IB= Winner
BA= Remains to be seen but I donīt see it too positively...
IB MD80īs ... I can see three on the remote stands at T4 from my office and theyīre different from those that were there at the begining of the day.
IF everything goes through I hate to think what the reaction will be from the first BA Executive accounts that use Iberia business class intercontinental or pan european.
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Max Tow,
It's called a hedge, not a 'bet'. You can use Contracts for differences (CfD's) to bet (ie. a spread bet) but in this case, Iberia want to lock in a price for that part of the BA stake:
- BA shares price goes up, the CfD goes up, they make money on the CfD which covers the higher price of acquiring the underlying shares;
- BA share price goes down, CfD goes down, loss offsets better purchase price of underlying shares.
Either way you've locked in your effective price.
Indeed it might've been structured with downside protection, but that carries an implicit cost.
One benefit is that there is no stamp duty on the CfD hence if it falls through (eg. due regulatory or shareholder block), they only have to settle the CfD and walk away; so you're getting the economic exposure without the other frictional costs.
Agree with others that BA service sh!ts from a great height on IB. Most BA CC actually appear to give a damn whereas to the bulk of IB CC I've had the misfortune to be on an aircraft with, us paying punters are clearly a nuisance to be dealt with in between chats in the galley...
It's called a hedge, not a 'bet'. You can use Contracts for differences (CfD's) to bet (ie. a spread bet) but in this case, Iberia want to lock in a price for that part of the BA stake:
- BA shares price goes up, the CfD goes up, they make money on the CfD which covers the higher price of acquiring the underlying shares;
- BA share price goes down, CfD goes down, loss offsets better purchase price of underlying shares.
Either way you've locked in your effective price.
Indeed it might've been structured with downside protection, but that carries an implicit cost.
One benefit is that there is no stamp duty on the CfD hence if it falls through (eg. due regulatory or shareholder block), they only have to settle the CfD and walk away; so you're getting the economic exposure without the other frictional costs.
Agree with others that BA service sh!ts from a great height on IB. Most BA CC actually appear to give a damn whereas to the bulk of IB CC I've had the misfortune to be on an aircraft with, us paying punters are clearly a nuisance to be dealt with in between chats in the galley...
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BA customer contact service standards might be better than Iberia's but in my experience BA's service recovery standards can be as abysmal as those of Iberia. For example, both carriers have failed to respond to complaints I put to them.
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the question its not if was going to hapen, the question was when, few months ago tpg, british and other spanish hedge fund tried to buy it but the operation was blockedby a bank, which is one of the share holders of iberia, by the way, will be one of the refence ownwer of the new coorporation,
the first feeling is that can be good for both, we (iberia ) are leader in south america, and still have a great potencial, but have few in the usa and nothig in asia, so probably there are complementary companys, the markets have receive the operation with a 20% increase just today, sure will see further increases, so, good for the company, good for investors. my worries are for the workers, specialy, of course, the pilots, will be good for us...
the first feeling is that can be good for both, we (iberia ) are leader in south america, and still have a great potencial, but have few in the usa and nothig in asia, so probably there are complementary companys, the markets have receive the operation with a 20% increase just today, sure will see further increases, so, good for the company, good for investors. my worries are for the workers, specialy, of course, the pilots, will be good for us...
Last edited by blanza; 30th Jul 2008 at 10:06.
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I heard an amusing item on BBC Radio 4 yesterday: if BA and Iberia merge, when BA loses (sorry, "temporarily misplaces") baggage all you'll get is "manana" (mind you, the last time this happened to me on BA this is exactly what I got).
On a serious note, the "PM" programme also interviewed WW. I got the distinct impression that BA is not currently in negotiations with any other airline. If I understood this correctly (I wasn't really paying much attention!) does this mean the three-way BA/Iberia/American merger is now on the back burner? Does anyone know?
On a serious note, the "PM" programme also interviewed WW. I got the distinct impression that BA is not currently in negotiations with any other airline. If I understood this correctly (I wasn't really paying much attention!) does this mean the three-way BA/Iberia/American merger is now on the back burner? Does anyone know?
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...3 WAY
Despite the fact that UA-CO-US-AF-SK-BD-OS-TP-LH; and
NW-DL-AF-KL would have unfair transatlantic market share in FRA, CDG, AMS, CPH...the obsession with LHR continues. Believe the proposed Star anti-immunity trust would encompass over 85% over transatlantic departures from FRA...
Now BA-AA-IB would have nowwhere near that at LHR, but parties on both sides of the atlantic deem it necessary to put restrictions on LHR and not other European hubs.
Maybe AA has been taken out of the equation for the time being (as well as their financial position being less than favourable).
Maybe Finnair will be the new partner in the threesome?? Stranger things have happened.
NW-DL-AF-KL would have unfair transatlantic market share in FRA, CDG, AMS, CPH...the obsession with LHR continues. Believe the proposed Star anti-immunity trust would encompass over 85% over transatlantic departures from FRA...
Now BA-AA-IB would have nowwhere near that at LHR, but parties on both sides of the atlantic deem it necessary to put restrictions on LHR and not other European hubs.
Maybe AA has been taken out of the equation for the time being (as well as their financial position being less than favourable).
Maybe Finnair will be the new partner in the threesome?? Stranger things have happened.
Last edited by Muizenberg; 30th Jul 2008 at 13:20.
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I wonder if BA-Iberia will now have to re-think locating all LHR-Spain flights in Terminal 3.
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I am rather amazed at some of the negative comments being made in here. As an employee of BA I am no less cynical then anyone else about management decisions but I must admit that as a business graduate I think it is a perfect fit.
Consolidation is going to happen one way or the other however I do not believe it is the answer to the current obstacles facing the industry at the moment. However BA and IBERIA are a perfect fit. They have similiar fleet sizes, similiar passenger levels and both are profitable. However BA have North America and Asia nailed whereas Iberia have South America nailed. Also both are perfectly placed to operate a more robust network of hubs then even KLM and AF.
I personally hope that this does not spell the end of BA's relatively large presense at its current African destinations (although not too bothered about south America). I feel the greatest problem with this merger would what I personally consider the great difference in customer service. I have flown IB countless times throughout the years and although consistent, they are consistent at the negatives rather then the positives. At least with BA you know where you stand! LOL!
Consolidation is going to happen one way or the other however I do not believe it is the answer to the current obstacles facing the industry at the moment. However BA and IBERIA are a perfect fit. They have similiar fleet sizes, similiar passenger levels and both are profitable. However BA have North America and Asia nailed whereas Iberia have South America nailed. Also both are perfectly placed to operate a more robust network of hubs then even KLM and AF.
I personally hope that this does not spell the end of BA's relatively large presense at its current African destinations (although not too bothered about south America). I feel the greatest problem with this merger would what I personally consider the great difference in customer service. I have flown IB countless times throughout the years and although consistent, they are consistent at the negatives rather then the positives. At least with BA you know where you stand! LOL!