OpenSkies
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Honestly, I really don't understand how anything gets done in the UK.
After spending six weeks training in the UK, what I came away from was this:
The Brits are charming enough people and quite polite (usually) but DEPRESSINGLY negative, and have a deathly fear of doing anything outside of the built in structure.
I'm saying this because I'm reading the post, and see a pattern of negativity on pprune.org Status quo for the industry is about to make an abrupt change, and the sooner we all adjust to this new reality the better off we'll all be.
If you ask me, and of course you didn't, Openskies could not have come at a better time for BA. This is a face of the new reality of a world where oil/fuel prices are not going down anytime soon, or at all. Travel in the future will be restricted mainly to those of means, or absolute necessity with a few who've saved for a nice vacation thrown in the mix.
Not much different let's say, then the days prior to US deregulation of the industry.
I think these horrible days of air travel will soon be coming to an end with airlines becoming much smaller and stealthier, less seats on an aircraft at a fare that is comparable to the service. Sadly I think some old industry names will go in the history books..namely on my side of the pond.
I think OS is a mark for the future, and BA was pretty damned smart to stake a claim this early in the game.
Of course only time will tell.
After spending six weeks training in the UK, what I came away from was this:
The Brits are charming enough people and quite polite (usually) but DEPRESSINGLY negative, and have a deathly fear of doing anything outside of the built in structure.
I'm saying this because I'm reading the post, and see a pattern of negativity on pprune.org Status quo for the industry is about to make an abrupt change, and the sooner we all adjust to this new reality the better off we'll all be.
If you ask me, and of course you didn't, Openskies could not have come at a better time for BA. This is a face of the new reality of a world where oil/fuel prices are not going down anytime soon, or at all. Travel in the future will be restricted mainly to those of means, or absolute necessity with a few who've saved for a nice vacation thrown in the mix.
Not much different let's say, then the days prior to US deregulation of the industry.
I think these horrible days of air travel will soon be coming to an end with airlines becoming much smaller and stealthier, less seats on an aircraft at a fare that is comparable to the service. Sadly I think some old industry names will go in the history books..namely on my side of the pond.
I think OS is a mark for the future, and BA was pretty damned smart to stake a claim this early in the game.
Of course only time will tell.
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BA Press Release this morning:
British Airways has reached an agreement to buy French airline L’Avion at a cost of £54 million (Euro 68 million). The cost covers the purchase of the airline and £26 million (Euro 33 million) of cash in its business.
L’Avion is a privately owned airline that operates two Boeing 757 aircraft between Paris Orly and Newark airport. Following completion of the deal, expected this month, it will become a British Airways’ subsidiary and be integrated into OpenSkies, the airline’s new EU-US subsidiary airline.
OpenSkies launched services on June 19 this year with daily flights from Paris Orly to New York JFK that operate with a L’Avion codeshare. The combined airline will operate up to three daily flights between Paris Orly and New York JFK/Newark airports using three Boeing 757 aircraft.
British Airways’ chief executive, Willie Walsh, said: “L’Avion is a successful airline that has built up a premium business between Orly and New York in a relatively short period of time.
“It has many synergies with OpenSkies and buying it provides OpenSkies with a larger schedule and an established customer base in the Paris-New York market.”
Christophe Bejach, co-founder and chairman of L'Avion, said: "We are happy to merge our operation with OpenSkies. This transaction will strengthen our current base and enable the combined airline to grow faster and stronger. Our staff will benefit from the ambition and recognised expertise of the buyer and our customers will have access to an even better service, on a larger scale."
British Airways has reached an agreement to buy French airline L’Avion at a cost of £54 million (Euro 68 million). The cost covers the purchase of the airline and £26 million (Euro 33 million) of cash in its business.
L’Avion is a privately owned airline that operates two Boeing 757 aircraft between Paris Orly and Newark airport. Following completion of the deal, expected this month, it will become a British Airways’ subsidiary and be integrated into OpenSkies, the airline’s new EU-US subsidiary airline.
OpenSkies launched services on June 19 this year with daily flights from Paris Orly to New York JFK that operate with a L’Avion codeshare. The combined airline will operate up to three daily flights between Paris Orly and New York JFK/Newark airports using three Boeing 757 aircraft.
British Airways’ chief executive, Willie Walsh, said: “L’Avion is a successful airline that has built up a premium business between Orly and New York in a relatively short period of time.
“It has many synergies with OpenSkies and buying it provides OpenSkies with a larger schedule and an established customer base in the Paris-New York market.”
Christophe Bejach, co-founder and chairman of L'Avion, said: "We are happy to merge our operation with OpenSkies. This transaction will strengthen our current base and enable the combined airline to grow faster and stronger. Our staff will benefit from the ambition and recognised expertise of the buyer and our customers will have access to an even better service, on a larger scale."
So the airline had a value of £28m. Anyone know what the market capitalisation of it was at the time ? If BA also needed to stick in a further £26m of cash straight away (will be needed to pay suppliers etc) then they must have been running pretty short and needed to sell out, rather than being a cash-positive business from day to day.
I'm sure we'll have a good discussion about why the other three premium operators went to the wall with no investors interested, while this one has managed to sell itself on.
I'm sure we'll have a good discussion about why the other three premium operators went to the wall with no investors interested, while this one has managed to sell itself on.
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No WHBM. It was not listed, so had no market cap at all. It has £26m of cash in the business, so not short at all (yet).
There are no other financial details in the public domain, so it would be disingenious to speculate. I suspect that having seen eos and Silverjet go bankrupt, a BA offer would be very attractive regardless.
There are no other financial details in the public domain, so it would be disingenious to speculate. I suspect that having seen eos and Silverjet go bankrupt, a BA offer would be very attractive regardless.
Yes, I got that wrong, read it as £26m cash "into" the business.
I see Chief Exec of L'Avion, Marc Rochet, used to head up Air Liberte, which of course BA once owned. Any long-term connections ?
I see Chief Exec of L'Avion, Marc Rochet, used to head up Air Liberte, which of course BA once owned. Any long-term connections ?
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Ive just seen a report that BA has bought L'avion for EUR68M (including EUR33M cash) and will merge this into Openskies. So thats two more B757's and its Orly-Newark route. Wonder if Openskies will now scrap Newark to focus on JFK and use the two B757's to expand routes from other places in Europe?
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I am sure L'Avion pilots must feel better and more secure. Watch Maxjet, EOS and Silverjet disappear and you feel you are next without more support. Open Skies at least have some money and support from BA.
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Excellent question about why BA didn't do this in the first place and avoid the start-up costs and BALPA disputes associated with OS....
I don't know the answer to this question, but looking forward I have significant doubts that the OS project will be hugely successful...Somehow it just doesn't seem to hang together correctly, particularly the Paris services....
Brussels might succeed as there is no ' home ' market competition to the USA, but service between Paris / Amsterdam / Frankfurt / etc and New York or other East Coast cities without a network for onward connections ( not even through or with OneWorld partners, of which I believe OS is not a member ) seems to restrict the services to a point-to-point market on routes that are already highly competitive with national carriers for local passengers and alliance hubs for onward connections....
As someone mentioned earlier with the question re Air Lib, has the current BA Board forgotten the last fiasco for BA in France - this country is a graveyard for most foreign investors due to the high degree of protectionism that the French Government indirectly provides to major French companies and what are considered as strategic industries....
And even with this purchase, BA is still not quite the nuisance to AF/KL that the combined DL/NW/AF/KL presence at Heathrow now represents to BA....It won't be long before the SkyTeam group turn Heathrow into a reasonable sized hub with huge numbers of codeshares for the North Atlantic market....Does OS have this capability ? I think not - no onward networks, no alliance for high yield FT's who are ALL mile collectors, Orly is not a major hub and never can be, and, most of all, France is France and all things French !
So curiouser and curiouser....
I don't know the answer to this question, but looking forward I have significant doubts that the OS project will be hugely successful...Somehow it just doesn't seem to hang together correctly, particularly the Paris services....
Brussels might succeed as there is no ' home ' market competition to the USA, but service between Paris / Amsterdam / Frankfurt / etc and New York or other East Coast cities without a network for onward connections ( not even through or with OneWorld partners, of which I believe OS is not a member ) seems to restrict the services to a point-to-point market on routes that are already highly competitive with national carriers for local passengers and alliance hubs for onward connections....
As someone mentioned earlier with the question re Air Lib, has the current BA Board forgotten the last fiasco for BA in France - this country is a graveyard for most foreign investors due to the high degree of protectionism that the French Government indirectly provides to major French companies and what are considered as strategic industries....
And even with this purchase, BA is still not quite the nuisance to AF/KL that the combined DL/NW/AF/KL presence at Heathrow now represents to BA....It won't be long before the SkyTeam group turn Heathrow into a reasonable sized hub with huge numbers of codeshares for the North Atlantic market....Does OS have this capability ? I think not - no onward networks, no alliance for high yield FT's who are ALL mile collectors, Orly is not a major hub and never can be, and, most of all, France is France and all things French !
So curiouser and curiouser....
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This purchase of L'Avion looks stranger & stranger, one wonders what business model BA is really following?
Assuming they really did pay £28M for the airline (excluding cash) then each a/c has to generate £40,000 profit pd to cover that cost spread over a year. So between a full load of say 50 club equivalent pax that's £800 per pax. And that's before fuel or any other operating costs are added in.
Next the L'Avion a/c are configured differently & go to EWR, so there does not seem to be much commonality.
In fact I do believe that it is BA that has got it wrong with its route selection, EWR is much better as a hub for onward US connections & it is also easier to get into Manhatten.
So I believe the rational for this purchase is to make Open Skies grow as quickly as possible,regardless of profits, in order to justify the future purchase of chunks of BA as forecast by the pilots union
Assuming they really did pay £28M for the airline (excluding cash) then each a/c has to generate £40,000 profit pd to cover that cost spread over a year. So between a full load of say 50 club equivalent pax that's £800 per pax. And that's before fuel or any other operating costs are added in.
Next the L'Avion a/c are configured differently & go to EWR, so there does not seem to be much commonality.
In fact I do believe that it is BA that has got it wrong with its route selection, EWR is much better as a hub for onward US connections & it is also easier to get into Manhatten.
So I believe the rational for this purchase is to make Open Skies grow as quickly as possible,regardless of profits, in order to justify the future purchase of chunks of BA as forecast by the pilots union