BMI bought by Virgin
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Surely the original premise of this thread is flawed as the rumour was the sale of the airline and slots as a single entity, when in fact we all knew about the slot sale yesterday?
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As I said on the other thread, the 'Virgin Group' could buy BD, without the politics of VS/SQ. It could then be run like VX/VA until such a time as it could be brought together.
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Virgin won't be buying anything. If there is a deal to be done here, VS will ensure that there is no cash outlay.
Perhaps a red herring story - as I'm sure that Virgin are looking strengthen in other ways.
Perhaps a red herring story - as I'm sure that Virgin are looking strengthen in other ways.
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an alternative view
I have watched the recent BMi developments with interest. I have no inside knowledge on any of the players in this deal and am simply offering this as an alternative theory.
It is not long since LH offered BMi for sale, there was no interest that was acceptable to its owners, Lufthansa and they withdrew it from the market. The only change to have happened since then is that the market conditions have got tougher. BMi is very sick and burns so much cash that Lufthansa would have to provide a significant dowry to offload it. From this I conclude that Lufthansa know who was interested and there will be no new interest. They only needed to pick up the phone and ring up IAG and Virgin to see if they want it, there is no need to appoint at, presumably, a great cost city lawyers and bankers. They prepped the company for sale a couple of years ago, nothing much will have changed except the situation has got worse. It may in fact be cheaper just to close it down and realise the only “value” in the company, its slots. These slots have no value however unless they are used so they need to keep BMi flying until they offload the slots, if this is their plan then the slot sale to BA is the start of a long lingering death for BMi.
Alternatively Lufthansa could go “double or quits” everyone knows that the BMi Virgin merger is the biggest deal never to have happened in recent British aviation history. Virgin is just about keeping its head above water and BMi would sink it within a very short time period, mergers have high initial costs to cash flow. Lots of redundancy, early termination of contracts with exit payments and loss of focus on the original business as everyone struggles to cope with the change. If as was stated in the thread above, and I have not checked, Singapore Airlines have written the value of their investment in Virgin down to zero they are not about to allow them to get into a deal that will require this amount of cash, to the contrary they will be open to any offer, after all they have said it is worth nothing.
Robert Anthony Wilson said “The best place to hide something is out in the open. Nobody ever thinks to look there.” Everyone is talking about Virgin buying BMi. Maybe Lufthansa have agreed in principle to acquire Virgin and the work being done by he lawyers in BMi is all about acquiring Virgin and merging the two businesses into a single Star Alliance airline based out of London under the BMi brand.
It is not long since LH offered BMi for sale, there was no interest that was acceptable to its owners, Lufthansa and they withdrew it from the market. The only change to have happened since then is that the market conditions have got tougher. BMi is very sick and burns so much cash that Lufthansa would have to provide a significant dowry to offload it. From this I conclude that Lufthansa know who was interested and there will be no new interest. They only needed to pick up the phone and ring up IAG and Virgin to see if they want it, there is no need to appoint at, presumably, a great cost city lawyers and bankers. They prepped the company for sale a couple of years ago, nothing much will have changed except the situation has got worse. It may in fact be cheaper just to close it down and realise the only “value” in the company, its slots. These slots have no value however unless they are used so they need to keep BMi flying until they offload the slots, if this is their plan then the slot sale to BA is the start of a long lingering death for BMi.
Alternatively Lufthansa could go “double or quits” everyone knows that the BMi Virgin merger is the biggest deal never to have happened in recent British aviation history. Virgin is just about keeping its head above water and BMi would sink it within a very short time period, mergers have high initial costs to cash flow. Lots of redundancy, early termination of contracts with exit payments and loss of focus on the original business as everyone struggles to cope with the change. If as was stated in the thread above, and I have not checked, Singapore Airlines have written the value of their investment in Virgin down to zero they are not about to allow them to get into a deal that will require this amount of cash, to the contrary they will be open to any offer, after all they have said it is worth nothing.
Robert Anthony Wilson said “The best place to hide something is out in the open. Nobody ever thinks to look there.” Everyone is talking about Virgin buying BMi. Maybe Lufthansa have agreed in principle to acquire Virgin and the work being done by he lawyers in BMi is all about acquiring Virgin and merging the two businesses into a single Star Alliance airline based out of London under the BMi brand.
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SIMPLZ
Virgin buy SAS stake in BMI (if they still have one?)
Lufthansa buy SIA stake in Virgin
All in STAR managed by Lufthansa
Virgin Express/BMI feed LHR/LGW
Virgin Atlantic/BMI operate Virgin/Lufthansa flights out of LHR/LGW
Fleet to be B747-800s and A330s
SIMPLZ
Lufthansa buy SIA stake in Virgin
All in STAR managed by Lufthansa
Virgin Express/BMI feed LHR/LGW
Virgin Atlantic/BMI operate Virgin/Lufthansa flights out of LHR/LGW
Fleet to be B747-800s and A330s
SIMPLZ
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I can't see the logic of VS taking on BMI.
EDIT: Although LH buying VS. Wow! That would be clever!!!
If feeder flights were so strong and so essential, we'd still have BA flying from BFS, DUB and INV to LHR for a start. Maybe I am simplifying things too much, but VS has survived without a domestic network until now!
British Midland used to be a very strong brand. Those dark blue coloured 'planes, Diamond Service, popular with travel agents etc. And then they became bmi.
I worked in the travel industry back then and there were all sorts of rumours going around that British Midland was going to rebrand as 'bluebird' or something similar. What we got was bmi, with the 'i' standing for "anything you want it to'. (Their words). I think that started a malaise. They got confused. bmibaby, bmi regional and bmi mainline: all with differing levels of service. Not one brand is strong. (In fact I see bmibaby as untrustworthy following the revelations about their creative way of charging for bags. )
bmi forgot that if you are not the flag carrier, you need a punchy, evocative name to rise above the marketing antics of EZY, FR etc. bmi is not that name.
And now a once brilliant airline is on its knees.
I flew with them from BHD last week, the crew were lovely, the 'plane spotless. and very smart. I feel sorry for their staff who cannot be immune to the turmoil surrounding the airline, and to which I am unwittingly adding to with posts like this.
EDIT: Although LH buying VS. Wow! That would be clever!!!
If feeder flights were so strong and so essential, we'd still have BA flying from BFS, DUB and INV to LHR for a start. Maybe I am simplifying things too much, but VS has survived without a domestic network until now!
British Midland used to be a very strong brand. Those dark blue coloured 'planes, Diamond Service, popular with travel agents etc. And then they became bmi.
I worked in the travel industry back then and there were all sorts of rumours going around that British Midland was going to rebrand as 'bluebird' or something similar. What we got was bmi, with the 'i' standing for "anything you want it to'. (Their words). I think that started a malaise. They got confused. bmibaby, bmi regional and bmi mainline: all with differing levels of service. Not one brand is strong. (In fact I see bmibaby as untrustworthy following the revelations about their creative way of charging for bags. )
bmi forgot that if you are not the flag carrier, you need a punchy, evocative name to rise above the marketing antics of EZY, FR etc. bmi is not that name.
And now a once brilliant airline is on its knees.
I flew with them from BHD last week, the crew were lovely, the 'plane spotless. and very smart. I feel sorry for their staff who cannot be immune to the turmoil surrounding the airline, and to which I am unwittingly adding to with posts like this.
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STN Ramp Rat
I like the idea of hide it in the open and double or quits, but hell of a gamble......... i suspect that DLH already have an end game in mind, i just somehow can't see them shutting the lot down or selling it to IAG either. With bmi and VS share held by SIA worthless the cost of doing something in cash terms here is small, it just a paper exercise and probably a tax charge positive? who knows bmi and virgin under one roof within Star might work, it would certainly make IAG and oneworlds life more difficult.
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Virgin buy SAS stake in BMI (if they still have one?)
Lufthansa buy SIA stake in Virgin
All in STAR managed by Lufthansa
Virgin Express/BMI feed LHR/LGW
Virgin Atlantic/BMI operate Virgin/Lufthansa flights out of LHR/LGW
Fleet to be B747-800s and A330s
SIMPLZ
Lufthansa buy SIA stake in Virgin
All in STAR managed by Lufthansa
Virgin Express/BMI feed LHR/LGW
Virgin Atlantic/BMI operate Virgin/Lufthansa flights out of LHR/LGW
Fleet to be B747-800s and A330s
SIMPLZ
LH will not buy a minority stake in VS. Why would a group of the might of LH want to buy a stake in an airline where they won't have control? Why divert traffic from its own hubs where it won't get 100% of the revenue benefit?
The point made this week which probably explains LH's thinking is that at FRA, MUC, ZRH etc LH is Number 1. At LHR, even combined with BD, they will always be Number 2 and by a considerable margin. VS is a niche long-haul airline (and that's not intended to underplay its considerable achievements) and trying to build a 2nd major network carrier at LHR is unlikely to work. You will never match BA on network and frequency.
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any deal may well be for a £1 BUT.... someone needs to have deep pockets just to keep the thing in the air until they can make a profit. its that point that is key to any deal. you are going to have to burn a lot of cash before there is a sniff of a profit
my theory assumed that they would buy the SQ stake and the Virgin stake thus giving them 100% ownership
LH will not buy a minority stake in VS. Why would a group of the might of LH want to buy a stake in an airline where they won't have control? Why divert traffic from its own hubs where it won't get 100% of the revenue benefit?
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I think Willie Walsh was spot on when he questioned the merits of buying a business that has always been associated with a personality and is regarded by its owner as his "baby". The never ending trouble easyJet have with Stelios is a salutary warning.
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I can see VS acquiring BMi, with VS becoming a part of star in the process along with a good deal for LH on interline flights and expand feeder traffic through the UK for VS and would allow LH to sell interline flights at a better rate for themselves through the BMi and VS network.
Remember RB's comments “There is likely to be an announcement of an alliance coming very soon,”
(Virgin Atlantic Will Join an Alliance Soon, Says Richard Branson - Forbes)
It just looks like a way for LH to get BMi off the books but get something out of the sale in the long run...!
Remember RB's comments “There is likely to be an announcement of an alliance coming very soon,”
(Virgin Atlantic Will Join an Alliance Soon, Says Richard Branson - Forbes)
It just looks like a way for LH to get BMi off the books but get something out of the sale in the long run...!
Paxing All Over The World
BA/IAG only want the slots - nothing else and have shown no indication of wanting to buy a regional. Their plan is to get fully fledged carriers into their group.
Ten years ago, VS would have killed several grannies to get BM/bmi to get their feeder network - but that network has been decimated by RF + EZY and the others, so that bmi has fallen between two stools. I won't rake over it all now as it is history but there was some agreement (I recall) the stubborness of one man prevented the sale going to the company that really wanted them, VS.
Are bmi going to get squeezed out? Highly likely. A great pity, a good company but they are in the middle rank and the pax are now with the LCCs and the big boys.
Ten years ago, VS would have killed several grannies to get BM/bmi to get their feeder network - but that network has been decimated by RF + EZY and the others, so that bmi has fallen between two stools. I won't rake over it all now as it is history but there was some agreement (I recall) the stubborness of one man prevented the sale going to the company that really wanted them, VS.
Are bmi going to get squeezed out? Highly likely. A great pity, a good company but they are in the middle rank and the pax are now with the LCCs and the big boys.
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Virgin do not have the talent to succeed where Lufthansa failed, indeed the current team have hardly set the world alight beyond introducing a new shade of red paint. The idea that bmi as it is today would feed VS is comic. The only feeder routes are UK and Ireland and they are under immense pressure. Where does ex BMed fit in? Indeed VS wouldn't know what to do with the slots even if it got them. Taking on a failing carrier like BMI could wind up killing an underperforming VS. Remember SRB has little to do with VS day to day and I am still awaiting the GLA-JFK he promised when BA pulled out.
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