The Cleaner

From WW in Belfast Telegraph today.

"There has been one interested party in talks and two expressions of interest so far in bmi Regional and there are three interested parties in bmibaby, with one new party coming on board for talks in the last few days.



Read more: http://www.belfasttelegraph.co.uk/business/business-news/ba-boss-flights-tax-could-put-belfast-to-heathrow-at-risk-16150742.html#ixzz1tE74zHcr

mart901

So why are these parties suddenly interested? It sounds to me like they we're holding out all along knowing full well Luftansa would get less for the BMI group and they could get baby/regional on much more attractive terms.

sunday8pm

Could we not be looking at Easy here? Being paid to take Baby and return to EMA with ready made market share and routes in the process.

Granite City Express

I'll say it again; why should a company bother with all the hassle of integration and TUPE if you can just quietly wait and cherry pick what you need for a much much lower cost?

FANS

GCE - mainly because someone is paying you for the hastle of integration and TUPE.

Equally, it's a quicker way of growing turnover & market share rather than via an organic growth story.

You should also remember that it isn't that simple to "quietly wait and cherry pick what you need for a much much lower cost" - and this can still be hastle.

Granite City Express

If baby dies, then the market share goes elsewhere anyway, and turnover increases on your own services.

Lets look at what a prospective buyer gets:
Plus
400 staff
An AOC

Minus
A damaged brand
14 leased old aeroplanes
Loss making routes
Some fairly hefty liabilities

I am afraid I don't see what can be done to make a silk purse from this sows ear. The staff are very good and well motivated (or they were) and are by far the best asset of the company. Beyond that the business model is broken, the brand has been damaged and a complete fleet renewal is needed.

giblets

If this 'negative consideration' is involved, it would certainly make it more attractive for any potential buyer over a 'positive consideration' (or less negative if that makes any sense, I'm starting to get confused myself!) that may have been on the cards before.

If BA is paying any 'purchaser' less than the discount they got for taking on baby, they would be pretty happy with the deal too. If I was into conspiracy theories, I would say an informal approach to BA a while back to see what the offer would be post merger would be pretty clever, especially if the financials were finely ballanced.

Further, If Jet2 is looking to start major expansion, bringing on board an existing package with ready trained staff would save them a bit of cash and time too.

Not sure what the lease rates are like on the 737's, but if what flightrider says is true, this could be part of any deal, or they could be pretty reasonable (I have no idea what they are like).

FANS

GCE - the point is that the buyer would get cash to take the business over. That should be the number one item in your Plus category.

Unfortunately, it's not as simple as turnover just moving to you overnight and with no additional expenses!

sunday8pm

If Easy or Jet2 were being paid £ to take on Baby, they could soon release an EMA winter schedule of their own which does indeed 'cherry pick' the Baby routes which they want to keep - and their own additions.

They then spend the time between now and November integrating staff and aircraft - effectively disposing of Baby, leaving them with existing market share and many ex-Baby staff.

Facelookbovvered

There are some valid points in what you say, however the risk in waiting and see is that you could find your grand plans for Midlands expansion go down the drain if someone else gets there first! so its a calculated risk.

IAG first option is bound to be sell/give it to someone else, but there is clearly a sticking point here and i suspect its to do with the aircraft leases.

Second option is a trade sale of the bits that are of use to another airline

Third is a shut down.

Good news if Regional is to be sold, it will give people time to get out before it becomes Eastern V.2

Granite City Express

From what I have been told, there are some big liabilities relating to the airframes and engines, but that is second hand speculation.

All the a/c are leased and there is no property or spares, even the intellectual property is of debatable value. There is nothing to sell.

Hmmmmm, sad to say, but the lack of a winter sched by now, this is the most likely, but that is just my opinion.

Has IAG said they will give handouts for unloading baby? Not from what I have heard.

Another airline would not be interested in tidying up someone else's mess, and if a new entrant was going to use it as a launch pad, it would be cheaper and easier to start from scratch rather than take someone elses company culture and emotional baggage.The fleet would need to be renewed in fairly short order, so there is another huge expense after acquisition.

Lufty would have been happy to give a dowry to get shot of baby to save the reduction in sale price, cant see IAG wanting to give money away when all they were interested in were the LHR slots.

FANS

IAG has said very little, which is why this thread exists!

If IAG received a price negotiation for keeping these two basket cases, then they won't be giving money away, if they then offer this onto the new buyer in the form of negative consideration.

For the last time, they might if they were being paid to do so in the form of negative consideration. You must see this.

Everyone on this forum knows less than the cleaners, but the other parts of BMI could be of interest to an airline if there was now sufficient cash in it for them. It would also save BA/IAG the PR issues of mass redundancies.

sunday8pm

Surely easy or jet2 would allow IAG to pay them to dispose of baby. This incentive plus the prospect of existing market share and base expansion at EMA or BHX would surely be worth considering.

Granite City Express

For the last time stop using the term negative consideration, you sound like a tosser/manager/accountant.

The dowry that would need to be supplied would have to be in the region of 50million to make it worth anyone's effort to take on the basket case that is baby. There are large liabilities and bugger all assets. However hard I try I cannot see baby being a viable entity on its own, and I cannot see why an established operator would want to take on the hassle of a dying airline - it does not make business sense. The resources that would be tied up in integration and "right sizing" the incoming staff (see I can use wankspeak too) would be considerable.

I know that Jet2 looked at Baby and decided they would wait until the axe fell and then plan their move if/when it happened. Easy have an all Airbus fleet, why bother with ageing 737s and their crews? There are already plans to open a base at EMA & BHX anyway., regardless of what happens to Baby.

Baby are not big players, they never reached critical mass, and RYR have as many a/c based at EMA as WW have in their entire fleet. Is the Midlands market that critical to any of the main LoCo players? I dont think so, otherwise Baby would have been crushed long ago.

sam1993

Granite City Express, The language used in your latest post is both agressive and unnecessary and whilst I can understand the points you are trying to make, you seem unable to take on board those made by others on this thread (most of which seem just as logical if not more so than your own!) I note that your tone is somewhat more positive in the bmi regional thread, although given your username I can't say I'm surprised.

Also, given your last point:
This is simply not the case. Ryanair certainly do not have 14 aircraft based at EMA, as you suggest!

Facelookbovvered

Sam your wasting your breath when it comes to reason or fact with the like of GCE

FACT bmibaby have 14 aircraft total 4 are in BHX and 10 are in EMA but two night stop in BHD. BHD is not a pilot crew base.

So worst case is bmibaby at EMA have 8 FR have 7/8 units at EMA

He/she has become very cocky since the chance that bmir might be saved and bmibaby remains unresolved

GCE a word in your shell like, your new employer have some very clever folk when it comes to ISP trace and will take a dim view of your showboating on here at what is a very commercially sensitive time for your company and bmibaby, quite apart from the sensitivity of your group colleagues.

CRM

Surreyman

Having digested all the recent posts on the sale (or not) of Baby,

Given that a large 'Negative Consideration' (sorry GCE, I hate the expression too) paid to any would be purchaser has to cover All
takeover and restructuring costs plus enough to make a sizeable contribution to next years profits.
As already suggested, if the 'bribe' was big enough, this would outweigh all the hassle of TUPE, Management time, pensions etc.

So the question is are IAG/BA so terrified of bad PR - 'BA to make hundreds redundant, scrap a much loved brand' etc etc, that they are in effect prepared to pay some other company a massive premium to be the 'bad boys'?

davidjohnson6

I completely agree that either baby gets closed down in November or a winter schedule has to be released soon - not only to obtain the revenues from sales to keep the company ad a going concern, but also to signal to industry and customers that baby remains a credible airline

However I also note that Ryanair and Wizzair and Flybe are yet to release a winter schedule in full.

The end of October is 6 months from now and LCCs seem quite happy sometimes to wait until as little as 4 or 5 months before new season schedule release. The last few days of October are important for the half term peak but I doubt there will be a major loss of revenue in November with a small-ish delay in scheduling. Xmas is still a *very* long way away.

Perhaps better not to read too much into this quite yet and revisit around late May or even early June ?

OliWW

Your still all out... Ryanair only have 6 aircraft flying at EMA, 1 parked... and at the current time, only come November can Ryanair add additional flights anyway with no spare a/c

sunday8pm

Davidjohnson6 the point about a winter schedule or current lack of holds weight I think. If easy are shortly to return to EMA as rumour suggests, or jet2 are to expand the lack of a baby winter programme now offers them an opportunity in without having anything to do with baby. Let's say easy release a set of routes now from November onwards largely similar to routes from EMA which baby now operate. Forward bookings and revenue will already be theirs and baby has its work cut out already. This situation would be hard to recover and leave baby well and truly on the rack and remain IAGs problem. This isn't something IAG want which is why it makes sense for them to offer easy or jet2 a package attractive enough to avoid this situation. For this reason I think developments either way are likely sooner rather than later.