silverstreak and all the other doom-mongers...

Imagine yourself as CEO of BA. If a merger with IB is so bad, what *strategic* action would you take now (not 5 years ago) to ensure that BA has a long-term profitable survival, noting that

1) BA is essentially a network airline and needs to make a profit from this sort of activity
2) BA has a big pension shortfall and will have difficulty getting finance for fleet renewal until this pension hole is filled

Iberia adds nothing at all to BA's potential profitability, so why do it? It has the ability to take the Lufthansa path and add to its fundamental strength but by not growing its long haul fleet , other than via the conversion of a handful of 767s for the past ten years it has not made best use of its potential and slow portfolio. It needs now to get a grip of its own destiny. A merger with Iberia does nothing for it financially or strategically.

Surely B.A. would be better off investing time and money into companies that would give a better return and market share, A.A. the obvious one , but also companies like Flybe in the UK and various other multiple smaller European companies (like LF is doing) that would give much better market exposure.
If they want South America then why not through A.A. or other US or Canadian companies??

Serenity - it is my understanding that until the EU and US DOT grant anti-trust immunity, BA and AA will be unable to consummate their commercial relationship any further.

Flybe are a UK regional LCC who do not fly to LHR, and very little prospect of gaining LHR slots. Regional bases at Exeter and Southampton would have little strategic fit a network airline. Much of the rest of the Flybe operation was sold by BA to Flybe because BA couldn't make money out of it. In any case, BA already have a significant shareholding in Flybe.

SN Brussels are essentially a short-haul European airline combined with a good niche between Europe and West / Central Africa. Trade links between Germany and Congo are not strong, but Lufthansa were still ready to splash the cash.

Besides Iberia, other possible candidates for a BA takeover are Scandinavian, Finnair and LOT. I'm struggling to see why buying any of these 3 airlines is much more compelling than going for Iberia - perhaps you could explain your rationale ?

This is not a purchase by BA. It is a merger with Iberia. It seems that both will then have, AF/KL style, an owning company and board above them. The question then is who has the majority holding and where that company is legally domiciled.

If the main company was registered in Spain would this be a opportunity for for WW and the board to dump the NAPS pension problem on the Uk taxpayer ?

Davidjason6...

I didnt say as such that a 'merger' with IB was bad (maybe it will be for IB)

Pensions? Whos fault is that?

Finance for a new fleet? Afterall, not so long ago, BAs status was downgraded by Standard and Poors! Again, whos fault is that? If this were a football team, the manager would have been sacked, and his boardroom staff. Poor guidance, management, and all the other adjectives you care to mention.

Come on. Yes the airline is in a semi-healthy state (just), but whos running the show. Willie Walsh. I rest my case. Time for a new vision and a strategy that will sort out PENSIONS and the other gremlins that seem to continually grind down the company. Its the same old excuse after excuse. The pension situation isnt going to go away quietly, so deal with it. If it means a drastic cut in everything BA do, then so be it - it must be tackled and now. (Theres NO silverwear left to sell, offload or pass over). Maybe then BA might find itself in a position to attract a partner.

All Iam saying is that for all the years past, BA have had chances to cement relationships with other carriers and just screwed them up, one after the other. What else is there to say... They ALL cant be wrong...

BA needs to resize (downwards in the interim if required), regroup and lay out what they really want to do, who they want to be with, sort out ALL their financial issues then hit the ground running. No point being the biggest and 'best' if your running scared from the pension crisis and other issues.

Waaahhh ! I've become Del Boy ! :{

The finance for new aircraft is in place and guaranteed for several more years.

The pension is a mess again, but so is the stock market to which it is linked. Should the stock market improve in value then the defecit should reduce.

How would you solve the pension deficit?
Wouldn't leave a whole lot for investment if they put even more in? Pensions outside the public sector are the pyramid scheme that got found out.

... Appologies Davidjohnson6... :rolleyes:

Anyway who knows what will happen. The pension crisis is an issue and it may be that BA scale back activities and back-fill the fund - again.

Hope it all works out though. I dont have an issue with BA, just the way its being run. Directionless.

The BA-Iberia "merger" reminds me to some extent of another one - that between Mercedes Benz and Chrysler (okay, that was a takeover). I cannot see it working for BA. If Madrid was somewhere else there might be more in it for BA, as Terminal 4 at Barajas is wonderful. With sterling so weak against the euro, the BA "share" of the merged entity would be woefully low. Furthermore, BA would suffer from being more closely associated with an airline with, in my experience, poor customer service standards. Iberia is, I think, about to come under significant attack on its prized domestic routes by Ryanair, not to mention the rapidly expanding network of high speed trains. I don't understand why BA is pursuing this merger. Previous ones (United, US Airways, KLM, Qantas) made much more sense.

Would it have something to do with the large amoutn of Heathrow slots that Iberial hold?

Steve

QUOTE: "If the main company was registered in Spain would this be a opportunity for for WW and the board to dump the NAPS pension problem on the Uk taxpayer ?"

...you can't dump a pensions liability like that, it would sit with the company. The only route is insolvency and then a claim on the pension protection fund, but I can't really see this happening.

Looking around Europe the only partner I see that would add anything to BA is Easyjet but the cultures are too disimilar for it to work.

From a traffic point of view:
BA has approx 42% slots at LHR which is about 3900 Air Transport Movements per week, BMI 12% with about 1100, Lufthy 4.5% with about 416, Virgin 3.5%, Air Lingus 3%. SAS 3%, American 2.3% and then Iberia on 2.1% with 196 (not sure if this includes clickair which wont be much more)

Given that BA have another 51 coming from a deal with BMI for BMED slots in 09 for £30M it would be far cheaper for them to buy the 196 slots from Iberia and simply codeshare to Spain or allow Iberia to put on bigger aircraft to run all flights to Spain (thus allowing BA to not have to fly from T3 (once 757's have gone) and use the slots it has for MAD and BCN flights on something else........far cheaper than merging with Iberia just for slots at LHR.

Having said that I thought (from whats been said) the deal is to ultimately save costs by operating from one head office and removing any staff duplication, increased buying power reducing in lower fees for purchasing across the board (new planes, fuel....i could go on), one "executive" club to operate, and in terms of flights - BA codeshares and routes passengers on Iberias lucrative and extensive South American routes, Iberia codeshares and routes passengers via BA's North America routes.

'but the cultures are too disimilar for it to work'

Cultures maybe, but the the T and C's are about to come a hell of a lot closer in the next few months.

Wasn't aware thanks.:ok:

Any more schedule changes?
 

BA future bookings seem to be reasonable and at LGW the loss of 737 for 319 aircraft has reduced the cap on a number of destinations by 20+ seats. Therefore the seat reduction has come at very good time. It is rumoured that a number of Easy 320s (ex GB airways) are en route to LHR to free up a further 4 319's for LGW services. So at present things are not looking to bad?