Officedesk
5th May 2004, 19:34
From daily telegraph Monday 3rd May
British Mediterranean Airways, a small airline which flies under British Airways' colours to some of the most dangerous parts of the world, has appointed a leading investment bank to see if it should float.
If BritMed decides to list or sell itself, it would land two senior Conservative Party peers - Lord Hesketh and Lord Powell of Bayswater - with paper windfalls worth millions of pounds. BritMed, set up in 1994 by a group of private investors, has asked NM Rothschild to weigh up its options. Rothschild will report back to BritMed's board within four weeks.
Des Hetherington, chief executive, said BritMed was faced with floating, going for a private sale or a combination of the two. Mr Hetherington, 54, who joined in 1995, has 3.5m of share options and saw his pay jump 31pc to £219,141 last year. Floating is attractive but fraught with risk for BritMed, he said. "The airline industry is naturally fickle. There is also always the potential for civil strife from the areas that we fly to."
Lord Hesketh, 53, a former chief whip to John Major, is BritMed's chairman and its second largest shareholder with 18pc - or 9.8m shares.
Some industry experts suggested that BritMed could be worth up to £50m at float, potentially handing Lord Hesketh a paper windfall of £9m. Lord Powell of Bayswater, Baroness Thatcher's former adviser, would also benefit. He has more than 1m share options, the last tranche of which is exercisable in December this year.
Lord Hesketh said a valuation was very difficult at this stage. Flotation was just one option, he said, adding he would more know later this month. The board wanted an independent analysis of the company's strategic direction 10 years after he helped to set it up.
The most obvious buyer in a trade sale would be British Airways but Lord Hesketh thought it unlikely that British Airways would want to buy the company because some of the routes needed a lot of management time. He said: "I don't think that British Airways want to buy us. What we provide is a low-cost solution with the quality of product that they want in essentially fairly specialised markets with not a lot of volume."
BritMed has long-term leases, costing £11.1m last year, on six Airbus jets seating up to 149 passengers each. It hopes to increase the number of jets to 10 over the next four years. The company employs more than 400 staff - 140 based overseas.
BritMed's planes fly from Heathrow's terminal four to 14 destinations, often located near notorious trouble spots such as Khartoum (Sudan), Beirut (Lebanon), Almaty (Kazakhstan), Baku (Azerbaijan) and Tehran (Iran). The company's jets carry British Airways' livery, staff wear BA uniform and the flights use BA flight codes.
BritMed has benefited from an increase in oil, gas and mining companies working in ever more remote areas of the globe. Its turnover is split 70-30 between business and leisure customers.
BritMed made a pre-tax profit of £5m in the 12 months to March 31 2003, against a loss of £2.3m last time. Turnover jumped 21pc to £73.9m. Mr Hetherington said BritMed was due to post a 28pc increase in operating profits to £6m in the year to March 31 2004, on sales of £84m, up 14pc.
BritMed flew 253,000 passengers last year, up from 212,000 in 2002 and a 61pc increase on
British Mediterranean Airways, a small airline which flies under British Airways' colours to some of the most dangerous parts of the world, has appointed a leading investment bank to see if it should float.
If BritMed decides to list or sell itself, it would land two senior Conservative Party peers - Lord Hesketh and Lord Powell of Bayswater - with paper windfalls worth millions of pounds. BritMed, set up in 1994 by a group of private investors, has asked NM Rothschild to weigh up its options. Rothschild will report back to BritMed's board within four weeks.
Des Hetherington, chief executive, said BritMed was faced with floating, going for a private sale or a combination of the two. Mr Hetherington, 54, who joined in 1995, has 3.5m of share options and saw his pay jump 31pc to £219,141 last year. Floating is attractive but fraught with risk for BritMed, he said. "The airline industry is naturally fickle. There is also always the potential for civil strife from the areas that we fly to."
Lord Hesketh, 53, a former chief whip to John Major, is BritMed's chairman and its second largest shareholder with 18pc - or 9.8m shares.
Some industry experts suggested that BritMed could be worth up to £50m at float, potentially handing Lord Hesketh a paper windfall of £9m. Lord Powell of Bayswater, Baroness Thatcher's former adviser, would also benefit. He has more than 1m share options, the last tranche of which is exercisable in December this year.
Lord Hesketh said a valuation was very difficult at this stage. Flotation was just one option, he said, adding he would more know later this month. The board wanted an independent analysis of the company's strategic direction 10 years after he helped to set it up.
The most obvious buyer in a trade sale would be British Airways but Lord Hesketh thought it unlikely that British Airways would want to buy the company because some of the routes needed a lot of management time. He said: "I don't think that British Airways want to buy us. What we provide is a low-cost solution with the quality of product that they want in essentially fairly specialised markets with not a lot of volume."
BritMed has long-term leases, costing £11.1m last year, on six Airbus jets seating up to 149 passengers each. It hopes to increase the number of jets to 10 over the next four years. The company employs more than 400 staff - 140 based overseas.
BritMed's planes fly from Heathrow's terminal four to 14 destinations, often located near notorious trouble spots such as Khartoum (Sudan), Beirut (Lebanon), Almaty (Kazakhstan), Baku (Azerbaijan) and Tehran (Iran). The company's jets carry British Airways' livery, staff wear BA uniform and the flights use BA flight codes.
BritMed has benefited from an increase in oil, gas and mining companies working in ever more remote areas of the globe. Its turnover is split 70-30 between business and leisure customers.
BritMed made a pre-tax profit of £5m in the 12 months to March 31 2003, against a loss of £2.3m last time. Turnover jumped 21pc to £73.9m. Mr Hetherington said BritMed was due to post a 28pc increase in operating profits to £6m in the year to March 31 2004, on sales of £84m, up 14pc.
BritMed flew 253,000 passengers last year, up from 212,000 in 2002 and a 61pc increase on