BMI

[EastMids]

There are hundreds of jobs likely to be lost and you're talking fondly about a bloody building!!!!

There is legitimate interest in the building so why not debate it? Doesn't mean no one cares about the jobs - in fact a secure future for the Hall might be the best thing to protect some jobs. And don't blame anyone here for the lost jobs - blame Bish and the other muppets who were put in charge of the business over the years who managed to turn the UK's second airline into a basket case that even Lufthansa couldn't sort out.

[Rougueg]

Good News?

From Flight Global
All copy right etc theirs

"Lufthansa has had to wait longer than expected to offload the regional subsidiary of BMI.
The sale, to a group of UK investors known as "Granite Aviation", had been due to complete at the end of last year. However, the process stalled owing to the fact that an investment group, rather than another airline, was purchasing BMI Regional, a source close to the matter explained.
"The process has been very slow, because Granite only comprises three people and has no existing airline infrastructure in place," he said.
In particular, there were no support services in place for BMI Regional's fleet of aircraft, which took time to negotiate, the source said. Now there is a transitional service agreement in place whereby BMI will support BMI Regional for the first six months after sale completion.
The share purchase agreement has been finalised, along with proof of funding, the source said. BMI Regional has also secured an agreement to continue operating four of the five Embraer ERJ-145s it has been wet-leasing from BMI. The regional subsidiary additionally operates a fleet of four ERJ-135s and 15 ERJ-145s.
Ian Woodley, Graeme Ross and Robert Sturman, who have prominent roles within Granite, are understood to be the likely candidates to head up BMI Regional following its acquisition. Woodley and Ross were the founders of Business Air, which was sold to British Midland in 1996 and changed its name to BMI Regional. Sturman was CEO of British World Airlines for a decade, before working in various aviation advisory roles.
A leaked memo issued to staff at BMI Regional at the end of last year stated: "The intended buyer plans to continue the airline as an independent entity and will operate from the current head office in Aberdeen and its bases already established in the UK. The new owner will further develop the regional network in both the UK and Europe."
Meanwhile, International Airlines Group recently pipped Virgin to the post to acquire BMI for £172.5 million, in a deal that is scheduled to complete in March 2012."

[The Cleaner]

Good news! :O:D

[VIKING9]

Maybe BMIregional will become Business Air :ok:

[BAladdy]

Maybe BMIregional will become Business Air

As long as they don't rebrand it with the same name as there company

Somehow Granite Air, Granite Aviation or even worse Gran Air doesn't have as good a ring to it as Business Air

[Richard Taylor]

I just hope the deal's set in stone now! :ok:

[excrewingbod]

Bit of deja-vu creeping in. Took nearly the same length of time to organise Airlines of Britain buyout of II back in 1996. LH/LX departed in Jan/Feb 1996 and II entered the Airlines of Britain Group in April 1996.

The irony was those few months where Ian and Graeme had 100% ownership were the best I can recall. It all went downhill from April 1996 onwards....

Anyway good news that both of them are back and hopefully it is onwards and upwards for regional.

[andyy]

There is a reasonable level of hotel capacity around EMA but I do know that at least one other organsiation is considering investing in further hotels space in the area because they see the need.

The race track has not got the F1 Grand Prix (and that was a debacle) but that would have been relevant for one long weekend a year and you would not build a hotel for that alone. However, the track operates virtually 365 days of the year (probably about 360) and there is also the exhibition centre, both of which are on the up since the return of the track to the Wheatcroft family ownership. Room capacity for some of the bigger race meetings is certainly in short supply.

Castle Donington isn't just the airport and the track, though, and there are current plans in place for further expansion of the business and light industrial areas in or near the village, which may attract a need for further hotel rooms.

Many of the hotels in the area are of the budget variety, maybe there's a need for at least one slightly more upmarket hotel with conference and leisure facilities (and good sound proofing!)

[Van G]

All gone very quiet. Any news anywhere?! With the IAG deal looking to be completed in the next few weeks it's gone awfully quiet on the regional front...

[Rougueg]

Theres a load of posts in the BMI Baby thread which should be in here...

If a Mod could move them in?? :)

As for news, i wish there were some.

[Granite City Express]

Has anyone heard anything? It has gone very very quiet.

[davidjohnson6]

ATC in Frankfurt are on strike this week and Lufthansa are cancelling over 100 flights per day. Would imagine this is a rather more urgent priority for Lufthansa management than the future of the 3 bmi airlines.

[discretionagain]

Apparently Easterns MD Richard Lake was being shown around the BMIr offices in Dyce last week - witnessed by many people.
Has anyone from BMIr been told what that was about - surely he was not there just for a cuppa...

[Rougueg]

Is that a fact or are you trolling

[Flightrider]

Quite possible. bmir are leasing a Saab 2000 from Eastern to cover Embraer maintenance in March, so Lake probably would not have passed up an opportunity to be seen in their offices just to cause some curiosity. bmir are putting the Eastern S2000 on ABZ-NWI instead of the 135, where the competition is....oh yes, an Eastern Saab 2000! It's almost like they have a death wish.

[Van G]

So in less than two weeks we could be owned by IAG. Still nothing heard about the granite deal. Wonder what willy has planned for us...

[nigel osborne]

Van G

Willie Walsh used that fearful word "restructure" :eek: for BMI Baby and Regional.gulp !

Nigel

[cornishsimon]

Well short term if BMIr isnt sold off before IAG/BA gets their hands on it i would guess that BMIR will be brought under the Cityflyer brand, any routes making a profit might be kept but i expect the majority of the operation would be wound up under IAG ?

cs

[Flypuppy]

I don't believe that being part of IAG would be a Good Thing for the majority of Regional staff. It is worth looking at the statement from December;

IAG - International Airlines Group - News Release (http://www.iairgroup.com/phoenix.zhtml?c=240949&p=irol-newsArticle&ID=1642160&highlight=)
bmi regional and bmibaby are not part of our plans and Lufthansa has the option to sell them before completion”.

IAG are only really interested in the Heathrow slots, Regional being amalgamated into Cityflyer? The equipment doesn't fit, so there may only be limited opportunities for crews. However, we are not at that stage yet. Even though the information black hole is unbelievably frustrating I hope there may be some indication soon as to what the hell is going on.

[Trossie]

Don't BA (and therefore IAG) still own 15% of Flybe? They could ditch Regional there, the same way that they did BACon...

[Flypuppy]

No. They couldn't :ugh:

[INKJET]

I think that if IAG own 100% of bmi it can do more or less as it pleases. However I suspect that the delay with the regional deal is now intentional on either DHL or IAG part. The 80/20 rule applies to all slots and if BA moves quickly to remove duplication on bmi/BA routes then the slots released may need bmir to fly them until such time as BA restructure its route network and brings more long haul capacity online, alternatively DLH may keep regional to feed its own hub networks.

Bmir in IAG is probably a safer position than baby in IAG having said that BA are going to need lots of pilots long haul routes are far crew heavier than short haul.

I'm still of the view that bmibaby will be disposed of prior to bmi into BA transfer date, but only leaves 3 weeks!

I think bmir into BA would be good for its pilot work force less so for other employees wish all luck going forward

[Cactus99]

Looking at the whole issue of restructuring, Granite will need one hell of a lot of £££'s to get the show on the road.

When you think about a brand new start up, stepping away from the BMi "brand", with the associated costs of new aircraft livery,staff/ corporate branding, new uniforms, new check in facilities/ customer services as well as an effective marketing budget, not withstanding the looming aircraft maintenance costs.

Its a huge risk for any invester to take without knowing if the new start up will generate enough revenue to get a reasonable return. I can imagine the wage bill in itself must be huge.

I just cannot see anyone willing to take such a financial gamble in this industry at the minute.

Good luck to all the guys there, hope it all works out!

[Dave Clarke Fife]

Looks like the OFT will not be looking into the sale of bmi to IAG. Another step closer to the end of bmi. Good news if your name is Willy not so good if it's Richard


OFT will not ask for UK probe on Bmi purchase | ABTN (http://www.google.com/url?sa=X&q=http://www.abtn.co.uk/news/0517067-oft-will-not-ask-uk-probe-bmi-purchase&ct=ga&cad=CAEQARgAIAAoATAAOABAlarT-gRIAVgBYgVlbi1HQg&cd=dDfykw3SvPM&usg=AFQjCNEM85SApfbOgfnWYOCU6GIuxKizGw)

[airhumberside]

I think that if IAG own 100% of bmi it can do more or less as it pleases
They can't sell/give/dump regional to Flybe though without the BE Management and at least some of their other shareholders agreeing

[JobsaGoodun]

They can't sell/give/dump regional to Flybe though without the BE Management and at least some of their other shareholders agreeing

Completely accept the point. Despite their shareholding, BA have no control within BE and so BE are free to decide their own destiny.......however IAG do stand to get a sizeable discount on the price negotiated with LH if they have to take BMIR. It would not be inconceivable for part of any saving made by IAG to be passed on to BE/whoever to assist in any integration or restructuring of the business.....after all its very similar with what happened at BAConnect.

[handsfree]

Dunno what anyone could do with the Hall

I believe it made an excellent POW camp some years ago.

[Flypuppy]

If the OFT is not concerned, then I guess the likelyhood of the EU waving the deal through is pretty high...

[globetrotter79]

More likely that BA would ditch most of BMI regional and keep the most business-centric routes ex-ABZ to be merged into the BA Cityflyer operation...possibly with some E145s initially to be replaced by E170s ultimately (keep costs down due fleet commonality, even if they don't really need 70-odd seats on some of the ABZ routes)???

[JimNich]

I still think its a little early to write off the Granite Aviation interest. I know its only got (potentially) a couple of weeks to go before the BMI/IAG deal is finalised but I feel this bargain is more important to the bigger players than people realise. This is the land of the 11th hour deal after all.

Its a known fact that the long haul carriers (in part) rely on the regional operators to feed their hubs. BA/IAG still need to be a little careful that this particular apple cart stays upright. Its for this reason I believe some of the political posturing this side of the border RE route integrity may be a little over enthusiastic. The balance between domestic and overseas slots at the major London airports is a delicate one, rob too many of the domestic slots and you face starving your foriegn network and people will find somewhere else to route through (like Schipol). So I don't think its a simple matter of the airline being stripped of its Heathrow slots, then cast aside should it come to a BA integration.

Its my feeling that Flybe (although with enough money in the bank to either buy or be paid to inherit the debt) are: 1. Too busy elsewhere to administer another take over and, 2. Are trying to build up cash reserves/flow in order to meet higher fuel prices, which hasn't been touched on much but surely must be a factor especially with the thirstier older Baby fleet.

[Yellow Sun]

So I don't think its a simple matter of the airline being stripped of its Heathrow slots, then cast aside should it come to a BA integration.


For the umpteenth time, bmi Regional has no Heathrow slots. The slots are owned by bmi and that's the part that IAG intend to integrate into BA.

bmi, bmi Regional, bmi Baby; separate companies, separate AOCs.

YS

[Flypuppy]

I am hoping that now the OFT have has given the green light for the Mainline deal, we might now see some attention being paid to the Regional deal.

It certainly is far too early to write off Granite. A week is a long time in this game...

[JimNich]

Yellow sun, you are of course quite correct about the slots, my apologies. As for the AOCs, you are equally correct although that does not stop them being lumped into the same deal should it come to it.

[Artie Fufkin]

Flypuppy, The OFT haven't given the green light for the mainline deal. According to ABTN;-

The OFT said the EC was the best place to examine the competition implications of the deal because it involved flights going across several European jurisdictions and the commission had “extensive expertise in handling airline merger cases”.

Sheldon Mills, the OFT’s director of mergers, said: “The proposed acquisition of Bmi by IAG has generated a significant level of concern in the UK especially in Scotland, the north-west of England and Northern Ireland.

“We consider that the transaction should be subject to a careful and detailed review and we will continue to work closely with the European Commission to ensure that UK airline passengers will not lose out through the proposed deal.”

They have simply said they will not add a duplicate investigation on to the EC judgement.

[le grand fromage]

Flypuppy, the OFT has not approved the mainline deal....they have said that they don't intend launching a parallel investigation themselves when the EC is already reviewing the case and has enough expertise to do it themselves. That's not to say the EC won't approve but until at least 16th March we won't know. At that time they might approve, or say they want more time to consider some of the issues....the 16th is just the initial deadline. It could be spun out for a further 3 months in the worst case.

[ribble88]

Read the post above. Bmi is only a tenant at the hall. Its owned by SMB.

[PBO]

Wasn't that good a POW camp - one of the internees was the only German to escape from Britain back to Germany in either world war! Gunther Plüschow - Wikipedia, the free encyclopedia (http://en.m.wikipedia.org/wiki/Gunther_Plüschow)

[le grand fromage]

SMB owns the Hall? Complete and utter b*ll*cks. The Hall is owned by the company....always has been since it was bought for about £1m way back when. Thats why the cost of having it as the HO was actually very low as only day to day running costs were incurred and depreciation on freehold buildings were nominal. Just like the old rumour about SMB owning the aircraft and leasing them to the company, this has absolutely no grounding in truth....but as the journos would say, don't let the facts get in the way of a good story!

[corporatenut83]

Despite the success of low-cost carriers, he insists BMI's future is secure, although he acknowledges he has a fight on his hands. One constant refrain he would like to answer is the accusation that BMI's headquarters, Donington Hall, is a "mansion", while EasyJet is run from a prefabricated orange shed at Luton airport.

"I paid £185,000 for Donington Hall 20 years ago," he complains. "It was probably cheaper than their tin hut in Luton. But because it's a nice symbol, people don't let the facts get in the way."

Quoted from the Guardian 2002, so Donington Hall didn't cost SMB millions but am certain that it has cost bmi millions!

[Flypuppy]

Flypuppy, the OFT has not approved the mainline deal

LGF, I never said they had approved the deal. What they have done is wave it through to the EU. The signal they are sending is that they dont see any great problem with the deal. If the home country government organisation is not showing any concern, then why would the EU? I cant see any European competition issues so I am guessing there will be barely a murmur of complaint from them.

It is in no one's interest to spin this purchase out for another 3 months.


OFT statement on IAG/bmi merger - The Office of Fair Trading (http://www.oft.gov.uk/news-and-updates/press/2012/13-12)

[Flypuppy]

The OFT's decision not to make a request to the European Commission for a UK review of the proposed acquisition, is a very strong signal that they see no great problem with the deal, in the UK market.

If that is the case, then I can't see the EC delaying the deal any further. As I have said elsewhere, dragging on this purchase process any longer than is necessary is in no one's interest.

[le grand fromage]

Actually they havent "waived it through" to the EC. The primary jurisdiction is with the EC in a case like this due to turnover in other jurisdictions than the UK. It is quite unusual for the OFT to run a parallel case when the EC has jurisdiction, and as they say, they will be providing input to the EC to assist the consideration of the case.
As to whether it will get delayed further, the EC doesnt give a damn about what the parties think about the need for speed...they will take as long as they think it needs to resolve any competition issues on specific routes, and willl drag it out if they think that is necessary. They were very close to dragging out the takeover of bmi by LH in 2009 over one route that had less than 20k pax a year. There are much more significant issues with this deal.

[ribble88]

Big cheese, check your facts before exposing odeur de moisi...

[Say again s l o w l y]

Ribble, I reckon it's you who need to check your facts here I'm afraid.

[davidjohnson6]

Anyone want to comment on Lufthansa taking a EUR 285m charge as a result of bmi losses and disposal to IAG (and whoever ends up taking baby and regional) ?
Annual figures for Lufty group were worse than expected according to Reuters

Formal financial statements due on 15 March

Lufthansa - Lufthansa generates operating profit of EUR 820m in 2011. Executive Board proposes dividend of EUR 0.25. (http://investor-relations.lufthansa.com/en/meldungen/ad-hoc-releases/investor-relations-ad-hoc-releases/datum/2012/03/07/lufthansa-erzielt-2011-operativen-gewinn-von-820-mio-eur-vorstand-schlaegt-dividende-von-025-eur.html)

[bmybaby81]

I have no sympathy for Lufthansa for any of the losses which they have made as a result of bmi. Together with Sir Michael Bishop they have suceeded in getting rid of a proud part of british aviation and history. For this reason I hope bmi will finally be integrated into british airways and help strengthen our national airline.

Lets not forget that the Lufthansa Group will still be walking away with almost double the number of slots they had before they accquired bmi a few years ago, another reason why I have no sympathy for them at all!

They should quit playing the victim!

[midland_pilot]

Just been having a quick look through the posts and I have to say it is full of lots of thoughts and ideas. The trouble is unless any of us are actively involved in the sale process, then all of this is complete speculation. Something that I think we can all get lost in.

The only fact is whatever the outcome, we will know when the time is right. Irritating I know but I'm guessing I'm not alone in saying I too need to be reminded of this every once in a while?

On the flip side, and I must stress this has no substance, I'm hearing increasingly that integration into BA is becoming increasingly more likely. And pushed into Gatwick? Has anyone got anything that might back this?

MP

[ayebmi]

Here here bmybaby81!! Spot on. I had Wolfgang on a flight and he happily discussed all that's been going on with me, quite candidly (which suprised me slightly). Having been to one of his initial business briefings when he took over I asked what had become of his vision of bmi as
"simply needing to replace small aircraft flying to low yield shorthaul destinations from one of the world's most expensive airports, to an airline with larger aircraft flying longer and more lucrtive routes to make the most of it's slot portfolio". His answer was pretty easy to de-code and simple, Lufthansa got COLD FEET. He is not somebody who came to do a mopping up operation, he had big plans to expand bmi, just as he did at Jet in India, but when he went to Lufthansa to find some a/c they just got cold feet. Direct quote: "It was a case of the aircraft just not...being made available to us", there were...certain reassurances that we just couldn't provide to our shareholder".

[Dr. Spin]

Ayebmi,
Please be very careful in quoting any individuals on an open forum, if you're an employee you may be in breech of your contract. Not a good time for a disciplinary.
The Dr.:=

[Say again s l o w l y]

He's not said anything that isn't widely known throughout bmi nor the rest of the industry really.

[Flypuppy]

I stand corrected on the EC giving the deal an easy ride...

EC expresses concerns over IAG, BMI merger, raising prospect of remedies
8 Mar 12 | 10:53 GMT
The European Commission is understood to have expressed initial concerns over International Airlines Group’s planned buyout of rival carrier British Midland, raising the prospect that IAG may have to propose phase I remedies in its quest to obtain merger clearance and complete the tie-up by its end-March target date. Mlex (http://www.mlex.com)
This is saying that substantive issues seem to have been raised so IAG will have to put forward remedies (e.g. divestments of slots) to get clearance from the EC before end March. Otherwise it would risk a phase two investigation which would go beyond that date and they couldn't complete while it was still going on.

[Cyrano]

I stand corrected on the EC giving the deal an easy ride...


This is saying that substantive issues seem to have been raised so IAG will have to put forward remedies (e.g. divestments of slots) to get clearance from the EC before end March. Otherwise it would risk a phase two investigation which would go beyond that date and they couldn't complete while it was still going on.

But surely all this is saying is that the deal as it stands (i.e. a takeover, lock stock and barrel, of bmi) will have an impact on competition (obviously), so there will have to be remedies. The need for remedies shouldn't come as a surprise to anyone - it's been fairly evident from the start, and indeed it has generated much of the content of preceding pages on this thread! ;)

[Facelookbovvered]

It's difficult to see to whom any slots could be handed/sold to address any competion concerns, perhaps this is the reason behind the delay on completing the bmir deal?

Who would or could want to run services into LHR from say EDI ABZ MAN up against all that BA can offer in terms of FF points, business lounges, and onward connections?

A few crumbs to Virgin? Perhaps using bmir to feed? under a new name? Doesn't add up to me and if the price for clearance is to high then IAG might walk, what then for bmi?

I think more likely is some reassurance for the Scotts on flight frequency and prices, but given the upward march of oil it would be meaningless

Without access to LHR slots there is no way to address any of this, there is ample connections to other London airports from Scotland and NI

[STN Ramp Rat]

It's difficult to see to whom any slots could be handed/sold to address any competion concerns

a number of carriers have started, or are about to start, operations to Gatwick that already operate to Heathrow, they have made it clear they would prefer a one airport operation in London. BMi will have no difficulty shifting these slots

[Flypuppy]

The need for remedies shouldn't come as a surprise to anyoneIt doesn't and I am sure someone, somewhere had already factored this into the equation.

[Facelookbovvered]

I think you missed the point re competion post BA/bmi

Simply giving slots to another operator to fly from LHR will not address the competion concerns unless these are used on routes where BA/bmi currently compete , which are Scotland & NI plus. Manchester. No one is going to do that in my view!

I think BA will get away with promising to keep a LHR service from BHD as well as BFS & additional frequency on EDI to keep the SNP happy

With regards to WPS I think he will be bitterly disappointed about the way things have worked out for bmi but it was always going to be an uphill struggle to turn around the mess left by NT & SMB and the economic melt down followed by the Arab spring was to much even for the mighty Lufthansa to overcome.

[mccdatabase]

EC expresses concerns over IAG, BMI merger, raising prospect of remedies
8 Mar 12 | 10:53 GMT
The European Commission is understood to have expressed initial concerns over International Airlines Group’s planned buyout of rival carrier British Midland, raising the prospect that IAG may have to propose phase I remedies in its quest to obtain merger clearance and complete the tie-up by its end-March target date. Mlex



Leaving bmi as a "stand alone" company within the IAG group rather than integration with BA might well be a workable remedy.

[johnnychips]

Leaving bmi as a "stand alone" company within the IAG group rather than integration with BA might well be a workable remedy.

It lost millions as a 'stand alone' company. It still lost millions when it was slightly integrated with DLH.

[bmybaby81]

If IAG is forced to give up slots I'm not sure how this will work. Will the bidding airline have to pay IAG for the slots or do they get them for free?

[Cyrano]

If IAG is forced to give up slots I'm not sure how this will work. Will the bidding airline have to pay IAG for the slots or do they get them for free?

Typically how it works is this. The purpose of the slot release is to ensure competition on a given route. Therefore the slots are only usable for that route (let's say LHR-EDI). The bidding airline gets the slots for free, on condition that they are used on the route in question. You can't take the slots and then turn around after a week and say "oh, we want to use them for LHR-JFK instead". The regulator may appoint a "monitoring trustee" (law firm or similar) to ensure the slots are used appropriately.

For a good example, see the EC's judgement on the Lufthansa takeover of Brussels Airlines (PDF) (http://ec.europa.eu/competition/mergers/cases/decisions/M5335_20090622_20600_229007_EN.pdf). It's a long document (but an example of the level of detail that typically goes into the analysis) but most relevant for your question are pages 118 onward, the commitments (= the proposed remedies). You'll see (section 439, page 120) that a new entrant gets to keep the slots ("grandathering rights") after a certain number of seasons, i.e. after that period, the slots can be used for alternative routes if the original plan isn't working out.

Note also (and this is relevant for IAG/bmi too) page 120 onwards also describes the other commitments, e.g. interlining/SPA provisions for connecting passengers.

I think this is a reasonable template of what we could expect as conditions for approval of the IAG/bmi deal.

(I should add as a postscript, though, that this document also shows the limits of the regulator's approach. They approved the LH/SN deal on the basis that they were confident that another carrier would enter the relevant competed routes (BRU-FRA, BRU-HAM, BRU-MUC in particular). You can read the document and see that they fully expected VLM and/or Croatia Airlines (!) to do so. Actual result (unless I missed something!): no market entry, no competition. The alternative is to get an upfront commitment from a new entrant before approving the deal, and that's fraught with its own problems (see OFT Air France/CityJet/VLM as an example).)

Hope this helps
C.

[bmybaby81]

Thanks Cyrano for the info!

[mccdatabase]

Quote:



Leaving bmi as a "stand alone" company within the IAG group rather than integration with BA might well be a workable remedy.

It lost millions as a 'stand alone' company. It still lost millions when it was slightly integrated with DLH.



I am not suggesting that the present version of bmi carry on business as usual, but a restructured slimmed down bmi operating the contentious routes (ie those that a "competition " case could be made for) could help IAG argue that there is still some form of competition for BA at LHR.

Longer term bmi would eventually be totally integrated, maybe over the course of a few years and more gradually than the current integration plan envisages.

[The Olympian]

'Ayebmi,
Please be very careful in quoting any individuals on an open forum, if you're an employee you may be in breech of your contract. Not a good time for a disciplinary.
The Dr.:= '

Exactly !! Just ask some of your poor colleagues in EDI !
Don't give the company any excuse to haul you in for tea and biccies.

[Fairdealfrank]

Quote: "Leaving bmi as a "stand alone" company within the IAG group rather than integration with BA might well be a workable remedy."

There is no reason why BA and BD have to be merged. Obviously it would be a business decision, but unlike BA's take over of Danair, Brymon, BCAL, etc., in the past, this situation is different, it is IAG buying BD, not BA buying BD.

Keeping BA and BD separate (while amalgamating back office functions) avoids seniority issues with some categories of staff (e. g. pilots). It would be neccessary to have some price differential/competition on overlap routes particularly domestic to convince the regulatory authorities. CAI and DME are not so critical because there are other carriers on these routes apart from BA and BD.

Quote: "I am not suggesting that the present version of bmi carry on business as usual, but a restructured slimmed down bmi operating the contentious routes (ie those that a "competition " case could be made for) could help IAG argue that there is still some form of competition for BA at LHR."

Maybe BD would become a domestic feeder airliner for BA, or perhaps a short haul "express" type carrier.

Possible route swaps, for example, BA does all the DME flights, 4 B744s/day with first class to mop up the oligarch business. BD gets CAI.

Much is possible depending on the business case and happy regulators.

[LD12986]

IAG has already decided that bmi mainline will be integrated into BA. bmi mainline remaining separate was given serious consideration by IAG but BA pilots agreed to offer productivity improvements in exchange for integration. What is unknown is what other BA workgroups will have to deliver in improved productivity.

[Surreyman]

BMI/Lufthansa code-share 3 return flights a day between Heathrow and Tegel.
Who actually owns the slots BMI or LH?
If BMI, then IAG will end up with a monopoly on the route, if LH, then presumably they would want the slots back after sale to IAG/BA as LHR would be a serious gap in the new enhanced operation from Brandenburg.
9Apologies if this has been covered before).

[The Cleaner]

Well I doubt we're gonna know anything until the EC decides on IAG takeover of mainline. Bloomberg reported that IAG have tabled an amended agreement in response to EC concerns, if this involves divestment of slots to maintain competition is it not possible that BMIR would be well placed to pick them up as they are the only firm outside mainline flying those routes?? And if that were to be the case the terms of the granite deal may well be modified. The EC has already put their decision deadline back to the 30th I fear this wait may get longer :( !

[Flypuppy]

Reuters reporting that IAG have offered concessions, but no detail on what they are.
Will this deal ever be completed? :ugh:
Mon Mar 12, 2012 8:10am EDT
(Reuters) - British Airways owner IAG has offered concessions to EU antitrust regulators in a bid to get regulatory approval for its takeover of bmi, the British unit of German carrier Lufthansa, the European Commission said on Monday.

The Commission, tasked with ensuring a level playing field in the 27-country European Union, did not provide details of the concessions, in line with its usual policy.

It extended the deadline for a decision on the deal to March 30 from March 16, the EU executive's website showed.

The bmi takeover would boost IAG's share of runway slots at London Heathrow airport to about 52 percent from 43.1 percent, allowing it to launch lucrative long-haul routes.

IAG also declined to give details of the concessions.

The European Commission typically requires airlines to cede slots and offer rivals access to their frequent flyer programmes in return for clearing mergers and acquisitions in the sector.

Lufthansa promised to offer slots to allow new entrants to operate flights on four routes singled out by the regulator, during its 2009 takeover of SN Brussels Airlines. Other concessions related to its code-share agreements and frequent flyer programmes.

Rival and failed bmi bidder Virgin Atlantic has urged antitrust regulators to veto the deal, saying it would harm competition and push up prices.

[bex88]

So IAG have proposed remedies to concerns about the purchase of bmi mainly due to domestic competition I would assume, and this has pushed the announcement back to the 30th. Does anyone else not think this could play out quite nicely for bmi regional as well as bmi mainline? IAG would be best placed to say allow regional to continue to fly the slots it operates out of heathrow at the moment to say EDI, MAN and ABZ. This would vastly improve prospect for all bmi regional pilots and employees and IAG gets the deal through. Bmi mainline guys would not be affected because we currently don't crew these slots. Dare I say it there could be a feed to BA or a code share and sales via their channels too. More people would stand to keep their jobs which should be the priority over people maybe having to pay £5 more on their ticket when so many choose to fly on easy or ryanair anyhow. If I were granite I would not be hurrying this deal but negotiation to the 12th hour on the 30th. The wait is very very hard though

[Cyrano]

This seems like a fairly normal timescale for a deal of this size, to be honest.
IAG has offered concessions - slot handbacks etc. The Commission will now be "market testing" them, i.e. going out talking to other affected airlines and other parties, and asking them "does this seem reasonable and will it overcome the reduction in competition?" In some cases they'll be asking "Is the proposed package of concessions enough to get you to consider entering one or more of these routes?" The IAG concessions were only sent to the Commission on Friday so will only be going out from the Commission in the next couple of days, I'd imagine, and it's reasonable to give the market-test participants a week or two to assess them, especially since at least one or two of those participants are likely to have a bank holiday weekend coming up...:hmm:

[Facelookbovvered]

Would I be right to assume that the EU's remit extends only to inter European flights & flights within a single European country? Eg the Uk.

Where do BA/bmi actually compete in Europe other than MAN EDI ABZ That is to say on routes where they are the only carriers?

I could understand the NI office asking for assurances over LHR access from the city airport.

I guess they could always give some slots for bmibaby to fly into LHR from BHD and code share with Virgin under a new owner?

[le grand fromage]

No, the EC are potentially interested in any route where there is an impact on competition in the EU, so they might have a view about Cairo, Moscow and any other ex LHR non-EU routes that they both operate. However more likely to be worried about routes where there is currently no other competition, so Egyptair and Aeroflot/Transaero should allow those to go through without remedies. ABZ looks the most problematic...EDI has competition albeit not to LHR, as does MAN with the train.

[Aero Mad]

ABZ looks the most problematic...EDI has competition albeit not to LHR

Remember that on LON - ABZ, you've got Flybe thrice daily from Gatwick and easyJet twice daily from Gatwick and Luton.

[Cyrano]

ABZ looks the most problematic...EDI has competition albeit not to LHR, as does MAN with the train.

But a big part of the regulators' concern will be access to connecting flights from the regions, and service from EDI/MAN to London termini other than Heathrow doesn't deliver that connectivity. So EDI and MAN will require remedies, just as ABZ will.

[lamina]

Anyone else find it ironic that the EC regulator seems to be concerned about domestic connectivity, when the UK government has actively encouraged UK passengers to connect via the continent thanks to APD!

[SWBKCB]

BA has also operated LHR-NCL for years with no competition.

[Flyer70]

I have a flight booked later in the year with Brussels Airlines from Newcastle to Budapest. The Newcastle to Brussels sector is operated by BMI Regional for Brussels Airlines. What do you feel will be the outcome of this.

[hautemude]

Flyer 70. When you arrive at the baggage carrousel, assuming always that you do, there might be a possibility that the wheels have fallen off your suitcase assuming you had the old one repaired. Get a grip and waste your breath elsewhere!

[johnnychips]

Flyer 70. When you arrive at the baggage carrousel, assuming always that you do, there might be a possibility that the wheels have fallen off your suitcase assuming you had the old one repaired. Get a grip and waste your breath elsewhere!

Any particular reason for this singularly vituperative reply, hautemude?

[Aero Mad]

I have to say that the post before was singularly pointless, but perhaps a more civil reply could have countered that.

[G-AWZK]

Interesting article in the FT

IAG faces lengthy BMI takeover probe - FT.com (http://www.ft.com/intl/cms/s/0/0f7fe1f8-6c6f-11e1-b00f-00144feab49a.html#axzz1p6KlDoPb)

Not a huge amount of truth in though....

[stormin norman]

Its not a done deal yet.

The losses BMI are incurring at the present might make the IAG board think again if the EU put in to many restrictions.

[bex88]

IAG are not really buying bmi as a business. They have their own plans of how they will utilise the assets being, slots, planes and people. Changes will happen very quickly. In truth if Lufthansa wanted to sort out bmi it could, but it just is not wanting to invest. Let's hope the EU don't cost 4500 good people their jobs!

[no sponsor]

What stops Lufty from just selling the slots to IAG, and closing down BMI, thereby obviating the need to 'buy' BMI?

[JSCL]

What stops Lufty from just selling the slots to IAG, and closing down BMI, thereby obviating the need to 'buy' BMI?

The heavy cost of redundancy and cancellation of leases comes to mind.

[G-AWZK]

Then again, if the EC draw things out, and IAG walk away, there would be nothing stopping BMI Group being put into Administration and all the slots going into the pool to be fought over.

It would be like the Astreaus close down on a bigger scale, where the funder simply pulled the plug and the next day Astraeus was no more.

That isn't a likely scenario though. IAG regard the slot portfolio as far too valuable, so unless they are forced to give up a silly amount of slots (>40%), they will probably hang on in there.

The only thing is that one of the comments on the FT article says that BMI is losing £20million a month. Who is covering that bill?

Lufthansa annual report released today
http://investor-relations.lufthansa.com/fileadmin/downloads/en/financial-reports/annual-reports/LH-AR-2011-e_igjfbwpf.pdf

[no sponsor]

I believe IAG have already given Lufty a big wedge of cash to ensure BMI keeps going until the end of March.

[Artie Fufkin]

Interesting article in Flight this week stating that BMI's slot allocation at LHR has dropped from 800 to 461. The article went on to say Lufthansa's has increased by 248 and BA increased by 154.

[Rougueg]

Lufthansa details financial damage from BMI sale (http://www.flightglobal.com/news/articles/lufthansa-details-financial-damage-from-bmi-sale-369535/)

"Other price adjustments - notably restructuring expenses at BMI Regional and BMIbaby - dragged the net sales price into negative figures, says Lufthansa."


Can someone explain what restructuring expenses Lufthansa is incurring at BMIr? I though the new owners (when they get control) would be footing any restructuring costs.

Rougueg

[6chimes]

IAG won't walk away. This is the last large slot portfolio that will be available at LHR. They'll take whatever they can negotiate with the regulators. Only the price will change and the number of jobs lost.

6

[Fairdealfrank]

No disrespect or criticism intended (am not a top businessman), but in a way LH have been hoist by their own petard. It seems a bit short-sighted to have signed an agreement that forced it to buy Michael Bishop's 50% share of BD (when it owned just 30%) at any time within a ten year period and completely at Bishop's timing and discretion, with no "escape" clauses. It seems a crazy arrangement for any business as no one can tell the future, but in an industry as volatile as aviation......?

Perhaps minds were on other things: slots £££££? They certainly managed to skim off many of BD's slots over the least three years or so. BD was always LHR's second biggest airline with 14% of the slots. Now it's down to about 8% or so.

BTW what happened to SK's 20% ownership of BD?

[G-AWZK]

Can someone explain what restructuring expenses Lufthansa is incurring at BMIr? I though the new owners (when they get control) would be footing any restructuring costs.

At a guess I would expect that to cover separation of the operations; engineering, IT, back office systems, that sort of thing.

DLH would probably be expected to allow regional and baby to continue to utilise any IT or support infrastructure for 3-6 months until they have their own independent systems up and running.

[G-AWZK]

IAG will do whatever they can to secure the Heathrow slots. Latest gossip I hear is that the 777 fleet at LGW will move over to LHR and the bmi 319/320/321 will go to Gatwick to replace the 737-400 fleet. Would be handy if they had a deal approved by the EC though.


It is looking like a car boot sale at Lufthansa these days.

Wonder if IAG will snap up that one as well?

Lufthansa Considers Selling Austrian Airlines

FRANKFURT (WSJ)-Deutsche Lufthansa AG LHA.XE -3.47%on Thursday said it would consider selling its Austrian Airlines unit if it can't turn the struggling carrier around amid a wide-ranging plan to cut costs to combat high fuel prices and sluggish growth in Europe.

"It isn't possible to say when Austrian Airlines will break even," Chief Executive Christoph Franz said. "We will stick with Austrian Airlines until we no longer see prospect for profit," Mr. Franz said. "We still see this prospect," he said, though the business is in a critical condition and needs drastic restructuring.

Lufthansa has agreed to sell loss-making U.K. unit British Midland Ltd.-known as bmi-to British Airways IAG.LN -0.81%and Iberia parent International Consolidated Airlines Group. It said Thursday it has signed a letter of intent to dispose of its 25% stake small Chinese unit Jade Cargo to China's Unitop.
"We have to respond to the change in our industry with flexible structures that enable us to remain Europe's number one [carrier] in the future," said Franz.

The German airlines group, which carried 100 million passengers for the first time in 2011, said it would increase capacity by less than initially planned this year as well as reduce purchasing, administrative, and payroll costs as part of a €1.5 billion ($1.95 billion) three-year savings plan.

Despite the cost-saving initiatives, Lufthansa said it expects a sharp decline in operating profit in 2012, depending on market conditions, to around €500 million, which the airline described as "the mid three-digit million euro range," down from €820 million in 2011.

Last year's operating profit fell nearly 20% as a 26% rise in the carrier's fuel bill to €6.28 billion offset a 8.6% rise in revenue to €28.73 billion.
"Although the operating profit for 2011 is generally pleasing in itself, the operating margin is not," Mr. Franz said. Last year's operating margin was 3.4%. Lufthansa has previously said it would generate a margin of 8% in the longer term.

Lufthansa said it would limit passenger capacity growth in 2012 to 2% on the year compared with 3% previously as part of various measures to reduce costs. They include centralizing procurement, better coordinating flight plans within the group and trimming administrative and management staff. Lufthansa announced a hiring freeze last week.

The German flag carrier, like Franco-Dutch airline Air France-KLM AF.FR -1.46%and northern European carriers SAS AB SAS.SK 0.00%and Finnair Oyj, FIA1S.HE +1.30%are struggling with difficult market conditions, among them soaring fuel prices and fierce competition from no-frills airlines on short-haul routes and Middle Eastern airlines making inroads in European and intercontinental traffic. Europe's sovereign debt crisis and political upheaval in North Africa and the Middle East have slowed growth in air traffic.
Lufthansa said the planned sale of bmi should enable the group to swing back into the black this year after a €13 million net loss in 2011. The group, which announced preliminary earnings figures March 7, reported net profit of €1.13 billion in 2010.

Lufthansa said bmi made a €155 million after-tax loss in 2011. Austrian Airlines recorded an operating loss of €62 million in 2011. Jade reported a net loss of €38 million.

Lufthansa shares fell on the Frankfurt stock exchange as the severity of the problems at Austrian Airlines took investors by surprise, traders said. The stock was down 1.1% at €10.40 around 1 p.m. GMT. Lufthansa shares have declined around 19% over the past 12 months, underperforming the German blue chip stock index DAX over this period. The DAX was up 0.3% Thursday.

[Cyrano]

BTW what happened to SK's 20% ownership of BD?
Google is your friend. (http://bit.ly/xjUU5Z) ;)

[Redcap49]

Interesting scenario....I have also heard that the 777 will be going to LHR but I can't see the BMI aircraft going to LGW to replace the 737's.It means that LGW will just have a shorthaul operation which I believe is not profitable.LGW is now a stand alone business unit and is financially autonomous.No more financial assistance from the 'mothership' at LHR.Whether it could be made profitable is debateable given the competition from the likes of EZY.

[stormin norman]

'I believe IAG have already given Lufty a big wedge of cash to ensure BMI keeps going until the end of March'.

Walsh would be lynched by the shareholders if he did this.

With the BMI losses reported by LH expect the plug to be pulled on the non profit making parts of the operation as soon as the deal goes through.

[le grand fromage]

Frank, LH bought SK's shares some months after they bought SMB's after a bit of a stand off about price. SMB was paid the bulk of his money as compensation for giving up his put option and a low price for the shares....not surpriingly SK didn't feel they should get the much reduced share price so held out for more which eventually I think they got, though not as much as SMB's option price.

[G-AWZK]

From the IAG press release of 22/12
IAG intends to finance the purchase from its own funds. £60 million of the purchase price will be paid in four instalments to Lufthansa pre-completion. This amount will be secured by Heathrow slots.

[queenvic]

I believe most of that money has gone already.

IAG would get 12% of the slots.

Just keeping praying the EU allow the purchase through asap otherwise many of us will be in big trouble paying our mortgages.

[LD12986]

I would be very surprised if the LGW BA 777s go to LHR (though maybe one or two routes may move across). BA LGW long haul is profitable in its own right and BA has already spare long-haul capacity with parked 747s and the 787s and A380s will start to be delivered next year.

BA long-haul growth at LHR with the extra slots is likely to be very cautious and probably will not happen until the 787s arrive.

[Fairdealfrank]

Thanks for that, Grand Fromage, much appreciated!

[G-AWZK]

Long Haul out of Heathrow is where BA focuses its attention. I would expect an aggressive stance at the end of the bmi summer flying programme in October.

Just my opinion though.

[G-AWZK]

Wonder when we will hear if Granite take ownership?

[LD12986]

True LHR long haul is where BA really makes money and it does that through maintaining yields. I think anyone expecting a sudden expansion of LHR long haul from the next Winter season is going to be disappointed. BA acquired a decent number of slot pairs (8+) for the Summer 2012 season and the slots were used quite conservatively (extra short-haul and extra MIA & JFK, and modest extra HKG and JNB frequencies which seem to have been reversed for the Winter season).

BA had the scope to increase LHR long haul for Summer 2012 by substantially more than it chose to do. As I say the long haul expansion will be steady and carefully managed when the right aircraft (ie the 787) are available.

A sudden aggressive increase in LHR long haul capacity ahead of revenue is a fast track to red ink all over the profit and loss account.

[INKJET]

Good question!

I have no idea what is going on with bmir re Granite but at a hunch i would say nothing and they will end up with IAG, i suspect that this will form part of the remedies required to satisfy the EU in what way will be interesting, but if bmir peeps end up in BA = result!!

[G-AWZK]

If IAG are forced into taking regional, I don't think that will be good news for the staff.....

[Van G]

I'd roll the dice with IAG over Granite any day of the week. Most people north of the border (which of course includes management) I suspect want Granite. Most south of the border and everyone I work with would rather take their chances in IAG.

[Facelookbovvered]

what puzzles me is that it's close on 6 months since the deal with Granite was announced since then there has been a number of done deal statements subject to satisfying certain conditions, yet sofar nothing appears sealed!

This could mean all sorts of things, but friends in bmir tell me that no serious post bmi work is underway in terms of running its own future, but I guess that can't start until that future is determined.

Likewise I can't see, at least in the medium term a bmir within IAG still flying for SN or retaining slots into FRA?

Shunting bmir or bits into Flybe would be fraught with problems, not least on MAN EDI & ABZ the Scottish would go nuts about competion and choice.

Could DLH choose to keep it for feeding its hubs?

My best guess would be that bmir will end up in IAG and be used on what will become very thin routes loads wise during the intergration of bmi into BA, Airbus (bmi) will need repainting into BA colours crews will need retraining into BA sop's which are very different from bmi, this will mean crews and aircraft out of the flying programe for weeks at a time, this at a time when both bmi & BA need additional crews, so the little jungle jets & drivers could provide a useful resource the carrot to stay being jobs at BA or city flyer, not ideal if you live in ABZ LBA EMA but EDI GLA based crews could live with that.

It would be great to see BA return to BHD though

[G-AWZK]

From the IAG statement of 22/12/11“bmi regional and bmibaby are not part of our plans and Lufthansa has the option to sell them before completion”.


Regional doesn't fit with any BA operation and Cityflyer have enough problems to worry about without having to integrate another aircraft type and 180 aircrew on different T&Cs. I would fear for Regional's future if they were forced into the IAG deal.

BA don't have any use for it and 50 seat jets into LHR is commercial suicide, so I can't see where it would fit for BA.

[Van G]

I totally accept that. I don't think they will want the planes. Hopefully some of the people though. And I'd rather take my chances there than with Granite. Just my stance on it. I'm not overly optimistic about Granite. I'd rather end up in IAG and see what happens. Maybe I'm wrong but that's what my gut tells me based on various murmurings about both possibilities. Anyways. I have no control over it. What will be will be.

[Trossie]

Van G, IAG have no time for 'regional' work in the UK. They would dump regional faster than you could think... ask any ex Bacon pilot...

[Van G]

I know, they don't want regional work. They need pilots though. And as unlikely as it is I'd take that gamble over Granite. That's just my stance. You don't need to tell me that BA don't want a regional airline or more embraers, I know that. And I've been through redundancies before, I know this industry can spit you out overnight.

All I'm saying is, in my humble opinion and as far as I'm concerned, I'd prefer to go into IAG. I know others will disagree, but there's certainly a few people I know who agree.

[1234567]

Latest missive from WPS:

With respect to bmi Regional, we recognise that there has not been much communication lately. It was hoped that the sale would have been completed by now but as funding requirements have not been met by the potential buyer, the process has been delayed. We will continue our efforts to come to a conclusion of the sale and in case Regional has not been sold prior to completion of the IAG transaction, the business will be part of this transaction. I want to clarify that there are no integration plans for the Regional operation into BA. Regional will remain in its current set up and sales options will continue to be pursued. The summer schedule for Regional will operate as planned.

[ETOPS]

I'm sincerely sorry that Keith Williams has stated today that BMI regional will not be integrated in BA if unsold at the deadline. He gave no further information as to what that means in detail but the lack of such an announcement doesn't bode well.......

[Enecosse]

IAG would enjoy the discount if bmir remains unsold, so why would they want it sold.
Anyone hoping for a job with BA is hoping for a miracle. At best there may be some offers of a chance at the BA assessment and then maybe a job.
As far as Granite go you have to ask the question, leaving aside whether the finances can be raised, is a small independent airline based out of Aberdeen viable.
The people trying to buy the company are decent enough, but unless they have some plan other than just resurrecting Biz Air flying Emb 145's I can't see it working.

[no sponsor]

The lastest news from Keith Williams, the CEO of BA, to pilots states that Regional will not be integrated into BA. It states Baby is in advanced talks.

I guess that leaves regional as a unit of IAG.

[The Cleaner]

Last month flightglobal reported granite as having proof of funding?? Is it possible they may be stalling hoping for a better deal from IAG? As far as I have read from the press releases and here IAG only get a reduction if they end up taking on Baby, it does not apply to BMIR. Surely then they would be happy to let it go for a nominal sum plus taking the liabilities. Remember we still don't know the out come from the EC commission which could be favourable to BMIR's potential investors??? Just putting some thoughts out there....

[INKJET]

My own take is that if Granite was going to happen, then it would have been done and dusted by now, i don't think Granite are playing poker here, rather the chips offered by Granite aren't bankable.

We are now 13 days from the new EU ruling target date and the number one priority for DLH will be closing the sale to IAG. Bmir will all most certainly end up in IAG ownership.

[Unijet]

Hi, Have tried to google but seem to be unable to find clear information. I was wondering what routes BMIregional actually operate which would go over to the new owners.

In the past i have seen regional and mainline operate flight from LHR to MAN and BHD, but who infact would continue to operate this? Would regional be gaining any slots at LHR?

If anyone could give me a clear breakdown on the routes which will be sold as part of regional it would appreciated.

Thanks

[OltonPete]

Unijet

Try these for starters. In brackets I have put the code-share

Aberdeen - Manchester, Norwich, Groningen, Esberg
Bristol - Brussels for Brussels Airlines
East Midlands - Brussels (SN) & Frankfurt (LH)
Edinburgh - Brussels (SN), Copenhagen (SK), Leeds, Manchester & Zurich (LX)
Glasgow - Copenhagen (SK) & Leeds
Leeds - Brussels (SN)
Manchester - Lyon
Newcastle - Brussels (SN)

Then there is the Airbus contract and direct flying for BMI which I lose track of but certainly Heathrow routes - Aberdeen, Manchester and Hanover (LH) are still showing in GDS.

For arguments sake LH, SK, SN & LX find some aircraft by magic to operate some of the code-share routes (almost impossible until winter?) then the prime routes would be the ABZ ones and Manchester Lyon. On Manchester they are under pressure from flybe on Aberdeen (soon to be 5 daily) and Edinburgh although they have Lyon to themselves

The IAG option (with TUPE) seems seventh heaven, I am sure it would still be disruptive for the employees but unless LH has made a good offer to Granite in respect of Star Alliance feed for foreseeable future (I assume the financiers of Granite are not impressed),then Duo does comes to mind.

Pete

[Unijet]

Thanks Pete :ok:

[Montezuma]

....that Granite's bid may being underwritten by Bond ! Not the James variety :cool:

[The Cleaner]

Must say I've heard Bond mentioned as well recently, albeit 3rd hand....

[STN Ramp Rat]

Lufthansa (http://www.bloomberg.com/news/2012-03-17/lufthansa-s-bmi-regional-sale-stalls-as-buyer-lacks-funds.html)

Lufthansa’s BMI Regional Sale Stalls as Buyer Lacks Funds
By Steve Rothwell - Mar 17, 2012 5:15 PM GMT

Deutsche Lufthansa AG (LHA)’s sale of its BMI Regional unit is faltering as the buyer is struggling to raise money for the purchase, according to an e-mail sent to staff by BMI’s chief executive officer.

Lufthansa said Jan. 20 that a deal to sell BMI Regional to an unidentified buyer had been concluded subject to “certain pre-conditions.”

“It was hoped that the sale would have been completed by now but as funding requirements have not been met by the potential buyer, the process has been delayed,” according to the e-mail sent to staff yesterday by BMI CEO Wolfgang Prock- Schauer and seen by Bloomberg News.

The sale of BMI Regional is part of Cologne-based Lufthansa’s effort to divest money-losing British Midland Airways Ltd., known as BMI. International Consolidated Airlines Group SA (IAG), the parent of British Airways, agreed in December to buy BMI for 172.5 million pounds ($273.3 million).

BMI, based at East Midlands Airport in Derby, England, operates three units: BMI, which flies to destinations in the U.K., Europe, the Commonwealth of Independent States, the Middle East and Africa; BMI Regional, a short-haul carrier in the U.K. and Europe; and BMIbaby, a low-cost airline.

As part of the deal, Lufthansa has the option to sell both BMI Regional and its discount carrier BMIbaby, with IAG receiving a “significant price reduction” if BMI fails to dispose of BMIbaby before the deal is completed.

The carrier is in advanced discussions with one of two potential bidders for BMIbaby, according to Prock-Schauer’s e- mail. Lufthansa hasn’t disclosed the names of any of the potential buyers of BMI Regional or BMIbaby.
Regulatory Approval

The sale of BMI to IAG has yet to be approved by European Union regulators, though both airlines said March 15 that they are confident that the deal will receive regulatory clearance and are targeting closing the sale by the end of this month. The European Commission on March 12 extended a deadline to rule on the deal to March 30.

“Regarding BMI Regional we have concluded an agreement with a U.K.-based investor group which is subject to certain pre-conditions which are to be fulfilled,” BMI said in an e- mailed statement today in response to a request for comment.

Andreas Bartels, a Lufthansa spokesman, declined to comment.

[Granite City Express]

So where does this leave us?

I heard another group made an offer for Regional a couple of moths ago, but that was rejected by Lufthansa. If they had money why was it turned away and how have Granite managed to get so far without any money?

The comments from BA don't give a warm fuzzy feeling :{

[Justin Cyder-Belvoir]

GCE, it would appear that LH have scant regard for people's sensitivities: there are lots of jobs at stake here and the uncertainty can't be good for the staff.

[Granite City Express]

JCB,

There are a lot of people in ABZ polishing up their cvs and it is only a matter of time before China and the Middle East start looking attractive.

Regional is a tight knit company and this uncertainty is killing it. Granite seem to have had no money through the whole process I am amazed they have been taken seriously by Lufthansa.

[Granite City Express]

Anyone know what is going on? I heard this morning that Granite have funding and 15 minutes later heard they didn't. This is a very worrying time for a lot of people and from what I hear from friends at BA ownership by IAG won't be a pleasant affair.

[fjencl]

Lufthansa Threatens To Shut Down BMI If EU Does Not Approve Sale - Lufthansa Flyer (http://boardingarea.com/blogs/lufthansaflyer/2012/03/18/lufthansa-threatens-to-shut-down-bmi-if-eu-does-not-approve-sale/)

[Currock Base]

Granite - May not be pleasan't but could be short. BA have been very clear, BMI regional doesn't fit in their plans.

[crewmeal]

It infuriates me to see these so called commissions, bureaucrats, call them what you like deciding on the future of a company. Why do these people have to poke their noses into business in this way? What good do they do? What is the point of them?

If it wasn't for them then I'm pretty sure everything would have been sorted out by now, people's futures would have been settled and everyone would know where they stood. Instead we have pure speculation, uncertainty, worry, threats, the list is endless. Above all it's costing the industry a fortune one way or another. LH are loosing money by the day, IAG can't implement their future plans. If Regional and Baby are to be shut down at least notice could be served and employees could look for other jobs, be it integration into IAG or outside the group.

[Aero Mad]

Why do these people have to poke their noses into business in this way?

It's called socialism... :(

[22/04]

Not really.

I think we all agree we now live in a single European market.

If that is where we are competition must logically be regulated at a European level.

[hec7or]

22/04 you posted

Not really.

I think we all agree we now live in a single European market.

If that is where we are competition must logically be regulated at a European level.

In the aviation industry, we live in a world market, the competition is based in Asia and the Middle East.

D'Oh:ugh:

What the EC is doing is buggering up a potential jobsaver.

Screwing this up at a European Level is an own goal.

[G-AWZK]

Neither IAG nor Lufthansa will walk away from this deal, unless it is extended for a ridiculous length of time.

The EC will be aware of the situation and will apply what grains of common sense they may have.....

[bex88]

many peoples jobs and future job creation in the uk are on the line with this. The ramifications spread far beyond bmi crew to the wider industry. I choose to believe the comments from known sources that both IAG and lufthansa are on track to achieve a sensible phase one approval. I think the talks to allow a approval is being negotiated on a ongoing daily basis and will be until the early hours of March 30th.

Look who is involved Lufthansa, IAG, German government?, Spanish government? UK government? All very influential and I think the EC need to be seen to regulate to a certain extent. A long 9 days to go :confused:

[Trossie]

Would there be the same problems and threat to jobs if LH was selling Swiss? No, because Brussels have no say over business in Switzerland. Isn't this yet another case for leaving that farcical and job threatening (unless you are in an Eurocrat job) 'organisation' called the EU?

[Aero Mad]

Isn't this yet another case for leaving that farcical and job threatening (unless you are in an Eurocrat job) 'organisation' called the EU?

The reasons are many and numerous. The question we seemingly keep forgetting to ask ourselves is 'what's in it for us?'. The answer is more regulation and more laws and directives (ask any MEP about how much say they have over policy) over which we have almost no control - as well as the £65bn annual contribution to their budget. It amazes me that we continue with this lark. Yes to free trade, yes to free movement of people, yes to co-operation with Europe, yes to various shared policy. But no to such an undemocratic and expensive organisation, no to loss of control of ourselves, no to the gradual erosion of the right to self-government and self-determination. We really should move on from dear old Edward Heath.

[Artie Fufkin]

Yes to free trade, yes to free movement of people, yes to co-operation with Europe, yes to various shared policy

But the EC are looking into the BMI deal to ensure fair competition, or "free trade". Why be so Daily Mail about it?

[Aero Mad]

I'm not really sure what is 'so Daily Mail' about my analysis, given that it is shared by a wide range of people across the political spectrum and also many like me who incidentally detest that newspaper for its unjustified and unfounded tirades against target organisations and people from the BBC to John Bercow. I'm afraid I just object to my right to democracy being eroded. In answer to your second point, if BA don't get the BMI slots then inevitably we will lose out on trade with developing economies, and so will Europe; if the EC block the deal then they are certainly shooting themselves and their member states in the foot.

[ara01jbb]

I'm afraid I just object to my right to democracy being eroded.

Eroded? If you happen to reside near your profile's location, you'll find you have no less than ten MEPs from five different parties (I'm afraid I just object to my right to democracy being eroded.) representing you in Brussels and Strasbourg. If anything, your right to democracy at a European level is probably over-capacity :D

Don't forget that it was "faceless bureaucrats" who listened to BMA's appeal (and granted it) when they the CAA originally denied them access to LHR...

[Cyrano]

if BA don't get the BMI slots then inevitably we will lose out on trade with developing economies, and so will Europe

Let's imagine for a hypothetical second that the EC decides to give the deal the thumbs down (they won't) and BA doesn't get the bmi slots. How exactly does that impair the ability of airlines based in (for example) CDG, AMS, FRA or MUC to continue to develop links (facilitating trade) with developing economies?

[davidjohnson6]

Cyrano - to play devil's advocate there is the argument that better to have 3 strong (and roughly equally balanced in terms of strengths and weaknesses) airline groups in Europe instead of 2 strong and 1 middle ranking, and leave the rest of the market to airlines based outside Europe.

I think Lufthansa's German based operation is probably good fir the UK economy because it keeps BA on their toes and also flies routes to Asia that BA could never do simply because of the possibility of extra connecting feed from France and Switzerland into Frankfurt. Equally, BA is good for the German economy because of the additional transatlantic connectivity BA provide at Heathrow.
Furthermore, BA's flights to Shanghai prevent Lufthansa getting too greedy, while LH's flights to Chicago prevent BA upping the prices too much.

Not only does this increase competition making European airlines more efficient, but it also increases overall non-stop long haul connectivity from European airports instead of involving routings involving long diversions via the Middle East (London-Chengdu via Abu Dhabi anyone ?). More than once I've decided not to go on a trip because having to take a non-direct set of flights at cr*ppy times meant it just wasn't worth the effort and hassle involved.

BA swallowing bmi is bad for passengers flying from LHR on some mid-haul routes, but overall I reckon it's a good thing for European connectivity and keeping trade in Europe from leaking to the UAE / Qatar.

[Granite City Express]

A friend at BA tells me that we (regional) are to be included in the Mainline sale now. Where does this leave Granite?

[Trossie]

"But the EC are looking into the BMI deal to ensure fair competition, or "free trade". Why be so Daily Mail about it?"

The UK regulator (that is democratically accountable) was satisfied with this deal that involves UK airlines at an UK airport (as well as two UK subsidiary airlines elsewhere in the UK) and a considerable number of UK jobs. Why should the non-democratic EC (and forget the idea that MEPs could ever really hold the EC to account!) be allowed to scupper such a UK deal? (Don't other countries in the EU have even bigger slot holdings and 'monopolies' at their main hubs?) And if being supportive of UK jobs is "so Daily Mail", then maybe I should start reading the Daily Mail!!!!

[max nightstop]

Between a rock and a hard place?:D

[Artie Fufkin]

Sorry Trossie, but it is a very Daily Mail anti-Europe attitude.

Years ago people would bang on about "bendy cucumbers" as reason to oppose European integration. Now we've latched on to "undemocratic".

When did you vote in members of the OFT?

Why are you happy to see a fully elected European Parliament as less democratic than the British government (completely unelected, unaccountable upper chamber and the head of state being born to be Queen)?

http://www.youtube.com/watch?v=JvKIWjnEPNY

The OFT didn't say they saw no problem with the BMI / IAG deal, quite the contrary, they said they had very serious concerns about monopolies on certain routes, but felt that the European authorities were better placed to consider the whole of the deal, what with BMI/IAG being pan European.

The percentage slot allocation at Heathrow is not what is being looked into here. Lufthansa, Air France and KLM all have higher percentage slot ownership at their hubs. What is unique about the BMI/IAG merger is that IAG will have a monopoly on certain routes and with the slot constraints at Heathrow, no competitors are likely to come forward. Charles de Gaul, Schipol and Frankfurt are not at capacity, so anyone who wants to can move in and operate any routes that the dominant incumbent operates.

The EC has to make a judgement between the rights of the consumer who will lose out when monopolies are created, and the rights of BMI's staff who shouldn't have to loose their livelihoods.

We all hope and expect a sensible compromise; IAG being forced to cede slots to a competitor to allow them to operate on the routes that would otherwise become a monopoly.

[Trossie]

"When did you vote in members of the OFT?" -- The OFT are accountable to the MP that represents me.

The European Parliament is a joke: just look at the way that the UK public view it compared with the 'collaborationist' way that all other member countries view it... (and look at how their favourite currency is in constant threat of collapse...).

Let's simplify this: if Swiss was being sold by LH, would the (unelected!) EC have any say? NO! So why should the UK's OFT have to bow down on this matter to their 'lords and masters' in Brussels?

Sod the EC, the OFT should stop passing the buck and say yes to UK jobs!!!

(Now don't get me onto this EU farce of FTLs, when the UK actually has best and should not be cow-towing to the EU but insisting that the UK's sterling standards are maintained!)

I'm getting more tempted to start reading the Daily Mail!!!!!

[Trossie]

Worse... to be dumped within seconds of the take-over: BA have absolutely NO interest in 'regional' flying. Hopefully this is a 'brinkmanship' move by Granite: waiting for IAG to dump 'regional' and buy them for a quid!

[Van G]

I don't think this is brinkmanship on behalf of granite. If they are deliberately trying to delay the purchase then they are playing a dangerous game with staff/consumer confidence and loyalty to regional. I think they've made their best bid and it wasn't good enough. Just my guess.

Also, what are the legalities of IAG dumping regional when(if) they end up owning them. Guess they could still sell them to Granite, but if that were feasible surely LH would have already done it. Otherwise it's into BA, another buyer or redundancy packages??

This is turning out to be a long month.

[Trossie]

Sad to say (Otherwise it's into BA, another buyer or redundancy packages??) but 'redundancy packages'...

But then, if Granite are playing 'brinkmanship', maybe the odd million or so 'balances out' the staff/customer confidence, but it does stink somewhat... Hopefully they have a great big smell of roses available if they do take over!!

[stormin norman]

Regional does not fit into IAG's plans in any shape or form.Only the bidders know the real on-going losses and possible profits that can be derived from any takeover of anything within the BMI group.

[pwalhx]

Switzerland is not in the EU, therefore would the EU competition authority would not hold any sway surely if Swiss were to be sold. Maybe Austrian would have been a better comparitor for your anti EU rant.

[le grand fromage]

Latest news on the competition issues from the FT:

http://www.ft.com/cms/s/0/5b22a660-7442-11e1-9951-00144feab49a.html#axzz1pvyQrEUJ (http://http//www.ft.com/cms/s/0/5b22a660-7442-11e1-9951-00144feab49a.html#axzz1pvyQrEUJ)

Intersting routes the EC is focussing on......not surprising about EDI and ABZ, (but not MAN) and RUH and CAI, which have home country carriers competing against BA.

It's becoming a blinking contest......but my money is now on approval on 30th.

[Say again s l o w l y]

That link is no use unless you subscribe to the FT I'm afraid.

[Montezuma]

@Trossie, think of it like a swan: what you see on the surface hides the activity below :ok:

[no sponsor]

It mentions IAG giving up an additional 4 slot pairs in addition to the 10 already on the table. So IAG will give away 14 slot pairs, thereby securing 56 slot pairs. Any less than that, then it makes the merger unlikely due to the cost of acquiring BMI.

Several of these I am guessing would be the current duplicate routes - EDI, ABZ, CAI and Saudi. It does mean there would be an excess of pilots coming to BA. I wonder how that will be managed?

[Trossie]

"Switzerland is not in the EU, therefore would the EU competition authority would not hold any sway surely if Swiss were to be sold. Maybe Austrian would have been a better comparitor for your anti EU rant."

Aren't the Swiss lucky? (Or sensible!) They are able to agree to a deal involving Swiss companies in Switzerland that would consider Swiss jobs.

The Swiss therefore have a distinct advantage over the Austrians.

Wouldn't all those bmi staff be a lot happier if the UK could make the same decisions without foreign interference?

If that is an "anti EU rant" then surely there are a lot of bmi (and other UK) crews who would feel it is justified?

[xwindflirt]

i doubt it would affect the crews at all. bmi is already operating under crewed for those slots.

[Granite City Express]

"Switzerland is not in the EU, therefore would the EU competition authority would not hold any sway surely if Swiss were to be sold. Maybe Austrian would have been a better comparitor for your anti EU rant."

As a member of the EEA, if a Swiss carrier was operating routes inside the EU then they too would be subject to EC investigation. The difference is that the UK at least has some political representation in the EC/EU, whereas the Swiss don't .

It makes me wonder how long this charade can continue before either DLH or IAG decide it isn't worth the effort anymore. Wonder what the next step will be if there is no clear decision on the 30th?

[pwalhx]

Wouldn't all those bmi staff be a lot happier if the UK could make the same decisions without foreign interference?

Yes they would, but the UK OFT have dodged the issue by referring it to the EU competition authority. Presumably so they can say' it wasn't us gov' it was them pesky Europeans.

[corporatenut83]

I have to say that having been a BD employee for well over a decade I am not surprised that the takeover has been / is being handled in such a farcical manner.

The damage to the brand is not relevant because that will be lost anyway, but many loyal staff are being left in limbo, the company line has been "more information in the coming weeks" since the airline went up for sale nearly 6 months ago and although we know who the mainline buyer is we have absolutely no clue as to what will become of us, hardly worthy of their "investors in people" award!

I for one will be glad when the Eurocrats get their respective fingers out and make a decision.

[pennineuk]

MAN is not an issue because of the now heavy dominance of the rail operators who have taken the majority of the market share from BA/BD.

[The Cleaner]

So.... The BMI Regional thread has been merged into the mainline one???thanks for letting us know! Do the mods know something we don't???? Or have they lost all hope of BMIR being bought???? The mystery continues.....

[FQTLSteve]

Thanks Granite City Express you beat me to the EEA point, I was amazed how this wasn't taken into account in all those Swiss references. In the days of Swissair they lobbied furiously to their Governement worried about being outside the single market in aviation, and to enter an agreement with the EU, QED they are members of EEA, and have to implement all EU directives etc but have no representation or input whatsoever over these matters with the EU.

Trossie, foreign interference. As a UK natonal you are also a EU citizen, as stated on your passport, and the UK comissioners sit alongside all the other member states, except of course the EEA ones. So that's not a correct analysis.

As far as slots and feeds to LHR, it seems to me that DLH are doing very well feeding FRA, MUC and DUS from the UK regions. Big increase in pax last year for them from BHX & MAN. I do feel sorry however for all those at BMI, it really does seem very agonisng. I'll also miss BMI.

[Flypuppy]

Merging the Regional thread into this thread is not helpful.

[Aero Mad]

It is in fact very silly, considering we have known for some time that they are to be split up as two different companies (unless BA takes on Regional, which everything points towards being very unlikely indeed).

[Fairdealfrank]

As for the actions of the regulatory authorities, it's called "passing the buck". Too difficult a decision? shuffle it off to Brussels.

The EU Parliament (or talking shop) is irrelevant for these purposes, most EU activity is determined by intergovernmental agreement: meetings of the prime ministers/presidents of EU countries.

There's always an excuse difficult decisions - or implementing a manifesto promise. For example:

"Nick Clegg won't let me have an EU referendum"
"The European Court won't let me deport alleged terrorists"
"The EU won't let me bail out BD, but I can bail out the banks"

Notice a trend?

[Artie Fufkin]

Yes, another irrational europhobe :E

[crewmeal]

Yes, another irrational europhobe

OK Mr Artie F..... What exactly do they do? How do they help the UK? They are causing enough problems with trade with China and the US with these so called emission taxes. There is so much methane coming from Brussels and Strasbourg that they should tax themselves.

So we have 6 days to go before a final answer to all this speculation and an answer will be given? I really do hope so for the sake of the poor souls in BMI. This farce has dragged on for long enough and wasted so much money.

[11K-AVML]

They are causing enough problems with trade with China and the US with these so called emission taxesYes causing problems, but not for you or I. They are sticking to their guns and forcing ICAO to come up with a policy of it's own, something ICAO could have done in the last few decades but currently lacks. In effect they are getting the ball rolling on this matter which will hopefully bring about a globally accepted solution in the medium to long term.

[Trossie]

Oh dear, these irrational europhiles...!!

"Emissions trading" must be the biggest bureaucratic farce that exists: trading something that has disappeared into thin air!! (And the 'quantities' being determined by a new army of eurocrats....) And what good is it going to do? It'll chase all the transfer trade away from Europe: Why connect from North America to the East via any European hub and pay silly euro-pricing when you can go via the middle east and not pay that silly euro-pricing!! What-oh, kill off European busniness and sit there smugly saying "Look at how good and 'euro-green' we are!". In the mean time, jobs at bmi...? Oh, we'll get around to them sometime, may be a bit late by then, but -- hey -- look at these good euro-taxpayer funded jobs the we've got here at the Commission!! (And name a Commissionser that has the term 'democratic' spring to mind in connection with their jobs...?)

Good luck to the bmi staff, despite the EU!

[Fairdealfrank]

Quote: "Yes, another irrational europhobe"

Not at all, Artie Fufkin, just the cold facts, am telling it like it is.

Obviously co-operation between European countries is desirable, but we don't need an interfering, nit-picking, self-serving, money-wasting bureacracy in Brussels, a gravy-train that cannot get its accounts audited. Suspending all payments to Brussels would solve the debt-crisis at a stroke.

You probably believe that the EU has "kept the peace" in Europe since 1957, not so. It is welfare states, increasing prosperity (despite the EU) and mass travel that has done this. It is inconcievable that European countries would go to war now, we all know each other thanks to travel and have too much at stake. It's a million miles from grinding poverty for the majority that characterised the warring Europe of the early 20th century.

Look at the EU now, its policies and interference in southern European countries is causing no end of distress and could threaten their stability.
Governments cannot offer aid to companies in trouble, and over-zealous intepretation of their pointless "directives" puts jobs at risk.

Monetary union for political rather than economic reasons is crippling the continent's economy. For all his faults, Gordon Brown played a blinder keeping us out of that particular mess.

Everything positive that the EU takes credit for could be done by agreement between individual governments, for example, a single European sky, common air traffic control and openskies arrangements with other countries.

That's brought the thread back to aviation!

As previously stated, the government cannot bail out BD, the EU prevents it. It is true that successive governments would probably have been dis-inclined to do so, but they should have the option!

Judging by the subsequent posts since you called me a "Euro-phobe", Artie Fufkin, it appears that you are on the wrong side of the argument!

Hope this helps

[crewmeal]

Yes causing problems, but not for you or I.

Surely this will affect us in the form of higher airfares!

So this is the week that BMI personal find their futures? EU commissions will come to a decision? All other bodies will have made their minds up? Good luck to everyone concerned. I hope it's positive news for you.

[Facelookbovvered]

I can see and would expect that where bmi & BA had a duopoly and it now become a BA monopoly, then yes fares are bound to rise. In the UK this will only effect MAN EDI & ABZ, one world will become a monopoly from Belfast through Aer Lingus.

People often quote GLA but from a business point of view it makes sense to be using a 767 rather than two A320/19's and of course better use of the limited slots in to LHR, how much the alleged price increase on this route is down to increased fuel costs?

I can't imagine that the EU will try to force other competition on to these routes, bmi couldn't make them work as part of STAR and there was nothing wrong with the product

Time to bring this sorry saga to end

[Trossie]

MAN EDI & ABZ all have connections to hubs at AMS, BRU, CDG & FRA (with some connections to CPH too). What 'monopoly'? LHR is not the only 'hub' airport in the universe.

[Facelookbovvered]

Agreed and that's my point, its only a monopoly in to LHR in addition there are many flights serving London's other airports from all these places, so i don't understand what the fuss is about?:confused::confused::confused:

[11K-AVML]

Surely this will affect us in the form of higher airfares!I don't disagree with you about that, but the current arggy-bargy is is causing headaches further up the chain. It'll take some time before whatever the outcome reaches the passengers.

[MidlandDeltic]

Agreed and that's my point, its only a monopoly in to LHR in addition there are many flights serving London's other airports from all these places, so i don't understand what the fuss is about?

But a monopoly from Heathrow to where? It gives further chances for BA to "rationalise" - ie reduce regional connectivity within the UK to LHR by transferring slots to long haul, with no chance of an alternative short haul operator getting slots to start replacement routes. It is not just UK routes either; I suspect bmi Dublin services will be withdrawn, handing a monopoly to Aer Lingus - who of course already codeshare with BA on this route. So it does have issues other than in west London, and indeed the UK.

MD

[Flightrider]

If BA were to withdraw from Dublin, it would be because they can't make any money flying there. Aer Lingus would therefore have a monopoly because of the workings of the free market rather than because of the ba/BMI take-over.

The EU can compel BA/IAG to make slots available to potential competitors on various routes, but it cannot compel competitors to lose money flying those services in competition to BA. We cannot lose sight of the fact that bmi has been losing money at an alarming rate and that, ultimately, is the reason why the take-over situation has developed to begin with! Why should others be able to make money on routes where bmi has presumably been losing heaps of it?

It is not unreasonable for the EU to ensure that people can compete if they want to, but the actual number of new airlines who will put that to the test - given that the LHR slots will be tied to the routes on which competition is deemed to be needed - will be remote, I think.

[jerboy]

ie reduce regional connectivity within the UK to LHR by transferring slots to long haul

Of course they will rationalise, there clearly isn't room for the current capacity on some of these domestic routes. However, regional feed will always be an important part of BA's LHR operation as such huge numbers of these passengers then go onto long haul services. If they did cut the domestic capacity too much, then passengers would be lost via other hubs: AMS, FRA, DXB, CDG and the like.

I don't hear such moaning that "easyjet have a monopoly on LTN-EDI" or "Ryanair are the only operator DUB-STN". Hell, BA have had a monopoly on LHR-NCL for donkeys years and the prices are still pretty comparable to the other domestics.

Why is it when other airlines carve out their niche (a la EZY at LTN or FR at STN) that no one seems to bother about a 'route monopoly'.

Of course LHR is slot restricted but no one in their right mind would set up a new short haul operation ex-LHR. You need the long haul network to support the short haul and no one has a sizable enough one of those, not even VS.

[Jamie2k9]

It is not just UK routes either; I suspect bmi Dublin services will be withdrawn, handing a monopoly to Aer Lingus - who of course already codeshare with BA on this route. So it does have issues other than in west London, and indeed the UK.



And the point is....there is 5 other airprots in London that are connected to Dublin. Aer Lingus just like all other airlines have a monopoly on certain routes.

Ryanair have a monopoly on DUB-STN, LTN
Cityjet have a monopoly on DUB-LCY
Aer Lingus have a monopoly on DUB-SEN
Only DUB-London route with no monopoly is LGW and LHR (for now). The only thing that will drive up EI prices for LHR flights is the 13% increase in LHR charges for EI in 2012.

[Skipness One Echo]

no one in their right mind would set up a new short haul operation ex-LHR. You need the long haul network to support the short haul and no one has a sizable enough one of those, not even VS.

Well said, this is key. Everything else is BLAH! The actual routes on which real competition issues arise on the London airports with BA buying BD are tiny! Too many still see BD as the competitor with BA they were as British Midland, that airlines has not existed for over a decade. BD is niche.

[Artie Fufkin]

British Airways Owner IAG Offers More Remedies for BMI Deal
By Peter Chapman and Steve Rothwell - Mar 28, 2012 2:31 PM GMT+0100


European Union Competition Commissioner Joaquin Almunia said he’s studying additional remedies offered by British Airways’ parent International Consolidated Airlines Group SA (IAG) in its bid to acquire Deutsche Lufthansa AG (LHA)’s BMI unit.

IAG (IAG) has offered additional measures to assuage EU antitrust regulators after its initial proposals were rejected by parties that may be affected by the deal, Almunia told reporters in Brussels today. Virgin Atlantic Airways Ltd. and Scottish lawmakers oppose the deal, saying it would eliminate passenger choice by giving British Airways a monopoly on routes from Scotland to London’s Heathrow airport.

“The Commission must not waver from its purpose of protecting competition and with it the best interests of the consumer,” Virgin Atlantic said in an e-mailed statement in response to Almunia’s remarks today. “We will continue to challenge this deal unless robust remedies are offered which protect the best interests of the passenger.”

IAG, based in London, agreed in December to buy BMI, the second-biggest operator at London’s Heathrow airport, for 172.5 million pounds ($274 million). The carrier wants to use BMI’s take-off and landing slots to expand British Airways flights to fast growing emerging markets in Asia and Latin America.
‘Remedy Slots’

“We received yesterday additional proposals for remedies coming from IAG,” Almunia said. “The original remedies proposed by IAG were market tested and the opinion of the stakeholders consulted was negative.”

Virgin Atlantic, based in Crawley, England, said in the statement that it would use any “remedy slots” that it may acquire from IAG, as part of regulatory clearance, on routes where British Airways would otherwise hold a monopoly.
IAG Chief Executive Officer Willie Walsh said March 20 that loss-making BMI would likely fail to survive if European antitrust regulators block the deal. Lufthansa CEO Christoph Franz said separately on the same day that disposing of BMI was the only way of safeguarding jobs at the carrier.

“I know the situation of many people working in BMI and many people having bought tickets on BMI flights,” Almunia said. “So I will try to advance as much as possible the analysis of how we can decide on this case.”

The European Commission has set a deadline of March 30 to rule on the deal.


Above was from Businessweek (http://www.bloomberg.com/news/2012-03-28/british-airways-owner-iag-offers-more-remedies-for-bmi-deal-1-.html)

[INKJET]

The Sprout's in Brussels will have more important things on their minds right now! Easter Holidays, their's that is!!

[ETOPS]

The original remedies proposed by IAG were market tested and the opinion of the stakeholders consulted was negative.”


Does this mean Sir Richard Branson will get the blame if things turn out badly for BMI?

[Say again s l o w l y]

This is playing with the livelihoods of 4500 people. It's all posturing and nonsense.

If it goes to a 4 month investigation, then IAG will walk away and Lufty will pull the plug. bmi will cease to exist.

There will still be no competition on the routes the Beardy one is worrying about, but 4500 people will be out of work.

Nobody wins. It's enough to make me spit feathers.

[richandhazel]

Couldn't agree more! Very worrying times with our future in the hands of the EU!

[EastMids]

Virgin Atlantic, based in Crawley, England, said in the statement that it would use any “remedy slots” that it may acquire from IAG, as part of regulatory clearance, on routes where British Airways would otherwise hold a monopoly.


So, not necessarily on routes to [say] Scotland then!!!

About time Branson was told to wind his neck in and the EU acted in the interests of bmi's employees, not the misplaced wanabees who won't actually deliver what they are trying to imply they will. Virgin should be ashamed - IMHO they have no intention of operating LHR-EDI etc,and this is just an opportunistic slot grab on their part and they should accept that there's a bigger picture.

Andy

[bex88]

Andy...... Spot on so glad someone has said it. Taking the moral high ground when they were involved in price fixing. For once I really hope the EU can see the big important picture and accept that not all routes can support two carriers and that is market forces. Green light on Friday or alternatively job hunt, the sand pit and divorce probably is my future. :sad:

[Cyrano]

So, not necessarily on routes to [say] Scotland then!!!

About time Branson was told to wind his neck in and the EU acted in the interests of bmi's employees, not the misplaced wanabees who won't actually deliver what they are trying to imply they will. Virgin should be ashamed - IMHO they have no intention of operating LHR-EDI etc,and this is just an opportunistic slot grab on their part and they should accept that there's a bigger picture.

Andy

Remedy slots will be route-specific (the Commission will allocate them to carriers who undertake to use them to operate the routes in question), so if Branson wants them he will have no choice but to operate the routes they relate to (e.g. EDI/MAN/GLA). He can't just take some slots and say "actually, I'd like to fly to <insert random lucrative BA monopoly destination here>".

[The Royal Family]

From almost daily communications from WPS, has anyone else noticed how very quiet he has become over the last few weeks? The last update was on the 16th March.
I am fearing the worst for tomorrow, come on WPS rally the troops :(

[bex88]

I would think he knows about as much as we do hence the silence. Apart from quoting Willie Walshes we are hopeful/confident the deal will get approval to Lufthansa's threats what can be said. I just hope people understand the gravity of tomorrows outcome 4800 people await their fate. :eek:

[Rougueg]

Link

IAG to win EU approval to buy bmi airline - source - Finance News - London South East (http://www.lse.co.uk/FinanceNews.asp?ArticleCode=guwr1m1i4gbd5od&ArticleHeadline=IAG_to_win_EU_approval_to_buy_bmi_airline__s ource)


lets hope the LSE has the facts correct!

[The Cleaner]

So if the beardy one gets some domestic slots like he wants and you have to 'use em or lose em' what the heck does he plan to fly them with? Think ABZ may struggle with an A330!
Or is just the usual Branson Bluster?

[JSCL]

I know little about the BMI drama but if he has to use these slots on those domestic routes, there's one thing that would make sense to me.

Virgin, Baby! 733's and 735's ready to go to serve those routes and naturally the name Virgin Atlantic wouldn't suit under the domestic routes. So it would make sense to me.

[The Royal Family]

JSCL, unfortunately those old 737's are based everywhere but LHR.

[The Royal Family]

IAG to win EU approval to buy bmi airline - source | Reuters (http://www.reuters.com/article/2012/03/29/uk-iag-bmi-eu-idUSLNE82S01820120329)

[JSCL]

TRF,

I know they aren't based at LHR, but they aren't going to find a method of filling those slots any time soon unless they purchase an existing operator.

[Aksai Oiler]

Maybe he should buy Baby and then he can call it "Virgin Baby" or Virgin on the Impossible". I remember Virgin's last forray into UK shorty haul with a Viscount and B727.

I won't eat my words if it goes ahead, but I am also not pinning any hopes on RB moving into UK domestic.

[Artie Fufkin]

Beardy quite specifically doesn't mention UK domestic;
Virgin Atlantic, based in Crawley, England, said in the statement that it would use any “remedy slots” that it may acquire from IAG, as part of regulatory clearance, on routes where British Airways would otherwise hold a monopoly.

eg Heathrow to Phoenix?

[The Cleaner]

Virgin did say around the time they asked for an investigation that they would start regional flying if the deal was blocked/remedied. Also I believe it is the EC who will decide which routes will be covered and that I think that any airline taking those slots will have to commit to flying those routes for a certain period of time, I think it 2 years minimum????
I believe they can then use those slots as they wish.

[ayebmi]

So, If the EU blocks the deal is bmi expected to continue operating at a loss to prevent BA having a monopoly on certain routes, who exactly will subsidise these routes!?? Or will the company just fold, the slots go back into the pool!! Di^khe£ds! Yeah I'm sure EVERYBODY wants to start up loss making European and Domestic routes at the moment!!

[Tagron]

I am curious as to what I am reading about the "remedy" slots.

Is it correct that the remedy slots must be used for their specified purpose for a minimum of two years, after which they can be employed for any purpose ? So in theory they could be redeployed after two years as longhaul slots if the timings were suitable and then could they be sold on the open market, netting a handsome potential profit for the original beneficiary ? It might even make domestic losses bearable for two years .

Or would there be a prohibition on their sale or trade in perpetuity because they were allocated free as remedy slots, i.e. they could only be returned to the airport authority ?

Welcome comment anyone with a good knowledge of the system.

[happyberks]

does anyone know which website the official EU statement will first appear on?

[The Cleaner]

Typically how it works is this. The purpose of the slot release is to ensure competition on a given route. Therefore the slots are only usable for that route (let's say LHR-EDI). The bidding airline gets the slots for free, on condition that they are used on the route in question. You can't take the slots and then turn around after a week and say "oh, we want to use them for LHR-JFK instead". The regulator may appoint a "monitoring trustee" (law firm or similar) to ensure the slots are used appropriately.

For a good example, see the EC's judgement on the Lufthansa takeover of Brussels Airlines (PDF) (http://ec.europa.eu/competition/mergers/cases/decisions/M5335_20090622_20600_229007_EN.pdf). It's a long document (but an example of the level of detail that typically goes into the analysis) but most relevant for your question are pages 118 onward, the commitments (= the proposed remedies). You'll see (section 439, page 120) that a new entrant gets to keep the slots ("grandathering rights") after a certain number of seasons, i.e. after that period, the slots can be used for alternative routes if the original plan isn't working out.

Note also (and this is relevant for IAG/bmi too) page 120 onwards also describes the other commitments, e.g. interlining/SPA provisions for connecting passengers.

I think this is a reasonable template of what we could expect as conditions for approval of the IAG/bmi deal.


Hope this helps
C.

I'm going on this post I read a while ago!

No guarantees on accuracy :-) .

[Airclues]

Do these slots have to go to a UK airline (I've looked, but can't find anything that says that that they must)? Is there anything to stop Lufthansa bidding for LHR-EDI and feeding in to Star Alliance services? It would be rather ironic if LH were to pick up for free what they had just sold to IAG.

[INKJET]

Or they go to Granite feeding Star into LHR or Virgin gets regional to operate into LHR from Scotland or part of regional no doubt supported by the SNP ?

Just have to wait and see the detail tomorrow or Monday

[Say again s l o w l y]

I don't think Granite are going to be part of any plans, since they don't seem to have actually been able to buy Regional. I would be stunned if Regional wasn't simply part of the deal with IAG now.

The Scottish Government can't really get involved in funding themselves, though they have various entities that might be able to help. However, the idea that Alex Salmond would put his money where is mouth is over this, is I'm afraid unlikely.

[eastern wiseguy]

Do these slots have to go to a UK airline


My feeling is that they would be open to ANY EU airline.

[Zacbranigan]

Lotta talk about Virgin Operating short haul to places like Scotland but after BA take over BMI,
Which other airline is there with a lot of slots and a short haul operation?
Which other airline currently serves UK domestic traffic from LHR ?


Aer Lingus !


Can't wait see how the EU carve this up.

[bex88]

Does it not work that the company with he slots (BA/IAG) have to agree to give up those slots for that particular route to any competitor that wishes to enter the market? Therefore if no airline comes forward the slots are not given up. I believe this is what happened when Lufti took over Brussels airlines. Slots offered on 4 routes, 2 years later no airline had taken up the slots and they went back to lufti. The slots certainly won't be forced onto any airline. Correct me (I am sure someone will) if I am wrong. :confused:

[LBIA]

Quick question

If Virgin was to get 14 slot pairs for domestics/short haul routes out of Heathrow would these slots be spread over the day. Say one arrival and departure every hour through the day, Or would they be in batches of say 3/4 flights arriving and departing at the same a time which would require them to acquire at least maybe 4x or 5x aircraft?

[TDK mk2]

I don't think Lufthansa have taken over Brussels Airlines. My understanding is that they own 45% and have some kind of option to acquire more at some point.

Why couldn't Lufthansa retain Regional and use it to operate the routes in question to compete with IAG? They have bases at LHR, MAN, EDI and ABZ although would presumably only need a bigger type. Having said that I believe that Aberdeen has been operated exclusively by the Embraer for some time now, maybe to make a smaller loss than if it were to be operated by an Airbus.

[Count von Altibar]

I hope Virgin get the slots for the Scottish routes, Sir Dickie will be in a right dilemma then. How he ever thought he'd be taken seriously by offering less than a third that IAG did for bmi.

[bex88]

Ok so the full Lufthansa ownership maybe incorrect but the slot sacrifice was ordered on 4 routes but no airlines entered the routes so they never had to be released and now they have been retined. I hope virgin stick to what they do well being long haul and leave the domestic slots alone. The best outcome would be BA fly the slots and a regulator monitors the prices charged. I think the evidence shows these route into LHR cannot support two carriers.

[CabinCrewe]

VS LHR-Scotland ? eh, no, I shouldn't have thought so and if they do it will be suicide.

[aiuk]

Best of luck for tomorrow, I am ex BD ground staff from T1 (94-96). I truly hope everything turns out positive for you all.

[Flypuppy]

Why couldn't Lufthansa retain Regional and use it to operate the routes in question to compete with IAG? They have bases at LHR, MAN, EDI and ABZ although would presumably only need a bigger type. Having said that I believe that Aberdeen has been operated exclusively by the Embraer for some time now, maybe to make a smaller loss than if it were to be operated by an Airbus.
Logic plays no role in this whole deal. I dont expect DLH to start using anything like common sense anytime soon. Regional, and if Baby has not been sold, will both be rolled into the IAG deal. What happens after that is open to interpretation...

The Scottish Government can't really get involved in funding themselves, though they have various entities that might be able to help. However, the idea that Alex Salmond would put his money where is mouth is over this, is I'm afraid unlikely.
Governments are barred under EU law from funding airlines, Malev is an example of what happens when money is channeled directly in and then forcibly repaid...but you knew that :E

[johnnychips]

Why couldn't Lufthansa retain Regional and use it to operate the routes in question to compete with IAG?

Whom would they connect with at Heathrow, when these places have links already to their other hubs?

All the best to everyone tomorrow.

[davidjohnson6]

Assuming all the rumours about the EU agreeing to IAG buying bmi from Lufthansa are correct and Almunia doesn't throw something unexpected into the equation, when is the transaction likely to complete ? Or to put it another way, when will IAG pay LH the £172m, when do the current directors of bmi (WPS and co) resign and when does IAG nominate directors to the board of bmi and formally take control of bmi as a company ?

[le grand fromage]

Depends what other conditions to closing were included in the purchase agreement, but could be the same day if everything had been lined up ahead of time. Given that the parties seem in a hurry to get the deal done it would be surprising if it wasn't completed within days rather than weeks. Expect a statement from IAG/DLH on timing once the EC has issued their press release.

[Say again s l o w l y]

The plan is for the 16th to be the day of handover. That hasn't changed despite the dely from the EU.

As to what happens to the board etc. no-one on here is likely to have a clue, or if they do, they certainly won't say.

[Rougueg]

Please forgive my ignorance here but the 16th? I presume of April?

Where did that date come from?
I must have overlooked some vital info somewhere!

Cheers

[happyberks]

16th April is 2 full working weeks from the end of today when you take Easter into account. This was the time stated it would take to finalise the deal subject to the green light today.

[INKJET]

I would concur with the 16th

The directors of bmi eg WPS, NT & so on all go across to IAG, what they then do with them is a matter for the IAG board.

The relevant companies involved will by now know the out come of the EU ruling allowing them time to prepare the press releases for this afternoon to be issued after the EU go public.

[Rougueg]

And speaking of EU going public the website with details of the case is...

European Commission - Competition (http://ec.europa.eu/competition/elojade/isef/index.cfm?fuseaction=dsp_result&policy_area_id=1,2,3&case_title=bmi)

No news as yet but i think it will be released here first.

[stab3.5up]

Well what ever happens may god have mercy on there souls. never met a bad egg amongest any of the bmi staff.

[le grand fromage]

DDee, agreed. It would be normal for all existing Directors to be required to resign as part of the completion process and for the Buyer to appoint their own Board, change bank mandates etc etc....

[INKJET]

IAG are buying 100% of bmi and includes all staff, the directors are employees of bmi and will have long lead termination clauses of between 6 12 months ( pilots have 3 months) so yes I am for real.

They will continue to be directors of bmi owned by IAG until such stage that bmi is dissolved or merged into BA or the are replaced/contracts terminated by IAG

Of course it's unlikely that they'll be kept on long term, perhaps even short term, but thats the way it works, they have employment rights just like another employee and IAG will deal with it carefully wrongful dismissal on their pay scale would not be something IAG will want to get involved with, they will in practical terms be let go with a large, very large golden goodbye.

[happyberks]

Isn't WPS a contractor? His contract runs until the end of 2012 doesn't it?

[Flypuppy]

but thats the way it works, they have employment rights just like another employeeNot always true. Their positions may simply become redundant in the new company structure with immediate effect. I have seen it happen before in other mergers & takeovers. The current management team may be kept on for a bridging period, but new owners usually want their own people in ASAP.

[INKJET]

Redundant or paid off either way they'll be gone doubt, but yes I would say they'll still be around for a little while to hand things over, at the moment they are still competitors and have to act solely in bmi interest.

[TakeNote]

BA's / IAG's CFO will be visiting Donington Hall next week, apparently. As for bmibaby, tha'll be a nice gift for one group - esecpially as it'll be invested by LH.

[LGWFLYR]

Decision of the merger due to be announced today at 1800UK time.

[bex88]

Oh ok I thought it was not the 30th in Brussels or something. Where did 1800 come from?

[Cyrano]

IAG gets EC approval for bmi takeover. (http://www.reuters.com/article/2012/03/30/iag-lufthansa-eu-idUSL6E8EU5AV20120330)

[le grand fromage]

So 12 slots made available to new entrants on domestic/european routes not defined, with 2 slots leased to Transaero. But Transaero have been using those 2 slots for a number of years already under the agreement reached when BD started flying to Moscow so no actual change there. So IAG have really only given up 12 not 14.

[smiles22]

Eu press release

EUROPA - Press Releases - Mergers: Commission approves acquisition of British Midlands (bmi) by IAG subject to conditions (http://europa.eu/rapid/pressReleasesAction.do?reference=IP/12/338&format=HTML&aged=0&language=EN&guiLanguage=en)

Mergers: Commission approves acquisition of British Midlands (bmi) by IAG subject to conditions
Brussels, 30 March 2012 - The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the UK airline British Midlands Limited (bmi), by the International Consolidated Airlines Group (IAG), the holding company of British Airways and Iberia. The decision is conditional upon the release of 14 daily slot pairs at London Heathrow in order to facilitate new entry, and upon IAG's commitment to carry connecting passengers to feed the long-haul flights of competing airlines out of London Heathrow. In light of these commitments, the Commission concluded that the transaction would not raise competition concerns.
Commission Vice President in charge of competition policy Joaquín Almunia said: "The Commission could clear this transaction in the first phase given the commitments package offered by IAG which addresses the competition concerns we identified. The commitments package includes an appropriate number of very sought-after slots at London Heathrow as well as far-reaching feeder arrangements as regards connecting passengers. We are therefore satisfied that the competitive dynamics will be maintained so as to ensure choice and quality of air services for passengers."

The Commission’s investigation found that the transaction, as initially notified, would have led to high market shares and even monopolies on a number of domestic, European and international routes out of London Heathrow airport. The Commission also analysed whether there was a risk that IAG would prevent passengers from connecting on long-haul flights operated by competing airlines out of London Heathrow.

During the first-phase review, IAG submitted commitments to release 12 daily slot pairs at London Heathrow which could be used on the specific routes of concern, including the UK domestic routes, as well as on other European routes. In addition, two Heathrow daily slot pairs will be leased to Transaero for use on flights to Moscow. These slots and other incentives such as the acquisition of grandfathering rights after a certain period of time should facilitate new entry. Furthermore, IAG committed to entering into special agreements with competing airlines which operate long haul flights out of London Heathrow to provide these airlines with connecting passengers, including from UK domestic routes and other European routes. Passengers will therefore continue to have a choice to use other airlines than IAG when connecting at London Heathrow.

These commitments adequately address all competition concerns identified by the Commission. The Commission therefore concluded that the proposed transaction would not significantly impede effective competition in the European Economic Area (EEA) or a substantial part of it.
The transaction was notified to the Commission on 10 February 2012.

Companies and products
The undertaking International Consolidated Airlines Group ("IAG" - United Kingdom) is the holding company of both BA and Iberia Líneas Aéreas de España, S.A. bmi is currently owned by Deutsche Lufthansa AG.
Both IAG and bmi provide air transport for passengers, air transport for cargo, airport ground handling services and maintenance, repair and overhaul services.
Merger control rules and procedures
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).

[The Royal Family]

Roll on the 20th April :ok:

[jdcg]

So who'll take the slots?

Moscow - VS or SU or S7??
Cairo - VS or MS
Riyadh - VS or SV
Nice - AF
Edinburgh - BE (with VS codeshare)??
Aberdeen - BE(with VS codeshare)??

[lamina]

I would not be surprised to see a company called Granite suddenly get funding for the Scottish routes.

[BHD2BFS]

surely aer lingus will take some slot for BFS and DUB i really cant see BA flying own aircraft to these airports

[Skipness One Echo]

Air France have no interest in LHR beyond CDG, eveything else was dropped or went to CityJet from LCY.
Virgin may look at Moscow and Cairo.
Granite have enough bother raising enough cash as is without a gauranteed loss making LHR operation. I mean exactly who would they be feeding? Feeding STAR was what cost BMI.

Flybe are a regional specialist, I don't see them going head to head with BA.

[le grand fromage]

Here's the link to the IAG press release
IAG - International Airlines Group - News Release (http://www.iairgroup.com/phoenix.zhtml?c=240949&p=irol-newsArticle&ID=1678611&highlight=)

[Kittiwake]

Interestingly no mention of regional in the cost reduction paragraph. Actually no mention of regional at all......

[Mallorcaguy]

I'm not sure if anyone will know the answer yet but what happens to BMI flights already purchased for July.
We have MAN - LHR booked with BMI for early July with returns in August as part of our holiday, will they still be honored by BMI or transfered to BA. We only booked with BMI because the fares were half the price of BA when we booked.

Thank for any advice.

[SKYHOOK]

bmi summer schedule is planned to operate as normal. Should be no problem, but I would think BA would honour your tickets if the bmi flights were cancelled.

[Merchant Banker]

Phone customer services they will put you right.

There will be few toasting this tonight in mainline and I raise a glass to you too!

But the afterbirth aka baby/ regional will no doubt have more prolonged agony to endure whilst we are tossed to anyone whole will take us? :{

[CabinCrewe]

"Feeding STAR was what cost BMI"
...and you know that..how ? Without Star they would have gone a lot sooner