View Full Version : PSSST! Wanna buy an Airline? Cheap??

Few Cloudy
17th Jan 2003, 11:52
This is a verbatim quote from today's Evening Standard - motto: If you want to make a small fortune out of aviation, start with a big one...

BA set to give away German offshoot
Robert Lea, Evening Standard 17 January 2003

BRITISH Airways is prepared to give away Deutsche BA after a decade of losses at its German subsidiary that have run into hundreds of millions of pounds. The flag carrier is currently in an option agreement to sell Deutsche BA to easyJet for up to e39m (26m).

But with the budget airline dithering over whether it wants to go ahead with the deal, senior BA sources have confirmed it is now prepared to sell the domestic German airline for only a nominal sum.

Ray Webster, chief executive of easyJet, has given himself until March to take up the option to buy DBA which he wants to convert to the no-frills business model and which he reckons is an easy way to enter the domestic German market. But analysts believe easyJet, which has pumped 9m into DBA since taking management control under last year's option agreement, is now cooling on the project.

EasyJet shares have halved in the past 12 months. The market value of the airline has fallen to less than 1bn. Investors have been unnerved by easyJet's difficulty in digesting its takeover of rival Go, especially as latest traffic statistics suggest the airline is mismatching its increased capacity with seasonal demand.

Webster has indicated the jury is still out on whether to go ahead with the DBA deal. 'We cannot say one way or the other,' he said when asked whether he would be taking up the option.

He cited increased competition in the German market, the ability to persuade local managers of the no-frills business model, and the need to overcome German labour laws in easyJet's move to cut costs within DBA.

But a senior BA source confirmed its priority is to get rid of DBA, which has been making losses of at least 30m a year since its launch in 1992, irrespective of whether the easyJet deal goes through. 'Let's face it, easyJet are not the only show in town,' said the source. 'We will dispose of the business, and yes, we would give it away for nothing if need be.'

That suggests that if easyJet does not take up its option, BA could open negotiations with other recent low-fare entrants into the German domestic market - Hapag-Lloyd Express, the new no-frills arm of the TUI travel giant and Germanwings, the new player in which Lufthansa has a minority stake. DBA has a fleet of 16 Boeing 737s, employs 800 staff and operates 130 flights a day.

With Ryanair also heavily committed to expanding in Germany, industry experts reckon German domestic competition will become every bit as cut-throat as the British market. It has already claimed one victim, as Sir Richard Branson's Virgin Express has pulled out of its plans to set up a hub at Cologne-Bonn because of the competition.

BA's exit from the German domestic market comes after the 2000 sale of its heavily loss-making French regional carrier Air Liberte for only 40m.

Amazon man
17th Jan 2003, 15:59
For any BA source to suggest they would give DBA away has got to be the height of stupidity.

With that suggestion what airline is going to pay a reasonable price for the airline. Mind you its not the first Low cost they have more or less given away the name GO springs to mind.

18th Jan 2003, 20:14
If the bigEZY has struggled to digest Go (a sort of easyJet look alike with flaire), perhaps BA want to feed them a posion pill in the form of a tutonic BA..

Dan Winterland
19th Jan 2003, 11:23
Another gift from BA to easy. And I tought they were in competition!

19th Jan 2003, 17:40
Don't worry peeps, in the blink of an eye Easyjet management, through pig headed ignorance have managed to strip all moral and motivation from what was a happy, successful and profitable team called GO. Somehow I don't think these imbeciles will be threatening the European market for long unless shareholders/Stelios take action.

19th Jan 2003, 18:27
I agree with you 100% autobrake 3, Webster and his little band of men are full of hot air and ignorance, they are no threat to anyone but themselves and the poor EZY employees who are trying to build an airline.
How much have they spent already by holding the option to buy DBA !
They have already proved the GO merger/takeover was too much for them, how can they ever expect to handle DBA as well !


Few Cloudy
19th Jan 2003, 19:33
Autobrake, Stelios take action - a nice idea but he ain't involved any more - maybe we should tell him "Come back, all is forgiven..."

Rumbo de Pista
19th Jan 2003, 21:27
Now, if the shareholders were to recognise just where the trouble lies with this interesting little company, and displace the main incompetent, and give Barbara another go...?

Remember, often something is cheap because it's not worth having!! (They taught me that at Harvard!!)

19th Jan 2003, 22:44
Autobrake 3:

Let's face it. The easyjet top management will have probably left easyjet by the time the **** really hits the fan. They will have taken very substantial amounts of money with them and they will be working in their next top management position awarding themselves more massive bonuses etc. Consider two examples:

Bob Ayling:
Did a very very bad job and was highly unpopular. Was awarded a very golden parachute and went off to the next job.

Barbara C:
Did a better job and was highly popular. Left with a great deal of money.

Reward and ability are not related for many of the top managers. A growing number of them flit from position to position taking great sums of money as they go. Most if not all are Greedy self interested individuals. I don't find it very inspiring. The reason they are allowed to continue is that we are all very much like them. We are self interested and won't do anything unless we can see the direct short term benefit to ourselves. The idea of making sacrifice for the good of society is in the past.

20th Jan 2003, 12:24
Few Cloudy - I seem to recall that when Stelios resigned as Chairman included in the Press Release were some comments about the legal agreement that had been put in place given that the easyGroup owns the "easy" brandmark.

I'm pretty certain that one clause gives Stelios the right to come charging back in if he feels that the "easy" brand is being devalued - e.g. his remaining shares in the airline plummet in value!

Few Cloudy
20th Jan 2003, 15:09
Olney, that could annoy a few people in management but I reckon the shares would go up 20% overnight...

20th Jan 2003, 17:16
Ironically, the spin at the time was that Stelios was too grubby for the money men and they needed "serious people" in charge of the airline. Stelios' departure was supposed to be closely followed by MOL for the same reason :D :D :D

21st Jan 2003, 11:51
Mark D - it was more a case of the City believing that as effectively the largest shareholder AND Chairman of easyJet, Stelios had a conflict of interest.

Such situations are normal in small to medium sized companies, but are felt to be unacceptable for large publically quoted companies.

The same situation may exist with MOL and Ryanair, but I believe his actual shareholding is much, much smaller than that held by Stelios and his close family.

Few Cloudy - absolutely.

22nd Jan 2003, 13:03
The Times weekly roundup reported that BA are in discussion with Germania about the purchase of DBA, not EasyJet! Rumour has it that the DBA pilots do not want anything to do with easyJet, apparently seeing it as a degradation of their working conditions. Could it be that all the carping on this website by easy pilots has put the wind up them ? RW in his recent interviews has mentioned more than once that the key to making a decision on wether to buy DBA is getting DBA employees, mentioning pilots in particular, into the easy way of business. Is the treatment of UK based easy pilots now beginning to hurt easy expansion plans?

22nd Jan 2003, 22:24
Last I heard, Easy had an option. Management team and per month investment in DBA?

Not quite the same, but have BA not handed over 'bases, aircraft and crew' in the form of J41's CWL and crews to a complete outsider?

Well done Eastern, ready made profit. Best of luck with it.

Happy to stand corrected having just come round from hibernation.


Few Cloudy
23rd Jan 2003, 10:58
So, any DBA Pilots care to comment - especially in the light of "rumours" being quoted by others?