Domestos

Has anyone read about the Qantas/BA merger? I just heard about it on qfcrew.com today. Qantas has made it public knowledge that it is interested in merging but there are no guarantees at this stage

Would the ramifications be positive or negative? I think they will be negative.... this "Super Airline" will want to hack off certain overlapping bits.....eg. catering, cleaning, crew....to make it more streamlined and economically viable. Would the merger mean the end of an Australian icon?

Just like the Airline Consortium bid a few years back...I doubt the shareholders of QF will let it get across the line. Then again, Alan Joyce might be clever enough to sell the idea to the shareholders citing that they would get a better return on their investments if QF merged with BA....much like CBA and St. George Banks.

My question is....who takes over whom? Does BA buy out QF or the other way round?....If neither party buys out each other....then my guess is that both BA and QF will form a holding company to buy a controlling interest in both....that way both of them will be able to keep their branding but all profits get siphoned off to the holding company.

OzzieO

The brief we got at BA is that it is a merger not a takeover so the two companies will continue as they are. But who knows? I guess it might be run along the lines of AF/KLM.

I would envisage a whole load of job cuts on the ground. It would cut out the need for job duplications.

As far as flying goes I can see BA only operating as far as BKK/SIN/HKG and Qantas doing the flights down to Ozz.

Juud

To avoid confusion, the Air France - KLM deal wasn't a merger. After KLM a few years earlier ended talks with BA because management was afraid KLM's influence in the merger would be too small, they ended up selling the company to AF.
For very little money compared to the actual value, and with HUGE bonuses and plummy jobs in Paris for KLM's top management.

As OzzieO says, when it comes to the operational side of things, the 2 companies are run side by side. Thinking behind this is that both brands are valuable, and running them this way will maximise on that fact.
Also, since fringe the benefits for AF employees are hugely better than the ones for KLM employees, and the French (CC) unions are much more powerful and militant than the the Dutch ones, the French unions understandably balk at "equalisation & integration" of benefits.

In the air, little has been noticeable. Small stuff like different drinking cups in tourist class, different OJ and things like that, but nothing major at all.
The companies have removed double flights as it were, so both airlines have lost a few routes to the other, but again nothing major.

Training in both companies is still done very differently as well, with no improvements flowing from one system to the other.
No money to be made on that front, so of course management isn't interested.

Savings are made on the ground, as per OzzieO. Airport staff, maintenance staff, city offices. Synergy in bulk buying of everything from paperclips to aircraft is a major savings and the resulting profitable airline is a positive thing for the remaining staff.
Of course KLM was profitable before it was bought up, and in the first few years the overall profit came from already lean KLM rather than bloated AF, but it's not considered sporting to mention that fact.

FWIW.

Domestos

Interesting info and insights. I guess it would be pretty much like how the former accounting firm Coopers and Lybrand merged with Price Waterhouse to form PricewaterhouseCoopers (PwC), although in this case, BA and QF would still keep their identities. It would be interesting to know where the holding company would be headquartered....Sydney or London? I'm also keen to know which airline was the first one to the bargaining table to beckon the aother airline to come to it?

LOL....I'm just laughing to myself....if BA and QF merged, a new name could be BAQANTAS (or QANTASBA) and the new logo would be the kangaroo..except the tail of it would be the current BA curly ribbon. The uniforms would be the Aboriginal print with the BA stewardess cap! What a shame the Concorde no longer flies....I would have loved to have been able to work on it under BAQANTAS.

OzzieO

Or B&Q!!!!!

ONTPax

Here's an AP blurb about the proposed merger that appeared in the LA TIMES. With the global economy as it is, and the price of fuel like it is, you will probably see more airlines scrambling for merger partners.

~~~~~~~~~~~~~~~~~~~~~~~

British Airways in merger talks with Qantas
Associated Press

December 3, 2008

Reporting from London — British Airways and Australia's Qantas Airways Ltd. said Tuesday that they were holding talks about a potential merger, sparking hopes of consolidation in the hard-hit aviation industry.

Both companies issued statements saying they were exploring a potential merger with each other "via a dual-listed company structure."

Neither British Airways nor Qantas provided further details. In their statements to the London Stock Exchange and the Australian Securities Exchange, the two companies said: "There is no guarantee that any transaction will be forthcoming and a further announcement will be made in due course, if appropriate."

British Airways' chief executive, Willie Walsh, has long advocated industry consolidation, arguing that closer cooperation would help airlines cut costs in the current difficult economic climate.

British Airways, the third-largest airline in Europe, is already pursuing a revenue-sharing deal with AMR Corp.'s American Airlines and Spain's Iberia. It said that its discussions with Iberia on a potential merger were continuing.

British Airways and Qantas are code sharing partners in the Oneworld alliance.

British Airways' confirmation on the talks came a day after the Australian government disclosed that it planned to increase the level of foreign ownership allowed in Qantas but would not permit a takeover.

Analysts have been expecting greater consolidation after the global economic crisis combined with soaring oil prices this year to severely crimp passenger demand.
SOURCE:

British Airways in merger talks with Qantas - Los Angeles Times

~~~~~~~~~~~~~~~~~~~~~~

A few years ago, there was a politically incorrect joke going around that Continental Airlines and Aer Lingus were contemplating a merger. Need I offer any additional hints as to what the name of the merged airline was going to be?

ONTPax

ExSp33db1rd

When Qantas changed their Staff Travel rules some years ago they left their older retirees severely alone, i.e. no access to the new benefits, but they maintained what they had worked for, and were promised, for the rest of their retirement.

BA are about to introduce new Staff Travel rules on 1st April next, but ...... they are about to retrospectively deny Staff Travel totally, to their oldest, once loyal, retirees who helped forge the airline that the present managers are now priviliged to control.

Be very frightened, older Qantas retirees, be very frightened, the Big Bad Wolf might gobble you up, too.

( course - the older BA retirees may again enjoy their travel - if Qantas control BA !!! Wouldn't that be nice. I'll dream on )

galanjal

I've read on here that Qantas cabin crew who work on the A380 are out sourced staff and are on different T+C s than mainline Qantas crew. Interesting. What's that you say? Columbus? hmmm.... blueprint?

packrat

Qantas Mainline Longhaul has QAL,QCCA,AKL Base,LHR Base and BKK Base.
All are on different Ts and Cs.
Two Crew on different ends of the same meal cart can be paid differing wages and receive substantially differing benefits.
There is simmering resentment from those on lower wages.
Does not make for a happy harmonious work environment.
It has lead to inconsitencies in service delivery

Shazz-zaam

Simmering resentment , so true.
When it all falls apart ,they can shift the blame to the onboard managers.
For example, lack of leadership skills, not motivating the crew, not providing a duty of care and harmonious environment to work in.
The w*nkers in the office will just keep dishing out Clause 11's
Equal pay for equal work should be the moral way to go.
Qantas management like to divide and conquer, their management style leaves a lot to be desired.

Domestos

Galangal....
....yes, 80% of the crew who work on the A380 are employees of a company called Qantas Cabin Crew Australia (QCCA). This is a company set up by Qantas Airways Ltd and its one and only purpose is to "provide cabin crew labour to Qantas Airways Ltd". Employees of QCCA are on very different terms and conditions to their counterparts at Qantas Airlines (eg. no bidding for work; no seniority; lower wages; longer hours). This is unlike BA's B-Scalers who even though are on a lower rate of pay, are still on the same T&C of the A-Scalers.

I just read in the Financial Review yesterday that Qantas was the one who had beckoned BA to the table. I didn't know this...but Qantas, being a pokey little international airline, is worth slightly more money than BA ($4.4bn market capitalisation compared to $4.2bn). The newspaper said that analysts would not recommend the merger to shareholders since BA was facing $6.9bn of debt and Qantas only had $4.4bn...that is a whopping $2.5bn more. Other interesting facts include: passengers carried (QF=38.6m; BA=36.0m); revenue (QF=$16.2bn; BA=$20.1bn); employees (QF=33,670; BA=45,140).

Analysts also could not understand why QF would merge with BA since Singapore Airlines would provide more synergies and benefits than BA would. The newspaper also said that the merger would be listed in both London and Sydney; that the chairman would be rotated between BA and QF; and that advisers in HKG are finalising the terms of the merger at the moment.

Not to sound condescending to our BA colleagues....but I would rather see QF merge with SIA since they have more money, more clout and more prestige. Singapore is also closer to Sydney than London is and it provides a gateway to the growth markets of Asia. I think it would be silly to merge with BA given that Singapore has more money to slosh about than BA. Also Singapore has a fleet of A380s already and this would tie in syngergistically with Qantas' fleet of A380s.

I really hope that Qantas isn't merging with BA simply because England is the "Mother Country". Think dollars please QF...not historical ties!!!!!!! I want more money....not more debt!.

Apologies to our BA colleagues.....I'm making a pure financial and commercial judgement here....nothing to do with quality or subjective value. Just looking at it from a purely entrepreneurial aspect and nothing else.

ProM

Not sure about your figures Domestos.

A quick google shows that BA's capitalisation is slightly higher (although exchange rate fluctuations could explain that), its revenue is significantly higher than you quote and its passenger numbers are higher.

BA also seems to be coping with downturn better than Quantas from a quick look. As to your logic, maybe QF and SIA are too similiar and would have too much overlap? I can see benefits from a QF/BA tie up

I am neither employee or shareholder of either, can't see too much impact on me as a passenger either TBH

Domestos

As clever as I am, it is not (comfortably) possible for me to pull figures out of the dark regions of my (lower rear) body. Being a university graduate, I should have referenced my sources using the APA citation style.

So....ProM....in answer to your question, my source is:

Kitney, D., Nicholas, K., Mansell, I., (2008, December 6-7). Three Men And A Merger. Australian Financial Review.

Not to be an intellectual adversary...but ProM...would you like to reveal your "google source" other than Wikipedia? APA or Harvard referencing style is preferred. Thank you.

Once again...no disrespect to our colleagues at British Airways....but being an employee of Qantas Airways, I would rather see my company merge with a cashed up Singapore Airlines and be sloshing around in money.

P.S.......A taste of the 767 Rolls Royce 'ACE' is enough to put me off merging with BA

Domestos

I quote: "Its not the dream deal with Singapore Airlines or Cathay Pacific that would have given Qantas an impregnable position"

Kitney, D., Nicholas, K., Mansell, I., (2008, December 6-7). Three Men And A Merger. Australian Financial Review

So my question is....why bother merging with BA? Why not SQ or CX where we can stand to be a Superairline?

Domestos

I thought I might share with my fellow Biscuit Chuckers that there is a proposal being put forth by A.W. to A.J. for those on the current Divisional Transfer list to be transferred onto the A380 (complete with top up pay) for a period of 2 years. After this period, these transferees will have the choice to stay on the A380 or move onto mainline fleet. This proposal has come about because A.J is now in power and he has changed the cost approval structure for the company....ie. J.B is now no longer the one with the final say.

This proposal to A.J has come about because (1) the company is facing shortages of LH crew taking up the secondment (2) there is a freeze on external recruitment (3) there is an oversupply of EBA 7 crew at Domestic. I repeat...yes...there is an "oversupply" of EBA 7 crew...ie. full timers. Yes, I hear you all moan in a unified chorus..."How can we be oversupplied if I am being drafted on my days off...blah blah blah"...ad infinitum. As far as the company is concerned, yes, there is an oversupply of crew...permanent full time crew. In an effort to get rid of full time Domestic crew (thus paving the way for the New Entity someday), the company will funnel Domestics to LH as an indirect means of expediting redundancies. As we all know, LH is the final death row for full time QAL crew.

The call up will be from the current Divisional Transfer List starting from F/A no. 1 all the way down......(they will stop at however much they need at this stage). Transferees will work under Part II of EBA 8....just like LH do on secondment.

The proposal is of course:

1. pending A.J.'s approval
2. dependant on the recruitment freeze staying in place.

Oh and my source is.......[cue drum roll and dramatic stage lighting]....N.B. who is the base manager for LH Sydney. The information was divulged to the crew when he was paxing on a flight. And before you shoot me down with your flames....no I wasn't on the crew.

Anyway boys and girls....just some gossip for you to think about. Oh and please don't come to me sobbing because you have mortgaged your grandmother and sold your left kidney relying on this information and it hasn't come true. Like I said...it is still in the process of being approved but it may not happen.

mrpaxing

there are the armchair experts ($ 50 from fantastic furniture store, of course).
there are going to be more challenges for Qantas as well as any airline in the coming year. I do agree on one point. There are far too many managers in the cabin crew department. it used to be 1GM & as few Line & other managers.these days there are more layers then a double danish pastry. AJ here is your chance to save millions.

AirborneSoon

Maybe SQ & CX don't want QF...just a thought.

Domestos

I forgot to add...like all good things in life, there is a catch. If after the two year period, we choose not to stay on the A380 and decide to go to mainline, then we forfeit our jobs with QAL and agree to be employed by QCCA. This is obviously a catch designed to get rid of Domestic crews now.

ABP....I am not privy to the arrangement re QCCA. The above proposal relates only to the 20% QAL crew complement onboard the 380. Correct me if I am wrong, but I understand that 20% of the crew must be QAL. As the company is finding it difficult to obtain the 20% current International QAL crew, it appears they will offer it to Domestic QAL crew. I also understand that OBM promotions for the first 4 aircraft are reserved exclusively for QAL crew? I am happy to be corrected if I am wrong about any of these details.

packrat

As has been said...its about cost.
There are 22 crew on an A380.
There is a pool of QCCA crew who were employed specifically for that aircraft.
It you want to transfer on their wages and conditions you would go to the head of the Q.
If not....then you are dreaming

Ka.Boom

No one wants to partner up with Qantas in Asia.Every Asian carrier can see the enormous potential growth in the region.
Qantas suffers from end of line status and a small national market.
It needs to grow its shareholding in Vietnam Air (Pacific Partners) and then the expand the route structure of that entity.
The merger with BA would be a dud.
Merging with Iberian would be a much better arrangement