Branson & Bishop to tie - up airlines
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Latest position from the Bishop in the FT:
BMI keeping to the independent path
By Kevin Done in London
Published: June 8 2003 21:57 | Last Updated: June 8 2003 21:57
Having controlled the fortunes of BMI British Midland for 25 years Sir Michael Bishop is in no hurry to step aside in spite of the rush of recent speculation that he was about to merge BMI with Sir Richard Branson's Virgin Atlantic.
At 61, he says he is the same age as Lord King was when he first became chairman of British Airways.
Last week, Sir Michael wrote to employees of BMI and said: "I have no plans to retire." He said there was no truth that "advanced merger talks" had taken place with Virgin Atlantic and "neither are there any ongoing negotiations."
He told the Financial Times he had no plans to withdraw from his position as executive chairman of BMI and controlling shareholder. He planned to remain at the helm at least for the duration of BMI's present European joint venture agreement with its minority shareholders Lufthansa and SAS Scandinavian Airlines, which runs to 2007.
Financial details on the recent performance and future outlook for BMI and Virgin were exchanged a couple of weeks ago, but only served to emphasise their differing views of the airlines' respective prospects.
There has been no detailed due diligence work, and the investment bank advisers, Dresdner Kleinwort Wasserstein and Gleacher Shacklock for BMI, and Credit Suisse First Boston for Virgin Atlantic have been called off the case.
Whether that is the final word remains to be seen.
The crucial issues still obstructing a deal, remain valuation and, in particular, corporate governance, namely a structure that can satisfy demands for transparency and influence of all five present shareholders.
BMI is owned 50 per cent plus one share by BBW Partnership (Sir Michael's control vehicle), 30 per cent minus one share by Germany's Lufthansa and 20 per cent by SAS Scandinavian Airlines. Virgin Atlantic is owned 51 per cent by Sir Richard and 49 per cent by Singapore Airlines.
Sir Michael says he accepts that a merger could be "perfectly logical."
BMI has the second largest pool of take off and landing slots at highly congested London Heathrow, the world's busiest international airport, with a share of 13 per cent after British Airways' total of about 40 per cent. Virgin holds less than 3 per cent.
The Branson airline, exclusively a long-haul carrier, crucially holds lucrative traffic rights, however, for transatlantic services between Heathrow and the US. Sir Michael's BMI does not.
Sir Michael has campaigned for several years to break into the transatlantic market but hitherto has been blocked by the severely restrictive nature of the bilateral air services treaty between the UK and the US, which only allows two UK airlines, BA and Virgin Atlantic, and two US airlines, on the routes.
Virgin has found its own growth severely restricted by its shortage of Heathrow slots, and it has also suffered from not having access to the feeder traffic of a short-haul network in Europe. Sir Michael has the network.
Whatever the compelling business logic, it remains to be seen, whether the pair, two of Europe's leading aviation entrepreneurs, will return to the negotiating table.
There remain the deep differences on substance to overcome, as well as of style and personality, pitting the innate caution and conservatism of Sir Michael against the flamboyance and showbusiness flair of Sir Richard.
For his part Sir Michael insists he has a stand-alone recovery plan, Project Blue Sky, that can return BMI to sustainable profit by 2005 under its own steam.
BMI is the Star alliance's entry ticket at Heathrow against BA and its Oneworld grouping, and Star, led by Lufthansa, will not give up control of that trump card lightly.
BMI keeping to the independent path
By Kevin Done in London
Published: June 8 2003 21:57 | Last Updated: June 8 2003 21:57
Having controlled the fortunes of BMI British Midland for 25 years Sir Michael Bishop is in no hurry to step aside in spite of the rush of recent speculation that he was about to merge BMI with Sir Richard Branson's Virgin Atlantic.
At 61, he says he is the same age as Lord King was when he first became chairman of British Airways.
Last week, Sir Michael wrote to employees of BMI and said: "I have no plans to retire." He said there was no truth that "advanced merger talks" had taken place with Virgin Atlantic and "neither are there any ongoing negotiations."
He told the Financial Times he had no plans to withdraw from his position as executive chairman of BMI and controlling shareholder. He planned to remain at the helm at least for the duration of BMI's present European joint venture agreement with its minority shareholders Lufthansa and SAS Scandinavian Airlines, which runs to 2007.
Financial details on the recent performance and future outlook for BMI and Virgin were exchanged a couple of weeks ago, but only served to emphasise their differing views of the airlines' respective prospects.
There has been no detailed due diligence work, and the investment bank advisers, Dresdner Kleinwort Wasserstein and Gleacher Shacklock for BMI, and Credit Suisse First Boston for Virgin Atlantic have been called off the case.
Whether that is the final word remains to be seen.
The crucial issues still obstructing a deal, remain valuation and, in particular, corporate governance, namely a structure that can satisfy demands for transparency and influence of all five present shareholders.
BMI is owned 50 per cent plus one share by BBW Partnership (Sir Michael's control vehicle), 30 per cent minus one share by Germany's Lufthansa and 20 per cent by SAS Scandinavian Airlines. Virgin Atlantic is owned 51 per cent by Sir Richard and 49 per cent by Singapore Airlines.
Sir Michael says he accepts that a merger could be "perfectly logical."
BMI has the second largest pool of take off and landing slots at highly congested London Heathrow, the world's busiest international airport, with a share of 13 per cent after British Airways' total of about 40 per cent. Virgin holds less than 3 per cent.
The Branson airline, exclusively a long-haul carrier, crucially holds lucrative traffic rights, however, for transatlantic services between Heathrow and the US. Sir Michael's BMI does not.
Sir Michael has campaigned for several years to break into the transatlantic market but hitherto has been blocked by the severely restrictive nature of the bilateral air services treaty between the UK and the US, which only allows two UK airlines, BA and Virgin Atlantic, and two US airlines, on the routes.
Virgin has found its own growth severely restricted by its shortage of Heathrow slots, and it has also suffered from not having access to the feeder traffic of a short-haul network in Europe. Sir Michael has the network.
Whatever the compelling business logic, it remains to be seen, whether the pair, two of Europe's leading aviation entrepreneurs, will return to the negotiating table.
There remain the deep differences on substance to overcome, as well as of style and personality, pitting the innate caution and conservatism of Sir Michael against the flamboyance and showbusiness flair of Sir Richard.
For his part Sir Michael insists he has a stand-alone recovery plan, Project Blue Sky, that can return BMI to sustainable profit by 2005 under its own steam.
BMI is the Star alliance's entry ticket at Heathrow against BA and its Oneworld grouping, and Star, led by Lufthansa, will not give up control of that trump card lightly.
Paxing All Over The World
Sir Michael thinks that everything will continue until 2007? I wish him good luck. Experience of living in the world tells me that something will get in the way of the smooth path.
What that something might be - I have no means of knowing but I can see that the rate/cycle of change continues to speed up. Ever more unpredictable events occur and BD will not be able to continue on it's current, independent, path. It does not make me happy to say that - just the way that I see the world changing around me, every day.
What that something might be - I have no means of knowing but I can see that the rate/cycle of change continues to speed up. Ever more unpredictable events occur and BD will not be able to continue on it's current, independent, path. It does not make me happy to say that - just the way that I see the world changing around me, every day.
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the logic of it seems to depend on how fast the EU-US open skies progresses. If it takes ages then VS is OK because bmi will get more and more desperate but if it's concluded quickly bmi will have little/no need of VS but can roll out its own services using its existing slots.
Thing is - with UA and AC already operating, and US joining Star, are there routes North America-UK not currently served by a Star airline?
Thing is - with UA and AC already operating, and US joining Star, are there routes North America-UK not currently served by a Star airline?
