Print from Airliners.net discussion forum
http://www.airliners.net/aviation-forums/general_aviation/read.main/4118872/

Topic: AF/KL To Buy OS?
Username: Flynavy
Posted 2008-08-24 00:22:54 and read 6255 times.

As rumored, AF/KL have now gone public with their interest in purchasing OS.

The independent investment bank Lazard Ltd. has been hired by Air France KLM to advise it on a possible acquisition of Austrian Airlines, a Lazard spokesperson told Thomson Financial. Companies interested in purchasing state holding company OIAG's 42.75% stake in OS have until Aug. 24 to announce their intentions.

Source: http://www.atwonline.com/news/other.html?issueDate=8%2F22%2F2008

It will be interesting to see what happens should such a deal move forward. I would venture to say that OS would transfer out of the Star Alliance and into Skyteam.

[Edited 2008-08-24 00:31:38]

Topic: RE: AF/KL To Buy OS?
Username: ZWZWUnited
Posted 2008-08-24 00:41:11 and read 6200 times.

That is ok. I am not sure that they bring a whole lot to Star Alliance. LOVE their uniforms though! Sharp!!!! All I can say is good luck to the employees of OS, and keep up the good work!

~Tim  Smile

Topic: RE: AF/KL To Buy OS?
Username: Beaucaire
Posted 2008-08-24 00:50:20 and read 6183 times.

There is no chance LH will let AUA slip into the hands of AF,TK or Sibir ..
Meyerhuber is pretty tight-lipped about LH expansion-plans-understandably,since take-overs are a kind of intelligent poker game. But to them it makes a lot of sens while AF's focus to Eastern Europe is less pronounced-their key markets are rather Asia,Africa and South-America/Caraibes.
It would be a big,big surprise if AF did out-bid LH on OS...

Topic: RE: AF/KL To Buy OS?
Username: Haggis79
Posted 2008-08-24 02:00:31 and read 6097 times.



Quoting Beaucaire (Reply 2):
It would be a big,big surprise if AF did out-bid LH on OS...

hmm... I'm not so sure that LH could digest OS and AZ at the same time.... plus, do they really need LX and OS?

otoh, for AF some acquisitions or at least new Skyteam members are vital with the forseeable farewell of AZ from Skyteam...

Topic: RE: AF/KL To Buy OS?
Username: Beaucaire
Posted 2008-08-24 02:17:58 and read 6048 times.

Airlines still thinks in "speres of historical influence" ...
To AF,all areas where former colonies existed remain still vital today (North and Western Africa,Indochina,Caraibes,Indian ocean ..) while economic and tourist ties from Germans are rather more geared towards USA,Eastern Europe,China,Turkey,Italy ..) It's not a clean cut situation, but the traffic figures say from Germany to Turkey are quite staggering,while Germany-North Africa is rather insignificant..
France has ties with Lebanon and there are four flights/Day from Paris to Beirut while not much flights to Turkey or Easteren Europe.
I also think that AZ will end up indirectly into the LH network via Air One recommendations,and that AF has to grow externally. But that growth could come from outside Europe ..
I see AF potentially get foot into one of the North African markets ,which are very important for them. Economic ties between Austria and France are rather under-developped and -for instance where we live,we see literally no Austrian tourists at all.(They all end up in Croatia..)

Topic: RE: AF/KL To Buy OS?
Username: Ota1
Posted 2008-08-24 02:47:20 and read 5976 times.

Quoting Beaucaire (Reply 2):
It would be a big,big surprise if AF did out-bid LH on OS...

I think so, too. As OS already is highly integrated in LH - OS is not just a *A member, but is also fully integrated in Miles&More, they share a common IT platform with LH and reservation system, they have a JV on flights between Germany and Austria and have a close cooperation in terms of maintenance and training.
Taking over OS would definitely become a VERY expensive venture for AF/KL as they had to reestablish all of that above as well as paying *A for letting leave (which is supposed to cost some 100 million €). In addition there would still be OS's debts which are about 898 million €. So as you can see OS wouldn't exactly be a bargain for AF/KL. Speaking of which, I think at this point simply try to prevent LH from getting OS at a "bargain price". I can hardly see AF/KL taking over OS.

Quoting Haggis79 (Reply 3):
I'm not so sure that LH could digest OS and AZ at the same time

Well, according to what the press says, there wouldn't be a need to digest AZ as they are supposed to be talking about an alliance, not a takeover or even investment. As LH always has been very careful when considering any major investment I don't see them buying a stake in AZ at this point. What I can see is a close cooperation, maybe AZ joining Miles&More (not necessarily though) and *A. I could also see LH (EN) operating some feeder services for AZ, maybe a JV of some kind, but definitely no investment by LH in short- or even midterm.

[Edited 2008-08-24 02:50:44]

Topic: RE: AF/KL To Buy OS?
Username: Jano
Posted 2008-08-24 06:15:40 and read 5716 times.

me thinking... AF-KL is only interested in OS, so that they could play their poker game, and increase the price for OS (which LH would ultimately to pay) and also to get OK for cheap.

In other words both LH and AF-KL show interested in dancing with OS (increases the OS price), while OK does not have a partner to dance with (decreases the OK price).

Topic: RE: AF/KL To Buy OS?
Username: IrregKing
Posted 2008-08-24 23:27:38 and read 4477 times.



Quoting Ota1 (Reply 5):
fully integrated in Miles&More

so they will offer the clients who want to follow OS that they will transfer they're points
1:1 from Miles&More to FlyingBlue

Quoting Ota1 (Reply 5):
and reservation system

OS uses Amadeus too, and the rights OS have on the Artos platform (cover mask of Amadeus) could serve AF very well as they are working with a much inferior system called Alcyon. It will be an advantage and an investment.

Quoting Ota1 (Reply 5):
they have a JV on flights between Germany and Austria

So do AF & OS on all flights between Austria and France an vice versa.

Topic: RE: AF/KL To Buy OS?
Username: BrightCedars
Posted 2008-08-25 00:23:27 and read 4256 times.

As I said on another forum, I don't think it's a good thing for the consumer to have LH, LX and OS at FRA, MUC, VIE and ZRH in the same hands. I truly hope the competition authorities would not allow such a thing to happen without great concessions from LH and OS such as they drop the plan or such as the playing field remains competitive.

Topic: RE: AF/KL To Buy OS?
Username: LifelinerOne
Posted 2008-08-25 00:57:50 and read 4177 times.



Quoting BrightCedars (Reply 8):
As I said on another forum, I don't think it's a good thing for the consumer to have LH, LX and OS at FRA, MUC, VIE and ZRH in the same hands.

'
I think the EU competition authority won't like this as well and expect them to reject LH buying OS.

Cheers!  wave 

Topic: RE: AF/KL To Buy OS?
Username: HT
Posted 2008-08-25 02:14:20 and read 4016 times.



Quoting Beaucaire (Reply 2):
There is no chance LH will let AUA slip into the hands of AF,TK or Sibir ..

What's the reason why TK should not buy OS ?
After all they (TK) are in Star Alliance too and in case the EU competition authority would oppose a takeover of OS by LH, TK would be the next-best option to keep OS within Star Alliance.
-HT

Topic: RE: AF/KL To Buy OS?
Username: ZRH
Posted 2008-08-25 07:57:20 and read 3681 times.

Quoting IrregKing (Reply 7):
so they will offer the clients who want to follow OS that they will transfer they're points
1:1 from Miles&More to FlyingBlue

This is not as easy as it sounds. There is a passenger data basis with miles&more which OS (or its new owner) not can simply take away without paying a huge amount.

[Edited 2008-08-25 08:04:46]

Topic: RE: AF/KL To Buy OS?
Username: FlySSC
Posted 2008-08-25 08:07:37 and read 3637 times.



Quoting IrregKing (Reply 7):
So do AF & OS on all flights between Austria and France an vice versa.

 checkmark 

All flights CDG-VIE-CDG are codeshared AF/OS.

This takeover of OS by AFKL is now rumored for a while in AF.
It is even rumored that after buying OS, AF would buy OK (CSA) and merge the two to build a strong regional airline in Central Europe and dedicate VIE & PRG as Hub to Central/Eastern Europe and former USSR's republic destinations.

Topic: RE: AF/KL To Buy OS?
Username: SyeaphanR
Posted 2008-08-25 08:18:33 and read 3610 times.

I sincerely hope AF/KL do not get their paws on OS!

I'm a regular flyer to Poland, particularly KRK, and my preferred routing is via VIE...I also use Star Alliance flexibility to weave via MUC, sometimes on the same trip (LHR-VIE-KRK-MUC-LHR). It's been a good set of trips, even when a/c go tech, or other difficulties occur. the co-operation with LO is good, too.

Changing the OS link-up to AF/KL would be dire, IMHO!!! Sorry to be so blunt.

I also hate AF as an insulin-dependent diabetic, as they demand a french-language authority letter, causing difficulties...Highly symptomatic of their attitudes!

Air France? Non, merci! Jamais!  mad 

Topic: RE: AF/KL To Buy OS?
Username: Kiwiandrew
Posted 2008-08-25 08:33:27 and read 3556 times.



Quoting IrregKing (Reply 7):
Quoting Ota1 (Reply 5):
they have a JV on flights between Germany and Austria

So do AF & OS on all flights between Austria and France an vice versa.

there is a considerable difference between a JV and a simple codeshare - I was unaware that the Austria-France arrangement was any more than a simple codeshare perhaps you could share the information you have about it being a joint venture ?

Topic: RE: AF/KL To Buy OS?
Username: PanHAM
Posted 2008-08-25 08:39:08 and read 3552 times.



Quoting HT (Reply 10):

What's the reason why TK should not buy OS ?

The Viennese still have the Turkish siege syndrom  Wink

Quoting LifelinerOne (Reply 9):
I think the EU competition authority won't like this as well and expect them to reject LH buying OS.

Why not? AF is controlling OK, BA does the same with MA, why should LH not buy OS? All three alliances could perfectly compete oin that region. Much better and a clearer choice for the consumar than merging OS/OK with a dual hub strategie, whoich would not work anyhow. OS has a solid customer base in VIE with a lot of Eastern European companies setting up shop there because they have these flight connections. On some destinations a works day can be done without overnight stay. That plus connecting traffic ices the cake.


M&M is indeed a valuable asset which AF would love to get. I am on the OS mailing list although my M&M is with LH but I fequently use OS. If AD would buy them I would definately not switch to Skyteam, no matter how hard they try.

Topic: RE: AF/KL To Buy OS?
Username: Ota1
Posted 2008-08-25 09:15:21 and read 3469 times.



Quoting BrightCedars (Reply 8):
I don't think it's a good thing for the consumer to have LH, LX and OS at FRA, MUC, VIE and ZRH in the same hands

I can't see any good for consumers in AF/KL taking over OS. Maybe you forgot that OK and SU are already SkyTeam members in that area and RO is going to join. In addition TE is supposed to be another future member. So now tell me how consumers would benefit from Sky ruling eastern Europe.

Quoting ZRH" class=quote target=_blank>ZRH (Reply 11):
This is not as easy as it sounds. There is a passenger data basis with miles&more which OS (or its new owner) not can simply take away without paying a huge amount

Exactly! I'd bet LH would be willing to give those customers affected some really nice goodies to keep them in M&M.

Quoting SyeaphanR (Reply 13):
Air France? Non, merci! Jamais!

I hear you!

Quoting Kiwiandrew (Reply 14):
there is a considerable difference between a JV and a simple codeshare

Absolutely! BTW the JV we're talking about gives OS as much revenue as their entire CEE operations! They'd definitely loose a lot of money with out it (LH already stated they'd review the JV in case somebody else took over OS).

Quoting IrregKing (Reply 7):
So do AF & OS on all flights between Austria and France an vice versa

That's a codeshare, not a JV! As economical ties between Germany and Austria are much closer then Austria's tie to France a JV between OS and AF would not be as profitable as the one with LH.

Topic: RE: AF/KL To Buy OS?
Username: JoFMO
Posted 2008-08-25 09:48:26 and read 3401 times.

In terms of comeptition I don't see too much of a hurdle in LH taking over OS, because the JV has already eliminated all competition between them. So no change there.

But even if there is a problem in the internal market, I was surpriced to see some figueres on an Austrian forum:

berlin:
5 x daily AB (smallest fokker 100, biggest a320)
4 x daily LH (b737)
2 x daily OS (dash8-400 or fokker 70)

hamburg:
4 x daily AB (boeing 737 or a320)
3 x daily LH (boeing 737)
2 x daily OS (dash8-400 or fokker 70 or fokker 100)

cologne:
3 x daily 4U (a319 or a320)
3 x daily OS (CRJ or dash8)

dusseldorf:
5 x daily AB (a3120 or b737)
3x daily LH (a737 or a320)
3x daily OS (crj to 320)

FRA-VIE is more of a problem, AB has 2x daily fllights compared to a douzen Star Aliiance flights.
Same applies for VIE-MUC where AB also only has 2 daily flights compared a douzen LH/OS flights.

But I must admit I am very surprized how big the competition for LH and OS already is. I would have never expected it that in some non hub markets LH+OS are already in fact only number 2!


p.s.: the number are taken from poster Peter on Autrianaviation.net. Thanks for that!

Topic: RE: AF/KL To Buy OS?
Username: LJ
Posted 2008-08-25 10:00:26 and read 3372 times.



Quoting JoFMO (Reply 17):
In terms of comeptition I don't see too much of a hurdle in LH taking over OS, because the JV has already eliminated all competition between them. So no change there.

It´s not the OS take over where the EU mayhave a problem with. It´s the fact that IF AZ joins Star, the relative power in the region may be too big. Basically I wouldn´t be suprised if at one point Star must make some concessions in it´s coverage of the region. Unless they´re not interested in the new AZ......

Quoting Jano (Reply 6):
me thinking... AF-KL is only interested in OS, so that they could play their poker game, and increase the price for OS (which LH would ultimately to pay) and also to get OK for cheap.

This is probably correct. It would be similar to their bid of IB. However, they are probably genuine about a possible take over (also similar to IB). But not so much interested as LH.

Topic: RE: AF/KL To Buy OS?
Username: HT
Posted 2008-08-25 11:06:33 and read 3293 times.



Quoting LJ (Reply 18):
It´s the fact that IF AZ joins Star, the relative power in the region may be too big.

I think, "AZ joining *A" is a wide shot.
LH controls EN.
EN and AP are fully integrated into Miles&More.
With hubs at ZRH, VIE and MUC, *A already effectively has the biggest coverage of northern Italy.
-HT

Topic: RE: AF/KL To Buy OS?
Username: Ty134A
Posted 2008-08-25 16:46:30 and read 3100 times.



Quoting HT (Reply 10):
What's the reason why TK should not buy OS ?

That is simple, politics won't let it happen. Since we have lots of immigrants from Turkey, and with lots I mean really really really many, and the average Austrian being very unhappy with this situation, the political risk for this would be to great. Now we are facing elections, and before that I see not even a rumor about TK, and after the elections, this would still be suicide for those parties allowing the privatization and be a massive tho the right, and with right I mean those who rather see Austria out of the EU!

Besides this, Austria is the greatest EU sceptic, and this is also due to a possible EU membership of Turkey, so again another factor.

Quoting PanHAM (Reply 15):
The Viennese still have the Turkish siege syndrom

Trust me, there are districts in Vienna, if you walk through these, history is the least you worry about!!! M

Topic: RE: AF/KL To Buy OS?
Username: HT
Posted 2008-08-25 21:21:22 and read 3028 times.



Quoting Ty134A (Reply 20):
Quoting HT (Reply 10):
What's the reason why TK should not buy OS ?

That is simple, politics won't let it happen.

I admit, I did not think about the political side of this option.
Thanks for updating me.

Are similar concerns present in Austria (in general) against Russian S7 (the former Sibir) who also has shown an interest in OS ?
-HT

Topic: RE: AF/KL To Buy OS?
Username: LifelinerOne
Posted 2008-08-26 03:10:46 and read 2897 times.



Quoting PanHAM (Reply 15):
Why not?

Because almost the whole German-speaking part of Europe will be served by effectively one airline. Not much competition to go to, is there?

Cheers!  wave 

Topic: RE: AF/KL To Buy OS?
Username: Ota1
Posted 2008-08-26 03:37:57 and read 2860 times.



Quoting LifelinerOne (Reply 22):
Because almost the whole German-speaking part of Europe will be served by effectively one airline. Not much competition to go to, is there?

Yeah! Right! There won't be any competition for LH except for AB, HG, QW, 4U, ST, X3, F7, DS, 4T, 3L, 2W....

Where exactly is the competition in the Netherlands and where is it between France and the Netherlands??? Could you enlighten me, please?

Topic: RE: AF/KL To Buy OS?
Username: LifelinerOne
Posted 2008-08-26 04:20:23 and read 2779 times.



Quoting Ota1 (Reply 23):
Where exactly is the competition in the Netherlands and where is it between France and the Netherlands??? Could you enlighten me, please?

There's none, unfortunately. I wish that there was more local competition. The route AMS-CDG for example lacks competition as all flights are done by either KLM or Air France. Not much choice, isn't.

I do know about the airlines you're mentioning, but you'll have to admit that, if LH buys OS, a very large powerblock will be created in that region of Europe. Those smaller airlines are not in the position to stand up effectively against that block and may even loose the battle.

Cheers!  wave 

Topic: RE: AF/KL To Buy OS?
Username: PanHAM
Posted 2008-08-26 04:48:32 and read 2720 times.



Quoting LifelinerOne (Reply 22):



Quoting LifelinerOne (Reply 22):

Because almost the whole German-speaking part of Europe will be served by effectively one airline. Not much competition to go to, is there

We have a European single market, there are no national markets any longer, as you certainly know. Lufthansa 's business comes only about 1/3 from the German market. Swiss is set up as a stand-alone entitsy and offers German passengers better fares than LH does, so dies OS now and surely will continue to do so. LH is - OTH pilfering in their markets, competition even exists within this holding, the German market iutself is hughly compettive, with or without LH purchasing OS..

Doies that apply to AF/KL as well? Don't know, I am not a Sky team customer.

If there is one country in Europe which is overly protective,m it is France, it has bitten away almost each and every competition and the way it works is that companies who dare to enter the protectorate of AF are harassed by the airports, chasing away that business, across the Rhine from SXB to FKB, just to mention one.

The Netherlands are promoting DUS and BRU by imposing silly surcharged for pax departing their home airport. Fine, competition exists in Europe even if there are only 3 majors and a handful of independents left.

The only thing I worry about is Government inteference like in the case with France. But I don't live there, so what the heck.

Topic: RE: AF/KL To Buy OS?
Username: Ota1
Posted 2008-08-26 06:07:50 and read 2717 times.



Quoting LifelinerOne (Reply 24):
Those smaller airlines are not in the position to stand up effectively against that block and may even loose the battle

Well, AB and HG are competing quite effectively with LH and OS.

Quoting PanHAM (Reply 25):

We have a European single market, there are no national markets any longer, as you certainly know. Lufthansa 's business comes only about 1/3 from the German market. Swiss is set up as a stand-alone entitsy and offers German passengers better fares than LH does, so dies OS now and surely will continue to do so. LH is - OTH pilfering in their markets, competition even exists within this holding, the German market iutself is hughly compettive, with or without LH purchasing OS..

Doies that apply to AF/KL as well?

Absolutely correct!

Besides this SkyTeam as I pointed out before would become an absolute Uberpower in CEE with OK, SU, RO, TE and OS catering more or less the same market. Now that's worse for competition in that area than LH acquiring OS I think.

BTW, isn't AF/KL buying MP? So no competition left in the Netherlands as well, as far as MP has been any competition for KL.

Topic: RE: AF/KL To Buy OS?
Username: PanHAM
Posted 2008-08-26 06:21:14 and read 2690 times.

Martinair is listed with KL as owner, so is Transavia. Martinair has always been lined up with KL in one way or the other, even in the days when Martin Schroeder, the founder still existed

Transavia emerges as the LCC operator for AFKL and operates from France by the grace of the parents and to act as predator for other LCCs daring to enter that turf. That's OK, let'ssee how they will do in Germany where competition is a bit tighter than in France

Europe is an open field but some castles are harder to get into than others.

Topic: RE: AF/KL To Buy OS?
Username: LJ
Posted 2008-08-26 14:06:49 and read 2474 times.



Quoting Ota1 (Reply 26):
BTW, isn't AF/KL buying MP? So no competition left in the Netherlands as well, as far as MP has been any competition for KL.

Enough competition left (Arkefly for long haul flights). Furthermore, KL had to make serious concessions to the EU Competition regulator as the purchase was blocked twice....

Quoting PanHAM (Reply 27):
Martinair has always been lined up with KL in one way or the other, even in the days when Martin Schroeder, the founder still existed

Incorrect . Although M. Schroeder didn´t have a hostile view towards KL (unlike his Transavia counterpart at the time) both MP and KL weren´t always cosy. Even when KL purchased 50% of MP a few years ago, MP still wasn´t always KL´s good friend (and some within MP didn´t like the purchase).

Quoting PanHAM (Reply 25):
We have a European single market, there are no national markets any longer, as you certainly know. Lufthansa 's business comes only about 1/3 from the German market. Swiss is set up as a stand-alone entitsy and offers German passengers better fares than LH does, so dies OS now and surely will continue to do so. LH is - OTH pilfering in their markets, competition even exists within this holding, the German market iutself is hughly compettive, with or without LH purchasing OS..

However, the EU will react if the market force is becoming too big. The (the EU) can´t do anything against a purcahse of Swiss, but if LH also intends to buy into AZ it may encounter the EU sooner than they hope. Basically the EU looks at relative power in a cetain market area. If for example entire Mid-Europe (northern Italy, Austria, Southern Gemany) is controlled by one airline group than they´ll act. The only argument LH has is that OK is not under their control, but most certainly the EU will impose restrictions (as they did when AF and KL tied up).

Quoting Ota1 (Reply 23):
Where exactly is the competition in the Netherlands and where is it between France and the Netherlands??? Could you enlighten me, please?

There is. The Thalys is operating between Paris and Amsterdam (the EU doesn´t look at air travel only). Furthermore, AF/KL is required to surrender high quality slots at both AMS and CDG so that a competitor can start flying between those two cities. The problem is that no one is interested as the Thalys makes it not viable for a LCC (easyJet did examine the route but declined). The fact that there is no competitor on other routes is that France - The Netherlands routes aren´s so profitable (if profitable) due to low high yield traffic. The only LCC which could compete (easyJet) decided it can deploy its aircraft better on other routes than AMS-NCE years ago (thus before the takeover). Needless to say AF/KL is required to surrender slots if desired.....however no airline has come to take up the slots.

Topic: RE: AF/KL To Buy OS?
Username: PanHAM
Posted 2008-08-26 23:50:14 and read 2262 times.



Quoting LJ (Reply 28):

However, the EU will react if the market force is becoming too big. The (the EU) can´t do anything against a purcahse of Swiss, but if LH also intends to buy into AZ it may encounter the EU sooner than they hope. Basica

AZ is not the issue here, we talk about OS. LH is not interested in AZ in the "as is" state, they start looking at that option again if Italy manages to beauty the bride, put her up for sale without old debt and a nice dowry. Still them any suitor would have the ugly relatives in the bed, which are the unions Not really tempting. Not very realistic that Italy will manage anythign either.

On te local market between Germany and Austria, competition is there, has been shown up here in this thread.


The messages in this discussion express the views of the author of the message, not necessarily the views of Airliners.net or any entity associated with Airliners.net.

Copyright © Lundgren Aerospace. All rights reserved.
http://www.airliners.net/