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BA: Growth Through Acquisitions  
User currently offlineScotron11 From United Kingdom, joined Feb 2004, 1178 posts, RR: 3
Posted (9 years 1 month 1 week 4 days 20 hours ago) and read 3195 times:

BA is set to embark on an acquisition expansion drive, it has emerged.

BA's chairman Martin Broughton wants new CEO Willie Walsh to prepare the carrier for growth thru mergers and acquisitions. Broughton said there are opportunities BA would like to take "in the fullness of time" and that it would consider them as they arose.(Newswires)

So who's the target? They already have a 9% stake in Iberia. BMI? I don't think the UK authorities would allow it. Alitalia? Maybe...slim chance though. AerLingus? Possible. SAS?

26 replies: All unread, showing first 25:
 
User currently offlinePM From Germany, joined Feb 2005, 6882 posts, RR: 63
Reply 1, posted (9 years 1 month 1 week 4 days 18 hours ago) and read 3146 times:

"Mergers and acquisitions"... I know it's a widely-used catch-all phrase but a "merger" is not an "acquisition". Combining with Iberia or Qantas (a la AF/KLM) would really be a merger. Buying, say, Portugalia would be an acquisition.

Mergers: As above, rumours of BA and Iberia doing an AF/KLM have been around for a while and might make sense. Then we had the recent speculation about BA and Qantas. Either or both shouldn't be ruled out. Alitalia seems unlikely. I can't believe that BA would want to saddle themselves with an airline that is so culturally different.

Acquisititions: Should we assume that they are more or less limited to Europe because of ownership rules, etc.? Aer Lingus might work (not least with Willie Walsh at BA) but I suspect it would be a hard pill for some Irish people to swallow.

My own hunch would be SN Brussels. They have a good and underused airport at Brussels; BA have already tried to buy Sabena (along with KLM a decade ago); SN Brussels is apparently profitable; it has several routes into UK regional airports already; it has a small but complementary African route network for BA to acquire; it's associated with BA's OneWorld partner, AA; it may have a hard time surviving outside one of the big groups.

Beyond that, Malev is looking for a big brother and is on its way into Oneworld.

But whatever happens, I'll be glad if the BA giant is now stirring. It has spent several years cutting costs and planning its survival while LH and AF have, in their different ways, forged ahead. BA probably can't wait forever and may now be healthy enough to exercise some of its own considerable muscle.


User currently offlineJGPH1A From , joined Dec 1969, posts, RR:
Reply 2, posted (9 years 1 month 1 week 4 days 18 hours ago) and read 3101 times:

SN Brussels would be a good bet, small enough not to trigger any serious anti-trust opposition, with a complementary route system and an under-utilised hub in Europe's capital city.

User currently offlineFlycro From United Kingdom, joined Feb 2004, 374 posts, RR: 0
Reply 3, posted (9 years 1 month 1 week 4 days 5 hours ago) and read 2804 times:

SN Brussells is at least profitable, whereas Malevresembles a drain!!

User currently offlineB742 From United Kingdom, joined Mar 2005, 3767 posts, RR: 19
Reply 4, posted (9 years 1 month 1 week 4 days 5 hours ago) and read 2790 times:

Sorry for my little amount of knowledge on this topic...

But what is the advantage of purchasing another airline such as EI, SN, QF..?

If for example QF was taken over by BA, would the QF name and livery stay or will it be all BA?

Rob!  Smile


User currently offlineN77014 From , joined Dec 1969, posts, RR:
Reply 5, posted (9 years 1 month 1 week 4 days 5 hours ago) and read 2783 times:

Quoting PM (Reply 1):
My own hunch would be SN Brussels. They have a good and underused airport at Brussels; BA have already tried to buy Sabena (along with KLM a decade ago); SN Brussels is apparently profitable; it has several routes into UK regional airports already; it has a small but complementary African route network for BA to acquire; it's associated with BA's OneWorld partner, AA; it may have a hard time surviving outside one of the big groups.

My thoughts exactly. Firmly in the heart of the EU and close to LHR for connections, it seems an ideal reliever airport for LHR in this borderless aviation environment.


User currently offlineFlyCaledonian From United Kingdom, joined Dec 2003, 2080 posts, RR: 3
Reply 6, posted (9 years 1 month 1 week 4 days 3 hours ago) and read 2758 times:

Have to agree with PM that SN Brussels would be a good acquisition target for BA, especially being profitable. Advantages too of large BAe 146/Avro RJ fleet which BA CitiExpress also operate, and a combined order for replacement could be feasible.

Don't rule out Aer Lingus - BA would probably love those Heathrow slots, though I'm not saying that's the only reason to acquire EI!

bmi would never get past the regulators, if only for the issue of Heathrow slots which BA would have to dispose of. Plus, can't really see Sir Michael selling out to BA, seeing as he remains BD's majority shareholder (50% plus one share).

As for acquiring Alitalia or Malev I think BA will want to stay clear of loss making carriers after its experiences with Deutsche BA and TAT/Air Liberte.

On a merger front IB would have to be favourite, but maybe AY would be included in there two. Finnair is slowly building HEL as a credible hub for Asia, and coupled with BA's Middle East/African/North Atlantic operations at LHR and IB's Latin American operation at MAD you'd have a powerful three-hub carrier without the complications of AF-KL (Having to split operations between CDG/AMS) and LH where its FRA and MUC hubs dominate CPH (SAS), VIE (OS) and ZRH (LX - though will soon be a Lufthansa hub too).

Until EU-US Open Skies is sorted out I don't think BA will even entertain a merger with a US carrier, and probably the US aviation industry needs to improve financially anyway too. As for Asian carriers, QF is an outside chance, while CX seems to be leaning towards CA and possibly KA (Involving Swire Group and CAAC).

The death today of BA President Emeritus, and former Chairman, Lord King of Wartnaby, has reminded me how he pursued plans for BA to acquire or merge at various points with United, Continental, KLM and Sabena, all ultimately unsuccessful.



Let's Go British Caledonian!
User currently offlinePM From Germany, joined Feb 2005, 6882 posts, RR: 63
Reply 7, posted (9 years 1 month 1 week 3 days 18 hours ago) and read 2605 times:

Quoting FlyCaledonian (Reply 6):
The death today of BA President Emeritus, and former Chairman, Lord King of Wartnaby, has reminded me how he pursued plans for BA to acquire or merge at various points with United, Continental, KLM and Sabena, all ultimately unsuccessful.

Continental? Don't remember that one but BA were in bed with USAir for a while. And Lord King did at least claim BCAL.  Sad

Turkish were trying to cosy up to BA some years ago but I can't see that happening either.

How big would a BA/IB/SN (and AY?) merged airline be? Rather big, I'd have thought! Stranger things have happened...


User currently offlineEgmcman From United Kingdom, joined Jun 2005, 898 posts, RR: 8
Reply 8, posted (9 years 1 month 1 week 3 days 18 hours ago) and read 2560 times:

Quoting JGPH1A (Reply 2):
SN Brussels would be a good bet, small enough not to trigger any serious anti-trust opposition, with a complementary route system and an under-utilised hub in Europe's capital city.

Yes that would be a good fit although the press has thing about a BA Iberia tie up. What is Sir Richard Branson's involvement in Virgin Express as they now have agreements with SN Brussels?


User currently offlineAvek00 From United States of America, joined Oct 2004, 4368 posts, RR: 19
Reply 9, posted (9 years 1 month 1 week 3 days 15 hours ago) and read 2460 times:

A BA merger with most any airline will meet serious opposition from the USA. At a minimum, the acquired carrier would likely lose its rights to the USA once it became a British person.


Live life to the fullest.
User currently offlinePM From Germany, joined Feb 2005, 6882 posts, RR: 63
Reply 10, posted (9 years 1 month 1 week 3 days 14 hours ago) and read 2422 times:

Quoting Avek00 (Reply 9):
A BA merger with most any airline will meet serious opposition from the USA. At a minimum, the acquired carrier would likely lose its rights to the USA once it became a British person.

That doesn't seem to be an insurmountable obstacle. Evidently, KLM and Air France have found a way around it. Anyway, in the case of SN Brussels, I don't believe they fly to the States. Someone please correct me if I'm wrong.


User currently offlineIADLHR From Italy, joined Apr 2005, 735 posts, RR: 0
Reply 11, posted (9 years 1 month 1 week 3 days 12 hours ago) and read 2332 times:

PM
The reason the KL/AF merger did not meeet opposition from the US reulatory authorities is that both France and the Nehterlands had openskies with the US.
Unless and until there is openskies in place at LHR, the US will oppose a BA merger unless it is with an airline in a coiuntry that does not have service to the US as there are clauses in the air treaties that negate the treaty if the airlines is taken over by a foreign airline.


User currently offlineCornish From United Kingdom, joined Feb 2005, 8187 posts, RR: 54
Reply 12, posted (9 years 1 month 1 week 3 days 12 hours ago) and read 2334 times:

Quoting IADLHR (Reply 11):
The reason the KL/AF merger did not meeet opposition from the US reulatory authorities is that both France and the Nehterlands had openskies with the US.



Quoting PM (Reply 10):
Anyway, in the case of SN Brussels, I don't believe they fly to the States. Someone please correct me if I'm wrong.

no they don't in their own right. (I think they codeshare on AA services) - hence a merger/takeover with/by BA wouldn't raise too many issues in the US.



Just when I thought I could see light at the end of the tunnel, it was some B*****d with a torch bringing me more work
User currently offlinePM From Germany, joined Feb 2005, 6882 posts, RR: 63
Reply 13, posted (9 years 1 month 1 week 3 days 11 hours ago) and read 2322 times:

Quoting IADLHR (Reply 11):
PM, The reason the KL/AF merger did not meeet opposition from the US reulatory authorities is that both France and the Nehterlands had openskies with the US.

I wondered if it was something like that. Thanks. So if BA took over, say, Finnair, they couldn't any longer fly from Helsinki to New York? What if Finnair took over BA...?! Smile


User currently offlineIADLHR From Italy, joined Apr 2005, 735 posts, RR: 0
Reply 14, posted (9 years 1 month 1 week 3 days 11 hours ago) and read 2274 times:

PM

If Finnair tried to take over BA there would be an issue with the US as UK does not have an openskies with the US. On the other hand if Finnair took over an airline in a country that had an openskies with the US, there would not be an issue.

This was an issue in the failled merger talks between BA/KL. It will continue to remain a serious obstacle with the US until there is openskies at LHR for US carriers.

Only Ireland, Greece, UK and Spain, in western Europe do not have openskies with the US. Until this matter is resovled at LHR and there is openskies, BAs haands are pretty much tied as to being an active player in the airline merger business.

It is becasue of that reason that I strongly believe that the impasse regarding openskies at LHR will be resloved sooner rather than later. I also think that the time has come when the US is holding the upper hand and complete deck of cards regarding this mattter.


User currently offlineBilly From United Kingdom, joined Jul 2000, 895 posts, RR: 7
Reply 15, posted (9 years 1 month 1 week 3 days 11 hours ago) and read 2245 times:

My guess is that QF and BA each take the 57% of SQ that the Singaporean Government is prepared to sell.

User currently offlineSydscott From Australia, joined Oct 2003, 2965 posts, RR: 20
Reply 16, posted (9 years 1 month 1 week 3 days 1 hour ago) and read 2069 times:

Quoting IADLHR (Reply 14):
I also think that the time has come when the US is holding the upper hand and complete deck of cards regarding this mattter.

Not entirely. The only way BA would be forced to give up any LHR slots is if they wanted to re-hash their alliance with AA. I think the 2 governments should sign an open skies agreement now and that way the US carriers can do like all the other airlines that have Heathrow access do and buy slots to fly in. Give them the as much access as they want and let market forces dictate the price they pay for slots.


User currently offlineScotron11 From United Kingdom, joined Feb 2004, 1178 posts, RR: 3
Reply 17, posted (9 years 1 month 1 week 2 days 21 hours ago) and read 2010 times:

Quoting Sydscott (Reply 16):

Give them the as much access as they want and let market forces dictate the price they pay for slots.

I have to agree with you on that one. It's about time there was some credible movement by both the US & UK governments on this issue. Of course, now the EU has stepped in and declared that any bilateral or openskies agreements are their baliwick.

If US ownership rules were relaxed, current cap at 25%, you would see a lot more closer tie-ups between US/EU carriers. And what would be wrong with that?


User currently offlineAAmd11 From UK - Wales, joined Nov 2001, 1059 posts, RR: 1
Reply 18, posted (9 years 1 month 1 week 2 days 20 hours ago) and read 2018 times:

As stated previously in this thread, SN must surely be the favorites for the first target - small, profitable, the BRU hub and so on...
However, are SN not currently combining with Vex? Are they not trying to get on the same Op certificate at this time? If so, my question is - would it be best for BA to move soon, and scrap plans to get Vex and SN on the same operating certificate, instead bringing them onto the BA certificate at the same time? Or would it make more sense to wait until SN and Vex are combined before making the move?

Personally I'd like to see them combine with AY, SN or EI primarily, although IB would make a lot of sense.


User currently offlineSNBru From Belgium, joined Feb 2005, 168 posts, RR: 0
Reply 19, posted (9 years 1 month 1 week 2 days 17 hours ago) and read 1933 times:

Quoting AAmd11 (Reply 18):
would it be best for BA to move soon, and scrap plans to get Vex and SN on the same operating certificate, instead bringing them onto the BA certificate at the same time?

SN and VirginExpress are already merged. One holding has both airlines, though they 'll coexist with different brands for at least a few years. Sn for business traffic and TV for leisure traffic.

Sir Brandson sold his shares in TV (I don't know if he still owns a bit?). So anyway VirginExpress should get rid of its Virgin brand anyway. So maybe a BA Express?  Smile


User currently offlineScotron11 From United Kingdom, joined Feb 2004, 1178 posts, RR: 3
Reply 20, posted (9 years 1 month 1 week 2 days 15 hours ago) and read 1835 times:

The Australian government is reviewing the limits on ownership of QF as well as making a decision on whether to allow SQ access to the OZ-US market.

They are considering scrapping the foreign ownership rules, currently 49%, although no airline group can own more than 35%. If they were to do so, and QF's Dixon has indicated he would like it, maybe a merger with SQ is possible. But then again, as this post is about BA's plans, BA may well decide that is an opportunity it can't pass up.


User currently offlineVs25 From United Kingdom, joined Jun 2004, 66 posts, RR: 0
Reply 21, posted (9 years 1 month 1 week 2 days 9 hours ago) and read 1709 times:

I agree with scotron11 and sydscott, let's (ie the UK) just sign an open skies with the US and be done with it. Or let the EU sign an EU wide one. Although I would like the British carriers to have more access to the US market it doesn't matter that much. The US carriers are having enough issues making money there.

Leave it to market forces. If any of the other US carriers want access to LHR, then let them have it... but they will have to fight (and pay) for the slots like everyone else.

As someone who flies LHR-US a lot and I am all for more competition on those routes. BA/VS/UA/AA have had their little profit earning cartel long enough. Its time we put the consumer first and not the needs of the airlines.


User currently offlineEIRules From Ireland, joined Aug 2007, 765 posts, RR: 10
Reply 22, posted (9 years 1 month 1 week 2 days 6 hours ago) and read 1653 times:

Yeah I could see EI being bought, but remember there is only 66% for sale! Perhaps they would route some of their transatlantics through DUB, especially from UK provincial routes like Liverpool and Bristol (already flown by EI!!)


Next Flights: EI DUB-LHR A320, BA LHR-SFO B744, UA SFO-LAS A320, BA LAS-LHR B744, EI LHR-DUB A320
User currently offlineAirFrnt From United States of America, joined Jul 2004, 2826 posts, RR: 42
Reply 23, posted (9 years 1 month 1 week 2 days 6 hours ago) and read 1605 times:

My guess is that BA is going to try another pass at a American company. With the sad shape of the majors, they known that the administration is much more likely to waive the 50% rule given the current state of the industry.

User currently offlineBlueShamu330s From UK - England, joined Sep 2001, 2894 posts, RR: 25
Reply 24, posted (9 years 1 month 1 week 2 days 6 hours ago) and read 1628 times:

My take on it (after a slurrp or three of Veneto Pinot Grigio) is that BA and wee Willy are looking further afield, namely to the east.

BA gets back into Qantas
Qantas and Cathay do a bit of an equity swap
BA buy into Cathay
Cathay buy into Air China
Air China joins One World......... Asia and Oceania covered.   

BA and AA tie up the Atlantic...one day   

BA and IB become closer through equity swaps or buy-out and develop further the Latin America network in partnership with LAN.   

Agree with FlyCaledonian - I think Finnair could be an outside bet, ripe for a buy-out or merger. They have a quality image and a loyal customer base and with the other members of OneWorld, pretty much the whole of Europe is covered.   

I really can't see the attraction of Aer Lingus as far as this thread goes.... they strike me as not too distant from where bmi find themselves....no frills / trying to be a low cost carrier on short haul married to a fine, but limited in network, long haul product. They need to get their identity crisis sorted out before anyone can think of BA getting closer. BA have long been striving for a seemless level of service between the partners of OneWorld, and Aer Lingus aren't delivering on that IMO.

I also think SN Brussels has missed the boat as far as a merger or acquisition is concerned. Ten years ago, Sabena had a network which would have benefitted BA; Belgian traffic would route thru LHR for Asia and some US destinations, whilst UK passengers bound for Africa would route through BRU. Now however, BA conceivably take in Africa (or at least the parts of Africa they wish to serve) for the OneWorld network between themselves and BMed.

The other dark possibility would be the dirty tactic of a takeover, not to increase revenue, but to stifle competition on some of BA's blue riband routes, namely to Asia. I could see someone as aggressive as Willy going for an arabian carrier with expansion plans simply to stem the trickle away from BA's own longhaul product....If you can't beat 'em, buy 'em or kill 'em.

  Oooops, dirty tricks again, and BA would never stoop so low...would they?   

Regards

Shamu

[Edited 2005-07-14 21:48:09]

[Edited 2005-07-14 21:55:56] So blame the alcohol, not the alcoholic !!  razz 

[Edited 2005-07-14 21:58:00]


So I drive a 4x4. So what?! Tax the a$$ off me for it...oh, you already have... :-(
25 Ken777 : While BA may be looking I think they will want to maintain their efforts to reduce debts. That leads to a minimum cash outlay (stock swaps) with airli
26 IADLHR : AirFmt Do you know if the administration can waive the law limiting foreignownership in US carriers to 25% or does Congress have to pass a law waiving
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