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BA/IB - A Marriage Made In Hell.  
User currently offlineTC957 From UK - England, joined May 2012, 892 posts, RR: 0
Posted (1 year 7 months 4 days 15 hours ago) and read 20503 times:

It's reported in the travel trade publications that the IAG group are in the red purely because of IB's losses, with fuel prices being blamed. I'm wondering what possesed Willie Walsh that combining BA and IB was such a great idea.

119 replies: All unread, showing first 25:
 
User currently offlineLAXdude1023 From India, joined Sep 2006, 7640 posts, RR: 25
Reply 1, posted (1 year 7 months 4 days 15 hours ago) and read 20568 times:

Sounds similar to KL and AF. Its like the beautiful women (BA and KL) that married the fat ugly slobs (IB and AF).


Stewed...Lewd...Crude...Irreverent...Belligerent
User currently offlineRussianJet From Belgium, joined Jul 2007, 7704 posts, RR: 21
Reply 2, posted (1 year 7 months 4 days 15 hours ago) and read 20380 times:
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Quoting LAXdude1023 (Reply 1):
Sounds similar to KL and AF. Its like the beautiful women (BA and KL) that married the fat ugly slobs (IB and AF).

It is similar. Somehow, though, I feel more sorry for KL than BA. Not sure how accurate my impression is, and it's only an impression - I'm no expert, but it seems that KL is probably at more risk than BA in terms of maintaining their identity and product.

I have never understood even slightly why on earth they thought it was a good idea to join with IB. My immediate reaction when I heard it was happening was to question why the hell they did it, because there was little obvious reason.

Anyone care to try and explain what they were playing at when they made that decision?



✈ Every strike of the hammer is a blow against the enemy. ✈
User currently offlineLHRFlyer From United Kingdom, joined Apr 2010, 816 posts, RR: 1
Reply 3, posted (1 year 7 months 4 days 15 hours ago) and read 20322 times:

Quoting RussianJet (Reply 2):
Anyone care to try and explain what they were playing at when they made that decision?

If you go back three years ago, BA had no scope for growth at LHR and had to look elsewhere and Iberia had a complementary route network. At the time, it was not expected that the Eurozone crisis would be so bad and at least Spain seems to have got through the worst of it with better than expected debt/GDP figures recently.

The fact that the share price actually went up today says investors have full confidence IAG can turn things around.

The financial result is bad but I think there's an element of if the results are going to be bad, then it's best to get all of the bad news out of the way for a positive turnaround next year.


User currently offlineshuttle9juliet From UK - Scotland, joined Jul 2010, 192 posts, RR: 0
Reply 4, posted (1 year 7 months 4 days 14 hours ago) and read 20136 times:

Quoting RussianJet (Reply 2):

Basically I think BA were very late in getting married , should have really hitched up with KLM earlier on, but as one member on here commented, they were left with the ugly girl at the school prom.
But all was not lost as the ugly girl came with benefits, her folks owned a lovely new home in Madrid, and she had relatives in South America..


User currently offlineUALWN From Andorra, joined Jun 2009, 2816 posts, RR: 2
Reply 5, posted (1 year 7 months 4 days 14 hours ago) and read 20063 times:

Quoting shuttle9juliet (Reply 4):
Basically I think BA were very late in getting married , should have really hitched up with KLM earlier on

Or LX.



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User currently offlineIrishAyes From United States of America, joined Jan 2008, 2193 posts, RR: 15
Reply 6, posted (1 year 7 months 4 days 14 hours ago) and read 19932 times:

Quoting RussianJet (Reply 2):
It is similar. Somehow, though, I feel more sorry for KL than BA. Not sure how accurate my impression is, and it's only an impression - I'm no expert, but it seems that KL is probably at more risk than BA in terms of maintaining their identity and product.

It sort of depends how you look at it and how you measure problem areas.

Product-wise, AF is more tightly integrated with KL's brand reputation than IB is with BA. Truthfully, I would avoid IB at all costs - it seems like an all around crap carrier with outdated planes and poor service. Whereas AF, despite its financial shortcomings, still is a great airline to fly (based on general experiences) and still at least flies newer aircraft with upgraded interiors.

Airport-wise, MAD is a vastly superior airport to transfer through (moreso than LHR). In contrast, CDG is a nightmare (compared to AMS). So there are some flip-flops there.

However, I think it all really boils down to macro factors, which all European network airlines are suffering from. The Spanish and Eurozone economic crisis have impacted all European carriers. The degree of impact, however, boils down to a country level, like unemployment rate (25% in Spain and rising), labor law headaches, and unhappy/unproductive workforces.

LCC competition is also particularly draining force to reckon with given how lean carriers like Ryanair, Norwegian and EasyJet are. Before these carriers really beefed up, and back when gas was cheaper, network carriers could subsidize profit-thin, higher-cost short-haul markets with feed from their long-haul routes. That strategy is no longer viable now, and airlines like AF and IB have had to initiate aggressive cost-cutting initiatives to turn-around their short-haul mainline ops within Europe.

Quoting RussianJet (Reply 2):
I have never understood even slightly why on earth they thought it was a good idea to join with IB. My immediate reaction when I heard it was happening was to question why the hell they did it, because there was little obvious reason.

I wouldn't say there was little obvious reason. It was an ugly acquisition, but nevertheless one that came armed with a few key assets:

For starters, Madrid is the third largest O&D destination in Europe, after LHR and CDG. That's pretty big. BCN is the fourth largest and, while not an IB hub, the presence of Vueling (a huge success story) served as a contributing factor. IAG is eyeing that prize big time moving forward, and the role that it could play for IAG (if full ownership becomes reality) cannot be underplayed.

Secondly, Iberia is the leading carrier between Europe and the South Atlantic. Allegedly, only 8 of IB's 24 long-haul routes are profitable. Although I'm not exactly sure *which* ones those are, I would not be surprised if the majority of those hail from Latin America.

Honestly, it's going to be a long and painful road to recovery for both AF-KLM and IAG. I do believe that the changes made to Iberia will be the most brutal.



next flights: jfk-icn, icn-hkg-bkk-cdg, cdg-phl-msp
User currently offlinepanamair From United States of America, joined Oct 2001, 4913 posts, RR: 25
Reply 7, posted (1 year 7 months 4 days 14 hours ago) and read 19910 times:
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Quoting IrishAyes (Reply 6):
I would avoid IB at all costs - it seems like an all around crap carrier with outdated planes and poor service

IB's long-haul Business product is not bad - they already have flat-beds in J, for example.


User currently offlinePDPsol From United States of America, joined Feb 2004, 1116 posts, RR: 5
Reply 8, posted (1 year 7 months 4 days 13 hours ago) and read 19686 times:

Quoting IrishAyes (Reply 6):
Secondly, Iberia is the leading carrier between Europe and the South Atlantic. Allegedly, only 8 of IB's 24 long-haul routes are profitable. Although I'm not exactly sure *which* ones those are, I would not be surprised if the majority of those hail from Latin America.
Quoting shuttle9juliet (Reply 4):
But all was not lost as the ugly girl came with benefits, her folks owned a lovely new home in Madrid, and she had relatives in South America..

This is what BA was focused on and it remains a key element to the IAG strategy. No one can deny traffic growth rates in Latin America are strong, in comparison to North America and western Europe.

The IB acquisition had less to do with Spain and more to do with Latin America and the key markets in the region, especially MEX, GRU, EZE, BOG, GIG, LIM, SCL.

It just so happened IB already had a developed route network between these markets in Latin America and MAD. Other European carriers also have decades of experience serving Latin America, but none had a network as extensive to Latin America. One can argue endlessly why IB's network was more developed than, say, LH or, say, AF, or, say, KL, etc...

However, today in 2013, not only is Spain and all of western Europe in the middle of a cataclysmic recession, carriers in Latin America are in the strongest position they have ever found themselves in.

Four carriers in Latin America, TAM, LA, AV and AM, can compete with European carriers. The parent companies of these carriers are publicly traded and trade at high valuation multiples compared to peers in North America and western Europe. LATAM Group trades at 19x P/E 2013, compared to 5.5x for UA and 5x for DL. CM trades at 10x.

In addition, these carriers in Latin America have a very rewarding regional network which is highly profitable compared to their trans-Atlantic routes to Europe. The European carriers do not have this.

If IAG plays its cards right and can restructure IB and continue its leadership position in the Latin America/Europe market, the shareholders of IAG will benefit quite well, thank you.


User currently offlineSASMD82 From Netherlands, joined Mar 2007, 774 posts, RR: 0
Reply 9, posted (1 year 7 months 4 days 13 hours ago) and read 19617 times:
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Quoting LAXdude1023 (Reply 1):

Sounds similar to KL and AF. Its like the beautiful women (BA and KL) that married the fat ugly slobs (IB and AF).

The problem is that BA, KL and LH (and actually LX as well) serve the same markets (in general). That's why KL was never a serious option for LH and that's why BA and KL failed twice to agree upon a partnership. Both KL and BA are doomed with the large airlines from southern Europe -> AZ, IB and AF. From which I think AF has the least worst performance.

Without any doubt we can't prevent take overs (aka merger) such as the ones in the US in the last decades. They have to occur in Europe too. Simply an economy of scale to protect against the power of FR and U2 who have gained a huge market share in southern Europe. I think there will be no space left for an individual operating carrier of the size LX, IB, KL, TP, AZ, OA etc.

Only four or five big airlines will exist in Europe in 2020. No room for nationality or whatsoever. We are talking about loads of Euros and not about the national flag on a tale.


User currently offlineMaersk737 From Denmark, joined Feb 2004, 706 posts, RR: 1
Reply 10, posted (1 year 7 months 4 days 13 hours ago) and read 19521 times:

Quoting SASMD82 (Reply 9):
The problem is that BA, KL and LH (and actually LX as well) serve the same markets (in general). That's why KL was never a serious option for LH and that's why BA and KL failed twice to agree upon a partnership. Both KL and BA are doomed with the large airlines from southern Europe -> AZ, IB and AF. From which I think AF has the least worst performance.

Without any doubt we can't prevent take overs (aka merger) such as the ones in the US in the last decades. They have to occur in Europe too. Simply an economy of scale to protect against the power of FR and U2 who have gained a huge market share in southern Europe. I think there will be no space left for an individual operating carrier of the size LX, IB, KL, TP, AZ, OA etc.

  

I have to agree.

Cheers

Peter



I'm not proud to be a Viking, just thankfull
User currently offlineairbazar From United States of America, joined Sep 2003, 8410 posts, RR: 10
Reply 11, posted (1 year 7 months 4 days 13 hours ago) and read 19488 times:

Quoting LHRFlyer (Reply 3):
If you go back three years ago, BA had no scope for growth at LHR and had to look elsewhere and Iberia had a complementary route network. At the time, it was not expected that the Eurozone crisis would be so bad and at least Spain seems to have got through the worst of it with better than expected debt/GDP figures recently.

In addition, IB's problems are cost related, not market related. Their coverage of Latin America, a fast growing market, and brand awareness in that market is second to none. Their MAD hub is vastly superior to LHR and is very well positioned as a TATL and intercontinental hub. If/when IAG can get IB's costs to come down, this company will be very strong. The business case to merge BA and IB is very strong, IF Iberia can get its costs under control.

Quoting IrishAyes (Reply 6):
However, I think it all really boils down to macro factors, which all European network airlines are suffering from. The Spanish and Eurozone economic crisis have impacted all European carriers.

Well, not all. Just like BA and KL, other better managed airlines have reacted better to the European crisis. LH, TP, LX are just some European airlines that not only increased their profits from 2011 but they also grew their business.

Quoting PDPsol (Reply 8):
The IB acquisition had less to do with Spain and more to do with Latin America and the key markets in the region, especially MEX, GRU, EZE, BOG, GIG, LIM, SCL.

  


User currently offlinepanamair From United States of America, joined Oct 2001, 4913 posts, RR: 25
Reply 12, posted (1 year 7 months 4 days 13 hours ago) and read 19439 times:
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Quoting airbazar (Reply 11):
Their MAD hub is vastly superior to LHR and is very well positioned as a TATL and intercontinental hub.

Geographically speaking, MAD is only well-positioned for Europe-Latin America flows; LHR is a superior hub for North America-Europe traffic flows...


User currently offlineIrishAyes From United States of America, joined Jan 2008, 2193 posts, RR: 15
Reply 13, posted (1 year 7 months 4 days 13 hours ago) and read 19392 times:

Quoting SASMD82 (Reply 9):
Without any doubt we can't prevent take overs (aka merger) such as the ones in the US in the last decades. They have to occur in Europe too. Simply an economy of scale to protect against the power of FR and U2 who have gained a huge market share in southern Europe. I think there will be no space left for an individual operating carrier of the size LX, IB, KL, TP, AZ, OA etc.

Only four or five big airlines will exist in Europe in 2020. No room for nationality or whatsoever. We are talking about loads of Euros and not about the national flag on a tale.

Honestly, I really have zero idea what the future holds for airlines like SK, EI, LO, AZ and TP. AY may survive on its pan-Asia strategy, also having turned around their short-haul ops, but I wonder if QR joining OW may cause some indirect damage to that plan.

The Gulf Carriers will inevitably play a role in shaping the future for the Big Three. I envision that LH Group and Turkish will grow closer. A lot of existing connections will become unraveled and simultaneously, new relationships and tie-ups will become tangled. It will be interesting to watch.



next flights: jfk-icn, icn-hkg-bkk-cdg, cdg-phl-msp
User currently offlinePDPsol From United States of America, joined Feb 2004, 1116 posts, RR: 5
Reply 14, posted (1 year 7 months 4 days 12 hours ago) and read 19317 times:

Quoting airbazar (Reply 11):
In addition, IB's problems are cost related, not market related. Their coverage of Latin America, a fast growing market, and brand awareness in that market is second to none. Their MAD hub is vastly superior to LHR and is very well positioned as a TATL and intercontinental hub. If/when IAG can get IB's costs to come down, this company will be very strong. The business case to merge BA and IB is very strong, IF Iberia can get its costs under control.

Exactly, exactly, exactly... The strategic opportunity in Latin America for IAG and its carriers is very attractive:

The entire population of western Europe totals 415 million, Latin America is 575 million. The EU GDP is roughly double that of Latin America, so plenty of room for growth. Airbus expects 6% annual passenger traffic in the region over the next 20 years, topping even Asia Pacific.

Again, if IAG plays its cards right with IB, its shareholders will be rather pleased, indeed...

Meanwhile, Europe will continue to experience consolidation in its commercial aviation sector.

European carriers will also realize total integration of their operations, just like merged carriers do here in the United States. All this bluster about brands, 'identity', culture, and rigid labor agreements will disappear...


User currently offlineOA260 From Ireland, joined Nov 2006, 27027 posts, RR: 58
Reply 15, posted (1 year 7 months 4 days 12 hours ago) and read 19230 times:

Quoting RussianJet (Reply 2):
It is similar. Somehow, though, I feel more sorry for KL than BA. Not sure how accurate my impression is, and it's only an impression - I'm no expert, but it seems that KL is probably at more risk than BA in terms of maintaining their identity and product.

Spot on with that analysis. Very sad state of affairs indeed.


User currently offlineraffik From United Kingdom, joined Feb 2006, 1716 posts, RR: 4
Reply 16, posted (1 year 7 months 4 days 12 hours ago) and read 19038 times:

Quoting panamair (Reply 7):
IB's long-haul Business product is not bad - they already have flat-beds in J, for example.

Coupled with terrible terrible service.



Happy -go- lucky kinda guy!
User currently offlineRussianJet From Belgium, joined Jul 2007, 7704 posts, RR: 21
Reply 17, posted (1 year 7 months 4 days 11 hours ago) and read 18942 times:
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Quoting OA260 (Reply 15):
Very sad state of affairs indeed.

Seems to be, for sure. Flew AF one way and KL the other to South Africa in December. They were poles apart in terms of experience. I'm guessing the great KL product will be dragged down badly in the future.



✈ Every strike of the hammer is a blow against the enemy. ✈
User currently offlinetheobcman From UK - England, joined Nov 2010, 141 posts, RR: 0
Reply 18, posted (1 year 7 months 4 days 11 hours ago) and read 18546 times:

Quoting shuttle9juliet (Reply 4):

Basically I think BA were very late in getting married , should have really hitched up with KLM earlier on, but as one member on here commented, they were left with the ugly girl at the school prom.
But all was not lost as the ugly girl came with benefits, her folks owned a lovely new home in Madrid, and she had relatives in South America..


This is absolutely correct & actually really funny ! Made me laugh anyway - cheers


User currently offlineDTW2HYD From United States of America, joined Jan 2013, 1989 posts, RR: 0
Reply 19, posted (1 year 7 months 4 days 10 hours ago) and read 17913 times:

All legacy European Airlines should merge with LH, leaving only LH and Ryanair.

User currently offlineUALWN From Andorra, joined Jun 2009, 2816 posts, RR: 2
Reply 20, posted (1 year 7 months 4 days 10 hours ago) and read 17916 times:

Quoting RussianJet (Reply 17):
I'm guessing the great KL product will be dragged down badly in the future.

Why? AF and KL merged already 9 years ago. If it hasn't happened by now...



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User currently offlineawthompson From United Kingdom, joined May 2005, 475 posts, RR: 0
Reply 21, posted (1 year 7 months 4 days 10 hours ago) and read 17801 times:

Quoting LAXdude1023 (Reply 1):
Sounds similar to KL and AF. Its like the beautiful women (BA and KL) that married the fat ugly slobs (IB and AF).

Except 'fat' is hardly the word, 'skinny' is perhaps more accurate. Maybe she was fat when they got hitched but she went on a forced diet and is now anorexic  

Apart from BA, I am quite worried about the UK financially as a whole. Government and big companies have made very wrong/damaging moves/mistakes in recent years (ie. selling off Gold reserves/Banks/BP gulf explosion etc etc).

I have spent the earlier part of the evening researching how to open accounts in foreign currencies in an attempt to get what little money I have out of Sterling as it is plummeting against most other currencies. Many experts believe things will get worse and I would like to be able to continue travelling in the future and not be 'trapped' here with a next to useless currency. Maybe watching tonight's Keiser report has been too depressing for me!

Apologies for getting off the topic.


User currently offlineTheAviator380 From UK - England, joined Feb 2013, 401 posts, RR: 0
Reply 22, posted (1 year 7 months 4 days 10 hours ago) and read 17764 times:

I recently flown on BA (DEL-LHR) 777-200. Very average product to me, honestly. I wasn't happy at all.

User currently offlineIBERIA747 From Spain, joined Aug 2003, 1831 posts, RR: 58
Reply 23, posted (1 year 7 months 4 days 10 hours ago) and read 17522 times:

Quoting TheAviator380 (Reply 22):
I recently flown on BA (DEL-LHR) 777-200. Very average product to me, honestly.

That has been my experience with BA as well. Never understood all the hype about them.

On the other hand, I've flown about 50 times across the Atlantic on IB (Business and Economy, and quite a few short haul flights too) and my overall experience has always been satisfactory.



¡¡VIVA ESPAÑA!!
User currently offlineTheAviator380 From UK - England, joined Feb 2013, 401 posts, RR: 0
Reply 24, posted (1 year 7 months 4 days 9 hours ago) and read 17366 times:

Iberia747

Yup,I don't understand all hype about them. I wrote an email to customer services regarding my experience but reply wasn't too impressive either.


User currently offlinelychemsa From United States of America, joined Oct 2009, 1204 posts, RR: 3
Reply 25, posted (1 year 7 months 4 days 8 hours ago) and read 17244 times:

IBERIA long haul and short haul in the air service was good from Geneva to New York.

The only problem is that they cancelled my Madrid to New York flight. I had to pay for my night in Madrid. Same happened to a friend.

They are unreliable.


User currently offlineecflyer From United States of America, joined May 2012, 30 posts, RR: 0
Reply 26, posted (1 year 7 months 4 days 7 hours ago) and read 16755 times:

I spent a week in Barcelona in 2008 or 2009 and I honestly could not understand where the prosperity was coming from. Much of it, it turned out, was debt. At the time the bars were all full and the luxury retailers were chock full of shoppers...and the shoppers were Catalans, not Asians. Much different story in 2013.

I suppose this is the source of BA's whiplash. The weaknesses in Spain and Italy were poorly understood at the beginning of the Euro crisis, at least when compared to Greece, Ireland, and Portugal.

Being a bit Machiavellian, I have always preferred M&A that takes out a direct competitor vs. that which is "complimentary." (From the perspective of the acquirer that is, not the traveling public). Otherwise, internal growth seems to work best. If you are stalled out on internal growth, I am not sure buying some questionable compliment is the best way forward. It seems to work much less the half of the time.

I have only two IB experiences I can recall. A marvelous trip in 2000: JFK to MAD on a 742, then onto SVQ on an IB 722. The 727 flew so silkily even then that it was a zen experience. More recently was the trip from LHR to BCN, booked purely through BA. Only when I got to check in did I realize IB was the operator and would not honor BA's baggage policy--pure corporate stupidity. Several of us were at check in, ramming one bag into a second and holding BA tickets showing two complimentary bags allowed.


User currently offlineVV701 From United Kingdom, joined Aug 2005, 7566 posts, RR: 17
Reply 27, posted (1 year 7 months 4 days 6 hours ago) and read 16516 times:

Quoting IrishAyes (Reply 6):
Airport-wise, MAD is a vastly superior airport to transfer through (moreso than LHR). In contrast, CDG is a nightmare (compared to AMS). So there are some flip-flops there.

I do not disagree. But if you are flying in and out of LHR T5 then the experience can be as good as anywere else in the world.

My own view is that the BA / IB merger may never have happened IF - repeat, IF - BA had known that by April 2012 they would have added all BD's LHR slots to their portfolio. However being in partnership with IB and, through DFW and MIA, AA does mean that there is less urgency to focus on expanding operations to Latin America. So BA can focus their expansion more towards Asia (were IB is hardly present and BA not very strong) and, to a lesser extent, Africa. But the likely 787 delays will not help. However BA have managed to secure the delivery in 2014 of two more 77Ws on a ten year lease.


User currently offlineCuriousFlyer From United States of America, joined Oct 2006, 694 posts, RR: 0
Reply 28, posted (1 year 7 months 4 days 4 hours ago) and read 15946 times:

AF is going through rough years but it also has had it good ones. KL voluntarily joined AF after giving it a very long thought, and before that they had given an even longer thought at joining BA, and they chose.

KL needed AF to get better access to a large market, one can think that they are much better off with AF than without, having now critical size not only for passenger access but also for aircraft and engine purchases and many other synergies. On top of it the AF management was bright enough to leave a lot of autonomy to KL, thus sparing the pride of its employees and more generally the Dutch.

People can claim all they want that KL married an ugly girl, in my view it was and still is a very beneficial move for both.

As for BA, I have read and heard pretty nasty things about their purchase of IB, mostly they are trying to move the South America traffic towards the UK instead of letting it go through MAD, which both culturally and practically makes little sense. Instead of helping IB develop its brand and hub, they are sucking the blood out of it.

An example is the shuttle service that exists between AMS and CDG: hourly flights. Is LHR MAD anywhere near this?

One last thing: the CDG hub has vastly improved lastly, particularly with AF having most of its flights concentrated between two very well interconnected terminals, 2E and 2F. It certainly meets or beats LHR and is not that bad compared to AMS, where the walks can be pretty long too.


User currently offlineTN486 From Australia, joined Jul 2008, 924 posts, RR: 2
Reply 29, posted (1 year 7 months 4 days ago) and read 14460 times:

Seems QF (Alan Joyce) made the right decision some years ago in regards to "merging".


remember the t shirt "I own an airline"on the front - "qantas" on the back
User currently offlineSpeedbird2155 From United Kingdom, joined Feb 2005, 878 posts, RR: 5
Reply 30, posted (1 year 7 months 4 days ago) and read 14296 times:

Quoting CuriousFlyer (Reply 28):
As for BA, I have read and heard pretty nasty things about their purchase of IB, mostly they are trying to move the South America traffic towards the UK instead of letting it go through MAD, which both culturally and practically makes little sense. Instead of helping IB develop its brand and hub, they are sucking the blood out of it.

This is why you should never believe all of what you read or hear. MAD and IB are the IAG keys to South America. By pushing more traffic through MAD, IAG/BA can focus on expanding to Asia and other areas of the world when slots at LHR become available. Also, as you may have noticed, BA and IB are now jointly located in T5 at LHR, with IB operating most of the flights to MAD. So how is this "sucking the blood" out of IB?

BA and IB have their own management, who have to decide what is best for each carrier. Yes, ultimately both have to operate within the parameters set out by the parent company, but it is for each company to decide how to achieve the goals. BA went through a couple years of extreme hardship, where many of us didn't know if we would still have jobs, but we have come out of it being more profitable.


User currently offlineLHRFlyer From United Kingdom, joined Apr 2010, 816 posts, RR: 1
Reply 31, posted (1 year 7 months 3 days 23 hours ago) and read 13960 times:

Quoting CuriousFlyer (Reply 28):
An example is the shuttle service that exists between AMS and CDG: hourly flights. Is LHR MAD anywhere near this?

LHR-MAD has 13 flights a day. That's quite a lot and most of Iberia's long-haul departures are in waves rather than spread out through the day. Also, some of the flights are operated by a Iberia A340 and a BA 767.


User currently offlineTYCOON From United States of America, joined Feb 2007, 397 posts, RR: 3
Reply 32, posted (1 year 7 months 3 days 23 hours ago) and read 13724 times:

As far as service is concerned (putting aside profitability etc... for the moment), I believe AF is miles ahead of BA and that's a given in my book. I have flown BA 63x and a good number of those flights have been in the front, long-haul intercontinental and short-haul intra-Europe. The food and overall service is very poor. If I get served once again that atrocious Club Europe salad of lettuce, beets, goat cheese and chorizo, I will lose it... Just thinking of it makes my stomach churn.
And I am not a big fan of T5, always jammed packed with people like a huge shopping mall during Xmas rush... the outer terminals (B&C) are decent as less crowded, but they don't tell you which terminal until shortly before boarding time.
Going through T5 security, even in Fast Track, is always an unpleasant experience. Not friendly at all. I find the people manning the security at CDG terminals much more pleasant... and actually very friendly. Invariably they bid me "Have a nice flight".
The BA lounges aren't bad, but the selection of newspapers is appaling and very UK-centric. I have yet to find an International Herald Tribune in any BA lounge (!). The selection in AF lounges in CDG is more intellectually appealing.
BA may make more money than AF for NOW, but it is not in the same league service wise.
AF-KL work well together and I believe service on KL has actually improved since the merger.
And, at least on short-haul business class flights, I actually don't find IB to be too bad, friendly service, much the case with AZ too! However, longhaul on both AZ and IB, even if the seats are very comfortable and spacious in business class, the service is pretty poor.
Just my two cents!


User currently offlineshuttle9juliet From UK - Scotland, joined Jul 2010, 192 posts, RR: 0
Reply 33, posted (1 year 7 months 3 days 23 hours ago) and read 13709 times:

Quoting LHRFlyer (Reply 31):

It's actually an A330 now, brand new.


User currently offlineAzure From France, joined Dec 2012, 626 posts, RR: 16
Reply 34, posted (1 year 7 months 3 days 22 hours ago) and read 13430 times:

Quoting CuriousFlyer (Reply 28):
AF is going through rough years but it also has had it good ones. KL voluntarily joined AF after giving it a very long thought, and before that they had given an even longer thought at joining BA, and they chose.

KL needed AF to get better access to a large market, one can think that they are much better off with AF than without, having now critical size not only for passenger access but also for aircraft and engine purchases and many other synergies. On top of it the AF management was bright enough to leave a lot of autonomy to KL, thus sparing the pride of its employees and more generally the Dutch.

People can claim all they want that KL married an ugly girl, in my view it was and still is a very beneficial move for both.

Indeed ! It is really funny to read that AF was an "ugly guy" while it was the most profitable European airline in the early 2000s when the AF/KL "merger" took place ! As a matter of fact, at that time KL knew it could not survive alone and the dutch carrier certainly made the right decision when you compare what it was then and what it is now.
As for AF, if you take some time to look at its finances, its losses come from a/ its domestic operations (due to an ever increasing competition with an extensive high-speed train network that no other European carrier has to deal with); b/ cargo operations (due to the worldwide economic slowdown); c/ costs of its restructuring plan. Without b/ and c/ alone the airline would be profitable...



Quoting DTW2HYD (Reply 19):
All legacy European Airlines should merge with LH, leaving only LH and Ryanair.

Lol ! In another thread, one of your fellow citizen was as bold and imaginative as you are and suggested that AFKL needed a US management. I am well aware that the US know better than the rest of the world : this is certainly why most US carriers are / were placed under chapter 11 and why in general the economic data of the USA are even worse than the Eurozone (in terms of public debt, for instance).
Give us a break please ! How can you suggest Europe, with 500 millions citizens, can only sustain 1 major airline + 1 LCC (and what are you doing with Easyjet btw ?) And why should this major European airline be LH ? Granted, LH is profit making at the present time, and AF is loss making, but it has not always been the case in the curse of history. Furthermore the trends are now more in favor of AF than LH (the operating result is improving at AF, and deteriorating at LH - according to Bloomberg).



Quoting Speedbird2155 (Reply 30):
BA and IB have their own management, who have to decide what is best for each carrier. Yes, ultimately both have to operate within the parameters set out by the parent company, but it is for each company to decide how to achieve the goals.

I believe IAG is duplicating the LH/LX/OS and AF/KL model, and rightfully so.
IAG carries 50 million pax a year, vs 75 million for the AF group and 90 million for the LH group. BA and IB alone cannot survive as independant carriers in an ever more competive market. IMHO they were right to merge. In the long run they will benefit from mutual synergies. IAG was not created with the fiscal year 2012 in mind but with a long term perpective !



I fly because it releases my mind from the tyranny of petty things - A. de Saint Exupery
User currently online1400mph From United Kingdom, joined Jan 2013, 1039 posts, RR: 0
Reply 35, posted (1 year 7 months 3 days 22 hours ago) and read 13235 times:
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One thing to ponder...

When LH group released their results the share price tanked.

When AF-KLM released their results the share price tanked.

When IAG released their results the share price went up 8%.

As is always the case with the airline industry its more about reading between the lines.

It's as good as it's going to get for LH group from here on in but their market is only going to get tougher.

Air France-KLM are in one hell of a mess.

IB is burgeoning with potential and latent promise. A well run and lean IB combined with MAD with its South Atlantic / Latam partner in Oneworld will do very well indeed. BA is now in a very strong position at LHR with its new slots and upcoming A380 introduction on highly competitive (and lucrative) routes. A reborn AA and BA will be a powerhouse across the north Atlantic whilst BA concentrates on new routes east.

That is why even with an almightly loss (albeit it through exceptions) and an awful union battle looming the stock price surged on a better than expected 'loss' !!


User currently offlinebabybus From , joined Dec 1969, posts, RR:
Reply 36, posted (1 year 7 months 3 days 21 hours ago) and read 12984 times:

IB is a dreadful airline but to be honest BA isn't exactly leading the world in terms of in-flight service these days either.

Maybe not the awkward marriage we'd like to think.

I f there were money in them there south american routes BA would be trying to operate those routes themselves.


User currently offlineAzure From France, joined Dec 2012, 626 posts, RR: 16
Reply 37, posted (1 year 7 months 3 days 21 hours ago) and read 12944 times:

Quoting 1400mph (Reply 35):
One thing to ponder...

When LH group released their results the share price tanked.

When AF-KLM released their results the share price tanked.

When IAG released their results the share price went up 8%.

As is always the case with the airline industry its more about reading between the lines.

It's as good as it's going to get for LH group from here on in but their market is only going to get tougher.

Air France-KLM are in one hell of a mess.

Another thing to ponder :

AFKL share price : roughly + 100 % in 1 year




LH group share price : roughly + 50% in 1 year




IAG share price : roughly +80% in 1 year




Granted, the markets are not as pessimistic about IAG as some posters are here, neither do they believe AFKL is the huge mess you claim it is ! And of the 3 European major carriers, LH seems to have the least convincing economic profile...



I fly because it releases my mind from the tyranny of petty things - A. de Saint Exupery
User currently online1400mph From United Kingdom, joined Jan 2013, 1039 posts, RR: 0
Reply 38, posted (1 year 7 months 3 days 20 hours ago) and read 12562 times:
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Quoting babybus (Reply 36):
I f there were money in them there south american routes BA would be trying to operate those routes themselves.

Oh well that's a refreshing outlook. No money in South American aviation eh ? I think Latam might have something to say about that ? Projected growth for South American aviation is outstripped only by China hence the desperate attempts of other global alliances to lure Latam away from Oneworld.

Quoting babybus (Reply 36):
IB is a dreadful airline but to be honest BA isn't exactly leading the world in terms of in-flight service these days either.

Like I said...the only way for IB is up and analysts have every faith in management to achieve this despite its losses and current union issues hence the rising share price.

BA service ? Best business class seat in Europe (maybe VS is comparable but so small an outfit as to be irrelevant), comparable First class product in Europe. Economy certainly no worse than say Air France or Lufthansa and for people that fly on regular basis to a multitude of destinations by far the best Terminal and facilities on offer in any European airport for its national (or equivalent) carrier.


Quoting Azure (Reply 37):
AFKL share price : roughly + 100 % in 1 year

The market cap for an airline the size of AFKL is abismal by any standards.


User currently onlinejumpjets From United Kingdom, joined Apr 2012, 834 posts, RR: 0
Reply 39, posted (1 year 7 months 3 days 20 hours ago) and read 12517 times:

Quoting Speedbird2155 (Reply 30):
BA and IB are now jointly located in T5 at LHR, with IB operating most of the flights to MAD

Also IB maintenance facilities in Madrid are doing OK out of the BA fleet repaints/maintenance which I doubt they would have had IAG not come along.

Quoting Azure (Reply 34):
IAG was not created with the fiscal year 2012 in mind but with a long term perspective !

Well said, concise and accurate.


User currently offlineVV701 From United Kingdom, joined Aug 2005, 7566 posts, RR: 17
Reply 40, posted (1 year 7 months 3 days 20 hours ago) and read 12184 times:

Quoting CuriousFlyer (Reply 28):
As for BA, I have read and heard pretty nasty things about their purchase of IB

BA never purchased IB. Former IB shareholders received 45 per cent of the equity in the new SPANISH REGISTERED company, International Consolidated Airlines Group SA (IAG). Former shareholders in BA were issued with 55 per cent of IAG's equity. Nevertheless the largest IAG shareholder is a Spanish bank with around 12 per cent of IAG's equity.

Note in particular the following extracted from the IAG investors' web site:

"As a Spanish company IAG is subject to Spanish legislation and therefore the Shareholders Meeting will always be held in Spanish at a venue in Spain."

You can check this out in paragraph 2.2 of the IAG Shareholders' Guide accessible here:

http://www.iairgroup.com/phoenix.zhtml?c=240949&p=irol-meeting

So I think you can safely ignore the "nasty things" you have heard about how what is actually a British subsidiary of a Spanish registered corporation is treating a Spanish subsidiary of that same Spanish corporation. As you will know, things just do not work that way.

Quoting CuriousFlyer (Reply 28):
An example is the shuttle service that exists between AMS and CDG: hourly flights. Is LHR MAD anywhere near this?
Quoting LHRFlyer (Reply 31):
LHR-MAD has 13 flights a day.

Arguably the question is whether the AF/KL shuttle flights between PAR and AMS are anywhere near those of BA/IB between LON and MAD. And the answer is that they come quite close.

The first departure for MAD from LHR is at 06:20, the last at 20:15 . So that's 13 flights in 13 hrs 55 mins. Additionally there are two BA LCY-MAD flights a day. So there are 15 BA/IB LON-MAD flights in under 14 hrs. AF-KL have a similar frequency but over a slightly shorter day. They have slightly fewer departures from PAR (12) over the slightly shorter period (09:00 to 21:35) of 12 hrs 35 mins.
.


User currently offlinejfk777 From United States of America, joined Aug 2006, 8386 posts, RR: 7
Reply 41, posted (1 year 7 months 3 days 19 hours ago) and read 12128 times:
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BA - KLMwould have been heavenly. Then BA tried Swissair but was only interested in their LHR slots. IB was the last significant airline left to get hicked to.

User currently offlineairbazar From United States of America, joined Sep 2003, 8410 posts, RR: 10
Reply 42, posted (1 year 7 months 3 days 19 hours ago) and read 11898 times:

Quoting panamair (Reply 12):
Geographically speaking, MAD is only well-positioned for Europe-Latin America flows; LHR is a superior hub for North America-Europe traffic flows...

I was speaking from an operations perspective, primarily. MAD is not slot restricted and does not suffer from the weather and airspace issues that LHR has. But geographically MAD is no more out of the way than ATL is on the other side for example and yet, it's DL's biggest TATL hub. Yes, if you're flying between ORD and TXL, LHR is shorter. But if you're flying between MIA and FCO, then MAD is shorter. MAD also no worse positioned for Asia-Latin America or N.America-Africa that LHR. So geographically speaking the two have their place.


User currently online1400mph From United Kingdom, joined Jan 2013, 1039 posts, RR: 0
Reply 43, posted (1 year 7 months 3 days 19 hours ago) and read 11825 times:
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Quoting jfk777 (Reply 41):
BA - KLMwould have been heavenly.

Yes it would but at the time it was being discussed it was WAY ahead of its time and would have been blocked at every turn as indeed was the case with BA and AA forcing them into the current 'catch up' scenario.

I'm afraid that as is often the case BA was just far too forward thinking for the rest of the aviation world at that time. The flat bed seat is another prime example of BA genius.

However, BA's two main partners namely AA and IB are in the process of being reborn and 'catch up' they will. (and more)


User currently offlinethowman From United Kingdom, joined Jul 2004, 363 posts, RR: 3
Reply 44, posted (1 year 7 months 3 days 19 hours ago) and read 11831 times:

Quoting IBERIA747 (Reply 23):
On the other hand, I've flown about 50 times across the Atlantic on IB (Business and Economy, and quite a few short haul flights too) and my overall experience has always been satisfactory.

I don't think you would say that about you experience in Miami a few years ago when stranded, would you Alfonso?
     

I have flown both trans atlantic to MIA in the old first class upper deck with IB, and also in business class and economy to latin America with IB. I don't think they're a match for BA across the board - but the experience depends a lot on the crew, and some of the crews I have had are great and others suck. That's where BA win every time - the level of service.

Admitedly, I haven't been on Iberia for at least a couple of years now to get to and from the UK to Spain as they cannot compete with U2 and FR - and I think my days of doing so are over now - so cannot comment on recent developments.


User currently offlineAzure From France, joined Dec 2012, 626 posts, RR: 16
Reply 45, posted (1 year 7 months 3 days 19 hours ago) and read 11670 times:

Quoting 1400mph (Reply 38):
The market cap for an airline the size of AFKL is abismal by any standards.

AFKL market caps is not even worth the price of their 6 A380s, which does not mean this airline is a mess as you previously wrote. The fact their share price doubled in one year confirms my position and demonstrates your initial wording was based at least on some lack of information.

Quoting jumpjets (Reply 39):
Quoting Azure (Reply 34):
IAG was not created with the fiscal year 2012 in mind but with a long term perspective !

Well said, concise and accurate.

Thanks ! I wish this long term issue would be obvious for everyone !



I fly because it releases my mind from the tyranny of petty things - A. de Saint Exupery
User currently online1400mph From United Kingdom, joined Jan 2013, 1039 posts, RR: 0
Reply 46, posted (1 year 7 months 3 days 19 hours ago) and read 11564 times:
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Quoting Azure (Reply 45):
AFKL market caps is not even worth the price of their 6 A380s, which does not mean this airline is a mess as you previously wrote.

Any airline that delivers two consecutive billion euro losses is a mess. Before you self combust I am not implying that will always be the case. Maybe AF's rather lethargic management has seen the light ?


User currently offlineVV701 From United Kingdom, joined Aug 2005, 7566 posts, RR: 17
Reply 47, posted (1 year 7 months 3 days 18 hours ago) and read 11289 times:

Quoting Azure (Reply 34):
IAG was not created with the fiscal year 2012 in mind but with a long term perpective !

Yes. But in the current economic climate the short-term perspective is also very important. In tte IAG 2012 Annual Report Willie Walsh is quoted as saying:

"We achieved synergies of €313 million in 2012, exceeding our €225 million target set at the beginning of the year. This is another excellent performance, in particular through higher than expected revenue synergies. However, we must not be complacent - while this trend must continue it needs to be hand-in-hand with structural change."

Certainly IB (as well as BA) have financially benefited. What we can see additionally looking in from the outside includes:

1. Several BA aircraft being repainted at MAD.

2. Both airlines adjusting their LHR-MAD schedules to avoid the over-night stops away from their home hub that both previously made, thus avoiding the additional staff costs that created.

3. BA operating out of its home hub taking over the loss making IB BCN-LR flights between two non-hub airports.

How much difference this made to the IB 2012 financials under what were very difficult operating conditions is difficult to say. But it could be a crucial difference.


User currently offlineUALWN From Andorra, joined Jun 2009, 2816 posts, RR: 2
Reply 48, posted (1 year 7 months 3 days 18 hours ago) and read 11138 times:

Quoting VV701 (Reply 40):
Nevertheless the largest IAG shareholder is a Spanish bank with around 12 per cent of IAG's equity.

A Spanish bank that is bankrupt and has had to be rescued by the government...



AT7/111/146/Avro/CRJ/CR9/EMB/ERJ/E75/F50/100/L15/DC9/D10/M8X/717/727/737/747/757/767/777/AB6/310/319/320/321/330/340/380
User currently offlineAzure From France, joined Dec 2012, 626 posts, RR: 16
Reply 49, posted (1 year 7 months 3 days 17 hours ago) and read 10975 times:

Quoting 1400mph (Reply 46):
Any airline that delivers two consecutive billion euro losses is a mess.

Not necessarily when its turnover is 25,7 billion euros and when half of its losses come from provisions for restructuring costs.



I fly because it releases my mind from the tyranny of petty things - A. de Saint Exupery
User currently offlineRevelation From United States of America, joined Feb 2005, 12589 posts, RR: 25
Reply 50, posted (1 year 7 months 3 days 17 hours ago) and read 10964 times:

Quoting IrishAyes (Reply 6):
Truthfully, I would avoid IB at all costs - it seems like an all around crap carrier with outdated planes and poor service.
Quoting IrishAyes (Reply 6):
However, I think it all really boils down to macro factors, which all European network airlines are suffering from.

I think it's both macro and micro, a weak product in a weak economy.

Quoting SASMD82 (Reply 9):
Only four or five big airlines will exist in Europe in 2020. No room for nationality or whatsoever. We are talking about loads of Euros and not about the national flag on a tale.

Well, there's this small problem that the EU doesn't hold the bilateral agreements, the member nations do.

Quoting Speedbird2155 (Reply 30):
MAD and IB are the IAG keys to South America.
Quoting 1400mph (Reply 38):
Projected growth for South American aviation is outstripped only by China

As posted earlier, there is this small issue of well financed LatAm and SouthAm carriers with a lower cost base and lots of brand recognition in their home countries. The real question is can IAG compete? Three years on we should have some indications, no? Seems IAG is mainly focused on UK-ES at this point instead of ES to the Americas.



Inspiration, move me brightly!
User currently offlineIBERIA747 From Spain, joined Aug 2003, 1831 posts, RR: 58
Reply 51, posted (1 year 7 months 3 days 17 hours ago) and read 11002 times:

Quoting thowman (Reply 44):
Quoting IBERIA747 (Reply 23):
On the other hand, I've flown about 50 times across the Atlantic on IB (Business and Economy, and quite a few short haul flights too) and my overall experience has always been satisfactory.

I don't think you would say that about you experience in Miami a few years ago when stranded, would you Alfonso?

Hehehehe the good ole' Andy. Long time no see mate!.

I think you're starting to forget things!!       

My experience was positive. Iberia handled the situation perfectly, and my only complaint was not about them, but about the bunch of "paletos" who started insulting and attacking IB staff...typical, rowdy "I've-conquered-the-world" Spaniards on their way back home after their very first trip outside their village.

Here's the link to my 9-year old report, so you can check it out by yourself:

A Trip From Spain To Guatemala With IBERIA, Part 2 (by IBERIA747 Jun 27 2004 in Trip Reports)



¡¡VIVA ESPAÑA!!
User currently offlineAzure From France, joined Dec 2012, 626 posts, RR: 16
Reply 52, posted (1 year 7 months 3 days 17 hours ago) and read 10535 times:

Quoting Revelation (Reply 50):
Quoting SASMD82 (Reply 9):
Only four or five big airlines will exist in Europe in 2020. No room for nationality or whatsoever. We are talking about loads of Euros and not about the national flag on a tale.

Well, there's this small problem that the EU doesn't hold the bilateral agreements, the member nations do.

Yes, but the EC can - and does - block any merger that may affect competition (eg the EI/FR merger)
Anyway, the European market is already consolidated and dominated by 3 major carriers (AF/KL, IAG and LH/LX/OS) plus 2 or 3 LCCs.



I fly because it releases my mind from the tyranny of petty things - A. de Saint Exupery
User currently offlinePihero From France, joined Jan 2005, 4515 posts, RR: 76
Reply 53, posted (1 year 7 months 3 days 16 hours ago) and read 10344 times:
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Quoting 1400mph (Reply 43):
Quoting jfk777 (Reply 41):
BA - KLMwould have been heavenly.

Yes it would but at the time it was being discussed it was WAY ahead of its time and would have been blocked at every turn as indeed was the case with BA and AA forcing them into the current 'catch up' scenario.
I'm afraid that as is often the case BA was just far too forward thinking for the rest of the aviation world at that time.

What a load of hogwash : The talks failed because it wasn't a merger as KLM seeked, but from BA a takeover:
Roy Eddington "...we would be happy if we could acquire them..."
Telegraph

or..."...Eddington, BA's chief executive, said the key obstacle had been agreeing a structure which would have given BA control of the merged airline at the same time as guaranteeing KLM's traffic rights, which are granted on the basis that it is Dutch-owned."
The Independent

In other words, greed was the main cause of the failure.
...and it wasn't BA who intiated the talks, but KLM who showed a better vision of the future.

That said, the risk, in the year 2000 that an alliance between BA and AA, added to a KLM and Nothwest alliance would have in all probability been rejected by both the US and the EU anti trust regulators.



Contrail designer
User currently offlinePDPsol From United States of America, joined Feb 2004, 1116 posts, RR: 5
Reply 54, posted (1 year 7 months 3 days 16 hours ago) and read 10180 times:

Quoting Azure (Reply 45):
AFKL market caps is not even worth the price of their 6 A380s, which does not mean this airline is a mess as you previously wrote. The fact their share price doubled in one year confirms my position and demonstrates your initial wording was based at least on some lack of information.

That is why carriers are evaluated on a Firm value, or Enterprise value, basis, rather than simply equity market capitalization. A very material portion of a carrier's fixed assets, its fleet, is financed via direct debt and/or capital leases. Operating leases, which are not capitalized on the balance sheet, can also mask the true level of capital required for the carrier, as well as capacity purchase agreements ["CPA"] with regional carriers, which are simply a form of operating leases as well. The true FV of AF or IAG or the big US carriers, UA, DL, etc, are much larger than their market capitalization.

Carriers are, by their business model, highly levered [high debt levels] and also have a high level of operating leverage. This characteristic is only further amplified with rigid labor agreements, volatile fuel costs, etc., etc...

Quoting UALWN (Reply 48):
A Spanish bank that is bankrupt and has had to be rescued by the government...

Yes, of course, Bankia's parent company, BFA. This situation is a complete and total mess. However, there may actually be a silver lining to all this, that could benefit IAG. Bankia is essentially in restructuring, with long-term creditors squeezing out the equity [many of whom are small retail investors, i.e.: people, who were told Bankia's quasi-equity capital and straight equity at IPO were risk less investments].

As a result, BFA is desperate to monetize its residual equity investment in IAG and will likely sell most, if not all, of its interest. This would further institutionalize IAG's corporate governance and force the management team, the labor groups and all other constituencies to operate solely in the interest of the IAG shareholders, without any regard to silly issues, such as nationalities, differences, etc.


User currently offlineairbazar From United States of America, joined Sep 2003, 8410 posts, RR: 10
Reply 55, posted (1 year 7 months 3 days 15 hours ago) and read 9769 times:

Quoting Azure (Reply 52):
Anyway, the European market is already consolidated and dominated by 3 major carriers (AF/KL, IAG and LH/LX/OS) plus 2 or 3 LCCs.

You left out TK and any potential future mergers. I would love to see a TK/TP merger for example. IST is too far East to be a good hub for TATL traffic, but the new IST airport will be a great intercontinental hub. I think the 2 airlines would compliment eachother very well, but I'm just dreaming of course  


User currently offlineEddieDude From Mexico, joined Nov 2003, 7587 posts, RR: 43
Reply 56, posted (1 year 7 months 3 days 15 hours ago) and read 9753 times:

Quoting panamair (Reply 7):
IB's long-haul Business product is not bad - they already have flat-beds in J, for example.

And according to many IB also has great catering in J. However, overall, IB's reputation is terrible. So you might get a comfy J-class seat in long-haul and yummy meals, but the crews are known for their rudeness and lack of interest. I have heard some bad stories regarding baggage handling. I have never flown IB though. it is pretty much the general opinion of a.netters.

Quoting PDPsol (Reply 14):
The EU GDP is roughly double that of Latin America, so plenty of room for growth.

And that gap will undoubtedly narrow as the region, led by countries such as Brazil, Mexico, Colombia, Chile and Peru, continues to thrive. The potential for increased demand in the Latam-to-Europe market is good.



Next flights: MEX-GRU (AM 77E), GRU-GIG (JJ A320), SDU-CGH (G3 73H), GRU-MEX (JJ A332).
User currently onlinejumpjets From United Kingdom, joined Apr 2012, 834 posts, RR: 0
Reply 57, posted (1 year 7 months 3 days 14 hours ago) and read 9571 times:

Quoting UALWN (Reply 48):
A Spanish bank that is bankrupt and has had to be rescued by the government...

That may be the case but it doesn't stop them exercising their votes as IAG shareholders


User currently offlineVV701 From United Kingdom, joined Aug 2005, 7566 posts, RR: 17
Reply 58, posted (1 year 7 months 3 days 14 hours ago) and read 9496 times:

Quoting Revelation (Reply 50):
Well, there's this small problem that the EU doesn't hold the bilateral agreements, the member nations do.

Many of the bilateral agreements are between the EU and other nations. The EU-USA Open Skies agreement is a case in point. Some other countries (such as Turkey) have bilateral agreements with individual countries that have been modified so that, for example, any airlinefrom any EU state can operate under the Turkey-UK bilateral. But some countries - such as the Russian Federation - have refused to so modify their bilateral agreements with individual EU member states in this way. And some bilaterals between individual states continue to exist because no effort has yet been made to renegotiate them.

Because of the last two categories above Lufthansa Group, Air France-KLM and IAG all have company structures that allow the individual airlines that comprise each group to operate under all four of the categories of agreement listed above. However the corporate structures adopted do not prevent the airlines within each group to financial benefit from te synergies created by being a member of te group.

As an example while both BA and IB are 100 per cent financially controlled by Spanish registered International Consolidated Airlines Group SA, both BA and IB are operationally controlled by British and Spanish registered companies that are not subsidiaries of IAG..

So it is clearly possible for three, four or five major trans-national European airline groups to be formed trough the merger of all existing European legacy airlines and for LCCs like Vueling to join those groups.


User currently offlinePDPsol From United States of America, joined Feb 2004, 1116 posts, RR: 5
Reply 59, posted (1 year 7 months 3 days 11 hours ago) and read 9229 times:

Quoting jumpjets (Reply 57):
That may be the case but it doesn't stop them exercising their votes as IAG shareholders

Actually, the restructuring situation that BFA/Bankia does absolutely affect their participation in the corporate governance, especially if they have no choice but to divest their ~12% equity interest:

Quoting PDPsol (Reply 54):
Yes, of course, Bankia's parent company, BFA. This situation is a complete and total mess. However, there may actually be a silver lining to all this, that could benefit IAG. Bankia is essentially in restructuring, with long-term creditors squeezing out the equity [many of whom are small retail investors, i.e.: people, who were told Bankia's quasi-equity capital and straight equity at IPO were risk less investments].

As a result, BFA is desperate to monetize its residual equity investment in IAG and will likely sell most, if not all, of its interest. This would further institutionalize IAG's corporate governance and force the management team, the labor groups and all other constituencies to operate solely in the interest of the IAG shareholders, without any regard to silly issues, such as nationalities, differences, etc.

This will benefit IAG and IB.


User currently offlineViscount724 From Switzerland, joined Oct 2006, 25457 posts, RR: 22
Reply 60, posted (1 year 7 months 3 days 9 hours ago) and read 9005 times:

Quoting UALWN (Reply 5):
Quoting shuttle9juliet (Reply 4):
Basically I think BA were very late in getting married , should have really hitched up with KLM earlier on

Or LX.

LX would have been of minimal benefit to BA. Their route networks largely overlapped. On the other hand IB brings all of the rapidly-growing Latin America market to BA where BA has been historically weak. I'm convinced the BA/IB merger will eventually prove to be an excellent decision. Obviously the timing wasn't the best considering Spain's economic meltdown but that won't last forever and IB's strength is connecting traffic via MAD, not exclusively O&D Spain-Latin America traffic.


User currently offlineJAL From Canada, joined Apr 2000, 5085 posts, RR: 8
Reply 61, posted (1 year 7 months 3 days 9 hours ago) and read 9002 times:

Things will eventually improves for IB and IAG once Europe wakes up from all those cuts and taxes and try to boost their economy!


Work Hard But Play Harder
User currently online1400mph From United Kingdom, joined Jan 2013, 1039 posts, RR: 0
Reply 62, posted (1 year 7 months 3 days ago) and read 8594 times:
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Quoting JAL (Reply 61):
Things will eventually improves for IB and IAG once Europe wakes up from all those cuts and taxes and try to boost their economy!

Mmm. Europe all the world ? The worlds largest trading block will suck the weakening remaining global economy down with it if it fails.

For example who will sit in all those EK A380's that leave Europe on a daily basis if we're all skint ? (broke) At 500 people per rotation how do you make a 100 A380 fleet pay during the rough times ?

Fingers crossed that doesn't happen.


User currently offlinethowman From United Kingdom, joined Jul 2004, 363 posts, RR: 3
Reply 63, posted (1 year 7 months 2 days 22 hours ago) and read 8366 times:

Quoting IBERIA747 (Reply 51):

Yes, my memory is certainly going, but wow, how time goes by very quickly - can't believe it was 9 years ago already.

Cheers

A


User currently offlineAirGabon From Switzerland, joined Dec 2003, 886 posts, RR: 2
Reply 64, posted (1 year 7 months 2 days 22 hours ago) and read 8343 times:

Quoting Azure (Reply 34):
Indeed ! It is really funny to read that AF was an "ugly guy" while it was the most profitable European airline in the early 2000s when the AF/KL "merger" took place ! As a matter of fact, at that time KL knew it could not survive alone and the dutch carrier certainly made the right decision when you compare what it was then and what it is now.

100% agree, people forget facts very easily. AF was very profitable in the 2000s.


User currently online1400mph From United Kingdom, joined Jan 2013, 1039 posts, RR: 0
Reply 65, posted (1 year 7 months 2 days 20 hours ago) and read 8194 times:
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Quoting AirGabon (Reply 64):
100% agree, people forget facts very easily. AF was very profitable in the 2000s.

?

Subtract the figure AF received in state aid during this period and then look again.


User currently offlineMD11Engineer From Germany, joined Oct 2003, 14030 posts, RR: 62
Reply 66, posted (1 year 7 months 2 days 19 hours ago) and read 8122 times:

I think the profit / loss figures for AF/KLM are missleading. Due to high taxes in France and lower taxes in the Netherlands the company´s accounting office doctored the figures that the losses would appear on the AF side in France, to reduce their tax burden there, while the profits would appear with KLM, which then has to pay less tax than if the profits would appear in France.

Jan


User currently offlineAzure From France, joined Dec 2012, 626 posts, RR: 16
Reply 67, posted (1 year 7 months 2 days 17 hours ago) and read 7964 times:

Quoting 1400mph (Reply 65):
Subtract the figure AF received in state aid during this period and then look again.

What state aid did AF receive in the 2000s ?!

Quoting MD11Engineer (Reply 66):
I think the profit / loss figures for AF/KLM are missleading. Due to high taxes in France and lower taxes in the Netherlands the company´s accounting office doctored the figures that the losses would appear on the AF side in France, to reduce their tax burden there, while the profits would appear with KLM, which then has to pay less tax than if the profits would appear in France.

Jan

Indeed. The tax rate on corporate profits is 34,3% in France versus 25% in the Netherlands. It is AFKL interest that KL registers most of the group's profits.
It has even been rumored that the AFKL holding company had plans to move its headquarters from Paris to the Netherlands...

I suppose IAG is using the same fiscal tools to optimize its finances.

Quoting airbazar (Reply 55):
You left out TK.

Indeed. I still have some difficulties to consider TK as a mere European carrier when I see their plans for their new uniforms and after their alcohol ban on certain flights. Not very "European" by my standards, even if their headquarters are geographically located in Europe (but 90% or so of their territory is in Asia).
But from an operational perspective, a TK-TP merger would be quite interesting for sure ! However as you certainly know, the State of Portugal has been required by the EC to sell TAP and I doubt that Lisbon would accept to sell its national carrier to an airline in which a foreign state, Turkey, owns 49% of the capital...

As for the other European Legacies, SK, EI, AZ, etc., they certainly cannot survive by themselves but whatever happens to them, this will not dramatically modify the structure of the business in Europe (at least in a foreseable future).



I fly because it releases my mind from the tyranny of petty things - A. de Saint Exupery
User currently offlinepar13del From Bahamas, joined Dec 2005, 7283 posts, RR: 8
Reply 68, posted (1 year 7 months 2 days 17 hours ago) and read 7918 times:

Quoting Azure (Reply 67):
Indeed. The tax rate on corporate profits is 34,3% in France versus 25% in the Netherlands. It is AFKL interest that KL registers most of the group's profits.
It has even been rumored that the AFKL holding company had plans to move its headquarters from Paris to the Netherlands...

How are they able to fly under the radar as tax cheats while companies like Google, Amazon and others are blasted daily by all and sundry, are airlines special?


User currently online1400mph From United Kingdom, joined Jan 2013, 1039 posts, RR: 0
Reply 69, posted (1 year 7 months 2 days 17 hours ago) and read 7932 times:
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Quoting Azure (Reply 67):
What state aid did AF receive in the 2000s ?!

Sorry it was the late 90's AF received £2 BILLION in state aid.

Then there was the landing charges debacle for domestic flights in France. Tantamount to another £700M in state aid.

Apart from that............


User currently offlineVV701 From United Kingdom, joined Aug 2005, 7566 posts, RR: 17
Reply 70, posted (1 year 7 months 2 days 16 hours ago) and read 7809 times:

Quoting par13del (Reply 68):
How are they able to fly under the radar as tax cheats while companies like Google, Amazon and others are blasted daily by all and sundry, are airlines special?

Google and Amazon secured their low / zero UK tax rates by transfer pricing. They charged their UK subsidiaries high prices for services / product supplied to their UK subsidiaries by their non-UK subsidiaries.

You could have included Starbucks with Google and Amazon. It is the easiest illustrative example of how to avoid paying any corporation tax. Indeed although it is the UK's largest coffee shop chain, Starbucks in the UK made a reported profit in only one of the last 14 years. It made a loss in the other 13. Over those 14 years it has paid £8.6 million in UK tax. Compare this figure wit its reported turnover of £398 million and a "loss" of £33 million in its last UK accounts. This "loss" was achieved by getting its UK subsidiary to buy all of its coffee from Starbucks' subsidiary in that well known coffee producing country, Switzerland, by making high "royalty" payments to the Starbucks' subsidiary in the Netherlands (were it had negotiated a special tax rate with the government) and paying higher than market interest rates on loans to Starbucks' subsidiaries in other countries.

The opportunity for an airline to buy raw materials from a subsidiary in another country at an inflated price is, to say the least, limited. Of course BA could buy engineering or aircraft painting services from IB in MAD at inflated prices or the other way around. And, indeed, since the formation of IAG BA has had six former BD aircraft painted by IB. With corporation tax in Spain at 30 per cent and in the UK 24 per cent any tax advantage to IAG would accrue to them by minimising the amount invoiced by IB to BA. But the value of these transactions is so low that it would hardly be worth the hassle.

The nature of an airline's business is such that it significantly limits opportunities for such activities. This is primarily because airlines are national and not international corporations.

When airlines come together in international groups as in the case of AF-KLM, Lufthansa Group and IAG the opportunities are a little greater, particularly in the case of Lufthansa Group. They have around 400 subsidiaries in everything from airline catering to IT services. These subsidiaries include the likes of Lufthansa Technik in Sofia, Bulgaria and in Malta. But the nature of the Lufthansa Group's main business of providing transportation services for passengers simply does not provide for tax advantageous transfer pricing on a significant scale. Tickets sold in an international market do not have a transfer price to artificially inflate.


User currently offlinePihero From France, joined Jan 2005, 4515 posts, RR: 76
Reply 71, posted (1 year 7 months 2 days 14 hours ago) and read 7701 times:
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Quoting 1400mph (Reply 65):
Subtract the figure AF received in state aid during this period and then look again.

Quote a source when you utter that sort of statement.
For your information, the EU forbids it, and have done for thirty years or so.

Quoting 1400mph (Reply 69):
Sorry it was the late 90's AF received £2 BILLION in state aid.

Rubbish. It was a repayable loan for restructuration. And the EU watched the process like a hawk. During the time of the financing :
-All assets were frozen
-No investment could be made on new airplanes ( at a time when AF alreadyu had the oldest fleet in Europe )
-All salaries were frozen, no promotions were allowed
-A drastic reduction on woirk force was required
-Were also frozen: the number of flkights , in general and to any destinations / the numlber of seats offered...
-AF was to do all the above - and a lot more obstacles - to prepare for a privatisation...
The state recovered all the money.
By the way, the financing was approved by the EU, especially from a few British officials, among them Mr Kinnock.

Now compare that to BA's privatisation when the Thatcher government wrote off 900 M£ of debt and offered 20% of the shares to the public... if you want to live in a glass house, be aware some consequences could happen.
Of course, during the privatisation process, BA was quitre free to improve and develop, contrarily to AF.
BA did welkl to initiate the process in the eighties. They would have had EXACTLY the same conditions AF did 10 years later... and I'm certainly not sure the 900 M£ debt write-off would have been approved by the EU commission.

As for the so-called "landing charge debacle", you should check your references ba bit more carefully : AF won a court case they intented against Aéroport de Paris for overcharges - mainly for cargo flights - in the years 1992 - 1996 ; the amount claimed was 70 m [|B]FRANCS[:B], which they eventually got after winning the case. Once again, if that is a state aid...



Contrail designer
User currently offlinePihero From France, joined Jan 2005, 4515 posts, RR: 76
Reply 72, posted (1 year 7 months 2 days 12 hours ago) and read 7468 times:
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To come back to the topic :
Iberia had been for a long time #1 in Europe for number of transported passengers , confirming the country's position as one of the greatest holiday destinations, mainly from Northern Europe.
The fact is the airline has a very degraded customer's image ( # 10 in a "Worst ten Airlines" list, but the list includes the likes of USAir, Egyptair, China Eastern, China Southern, Air China... and RyanAir ).
Another fract is that it survived the 2001 to 2008 different crisises when airlines perceived as more "quality" went belly-up. See Swissair, Sabena, SAS... list is as everybody knows rather long.

IAG would try and ride on the South American market where Iberia is quite present, but so are national airlines with a better brand image and a loyal customer base : TAM, Aerolineas Argentinas, AeroMexico and... AFKL.. The fight is by no means won as these airlines belong to alliances other than OneWorld.

As a hub, Madrid is on the margin of the EU in terms of geography. That, combined with the fact that Heathrow is already struggling to keep up with FRA, AMS and CDG will make the business proposition even more difficult.

By experience, regaining a brand iimage takes five to ten years. By then, IAG would be well into profit.
Even if some A.netters won't be happy.



Contrail designer
User currently offlineairbazar From United States of America, joined Sep 2003, 8410 posts, RR: 10
Reply 73, posted (1 year 7 months 2 days 10 hours ago) and read 7312 times:

Quoting Azure (Reply 67):
But from an operational perspective, a TK-TP merger would be quite interesting for sure ! However as you certainly know, the State of Portugal has been required by the EC to sell TAP and I doubt that Lisbon would accept to sell its national carrier to an airline in which a foreign state, Turkey, owns 49% of the capital...

That's largely overstated and widely misunderstood. There is no mandate for Portugal to sell TP. So much so that the government rejected an offer from the Synergy Group to buy TP just 3 months ago. However, I do think that TP should be privatized and I would love to see it bought by TK and the 2 airlines merged. I would much rather see TP in the hands of TK than in the hands of LH, IAG, or Synergy.


User currently online1400mph From United Kingdom, joined Jan 2013, 1039 posts, RR: 0
Reply 74, posted (1 year 7 months 2 days ago) and read 7022 times:
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Quoting Pihero (Reply 71):
Quote a source when you utter that sort of statement.
Quoting Pihero (Reply 71):
Rubbish
http://www.independent.co.uk/news/bu...nd-aviation-subsidies-1416741.html

http://www.guardian.co.uk/business/2.../12/theairlineindustry.travelnews1

http://news.bbc.co.uk/1/hi/uk/137564.stm

http://www.flightglobal.com/news/art...-aid-despite-court-decision-40006/

http://www.europeanvoice.com/article...of-air-france-state-aid/31765.aspx

http://www.telegraph.co.uk/finance/2...-Air-Frances-1bn-of-state-aid.html

Air France would have gone bust years ago if not for government intervention securing their position against other European carriers long since privatized.

[Edited 2013-03-03 00:08:57]

User currently online1400mph From United Kingdom, joined Jan 2013, 1039 posts, RR: 0
Reply 75, posted (1 year 7 months 2 days ago) and read 7004 times:
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Quoting Pihero (Reply 72):
, confirming the country's position as one of the greatest holiday destinations, mainly from Northern Europe.

Yes indeed.

I wonder if the hotel, restaurant and bar owners of the Spanish Costas share the sentiment of Iberia workers with their 'British go home' placards ?


User currently offlinePihero From France, joined Jan 2005, 4515 posts, RR: 76
Reply 76, posted (1 year 7 months 1 day 22 hours ago) and read 6867 times:
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Quoting 1400mph (Reply 74):

Quoting Pihero (Reply 71):
Rubbish

What I find extraordinary is you found sources on the state aid for AF, and not one for BA's privatisation, which smacks of, to say the least, biased reporting, and argumentation.
You'd notice as well that I never contested the existence of the aid.
Allm the articlkes you mention are very late in the history of that financing, so that AF had come out of the limitations imposed on the initial agreement, hence the first fleet order.
When it happened to BA, that airline was in much direr trouble than AF was ever in. Please forward the accumulated deficits and the airline debt numbers. Come on, you're in the country where it happened.
And the only reference to your so-called "landing charge debacle" is an article stating the complaint of one ryanair ? Please tell us you're joking or provide us with the court ruling. Let's have a laugh.



Contrail designer
User currently offlineIndianicWorld From Australia, joined Jun 2001, 2983 posts, RR: 0
Reply 77, posted (1 year 7 months 1 day 22 hours ago) and read 6898 times:

The issues that IAG are currently dealing with are those that numerous airlines will have to overcome in the coming years.

Labour issues are becoming ever more prevalent, as both sides try and maintain what they have and want to have. The reality is though that unless these carriers continue to drive down their costs, they will fail. The more that unions fight for what they currently have and even more in most cases it seems, the more other LCC's and other carriers will exploit that weakness.

IB and MAD offer some very strong benefits but at present it just isn't panning out how they would have hoped, with so many factors against it.

I don't think its necessarily a bad move to merge, but timing wasn't ideal for this to come into effect. In some ways though, its likely best IB had to IAG backing or else things could have been much worse.


User currently offlineFlyCaledonian From United Kingdom, joined Dec 2003, 2093 posts, RR: 3
Reply 78, posted (1 year 7 months 1 day 20 hours ago) and read 6710 times:

Quoting Pihero (Reply 71):
Now compare that to BA's privatisation when the Thatcher government... offered 20% of the shares to the public.

What's that got to do with things? Those shares were sold to the public, not given away.



Let's Go British Caledonian!
User currently offlineUALWN From Andorra, joined Jun 2009, 2816 posts, RR: 2
Reply 79, posted (1 year 7 months 1 day 17 hours ago) and read 6507 times:

Quoting 1400mph (Reply 75):
I wonder if the hotel, restaurant and bar owners of the Spanish Costas share the sentiment of Iberia workers with their 'British go home' placards ?

The "British" in the IB workers placards are just a proxy for IAG's management. And, yes, I know WW is Irish. Now, in the costs, on the other hand:

http://www.dailymail.co.uk/news/arti...-British-students-wreak-havoc.html



AT7/111/146/Avro/CRJ/CR9/EMB/ERJ/E75/F50/100/L15/DC9/D10/M8X/717/727/737/747/757/767/777/AB6/310/319/320/321/330/340/380
User currently offlineVV701 From United Kingdom, joined Aug 2005, 7566 posts, RR: 17
Reply 80, posted (1 year 7 months 1 day 14 hours ago) and read 6304 times:

Quoting Pihero (Reply 71):
Quote a source when you utter that sort of statement.
Quoting Pihero (Reply 76):
What I find extraordinary is you found sources on the state aid for AF, and not one for BA's privatisation, which smacks of, to say the least, biased reporting, and argumentation.

So where is your source?

"Pot", "kettle" and "black" are three words that come to mind.

What is really extraordinary is that you expect others to provide a source for your statements.

For example were is your source for claiming:

Quoting Pihero (Reply 71):
the Thatcher government . . . offered 20% of the shares to the public...

Actually 100 per cent of BA shares were sold. See page labelled 278 here:

http://www.finance.pamplin.vt.edu/fa...1997-JFE-AirlinePrivatizations.pdf

Where is your source for stating:

Quoting Pihero (Reply 71):
the Thatcher government wrote off 900 M£ of debt

At the end of 1984 BA did have debts of £901 million. Most of these debts were in US $s and related to aircraft ordered and not yet delivered, primarily the 757. These are perfectly normal debts for any airline as new aircraft must be paid for. In this case there was an element of what might be considered a subsidy because the British government, as owner of BA, had guaranteed to meet any change in the Sterling value of the debt relating to aircraft purchases as a result of a change in the £/$ exchange rate (but not any of the debt itself).

I look forward to seeing your sources confirming that the British government wrote off the £901 million debt and that they sold only 20 per cent of BA. My link will not help you. Though it is a direct analysis of the financial aspects of the BA privatisation from the election of the Thatcher government in 1979, it mentions no such write-off. However since 1400mp provided you with six sources I am sure you will want to at least try to equal he who you critiqued so strongly.


User currently offlineanstar From United Kingdom, joined Nov 2003, 5252 posts, RR: 6
Reply 81, posted (1 year 7 months 1 day 13 hours ago) and read 6177 times:

Quoting VV701 (Reply 27):
I do not disagree. But if you are flying in and out of LHR T5 then the experience can be as good as anywere else in the world.

LHR T5 is a HUGE improvement over the other terminals.... but in all reality it lacks space and feels very crowded and cramped at best - especially during the peak seasons....

So whilst it may be the best at LHR it is certainly not great compared to the better airports out there.


User currently offlinejsnww81 From United States of America, joined Jan 2002, 2037 posts, RR: 15
Reply 82, posted (1 year 7 months 1 day 11 hours ago) and read 6031 times:

Quoting anstar (Reply 81):
LHR T5 is a HUGE improvement over the other terminals.... but in all reality it lacks space and feels very crowded and cramped at best - especially during the peak seasons....

Correct. It's the nicest terminal at Heathrow by a large margin, but it's still a BAA facility, which means circulation and relaxation space was sacrificed in the name of retail and the overall experience is still one of being in a massive, labyrinthine shopping bazaar, where passengers are held captive in retail areas until just before departure time.

Give me Madrid's T4 any day. One of the classiest designs out there, and it's worth noting that it's also the original design proposed for LHR T5, but which was nixed due to site constraints. The LHR T5 site was too small to allow for the light wells and "canyons" that punctuate MAD T4 and help bring a sense of spaciousness to the facility. That's why baggage claim in Madrid feels like a cathedral and baggage claim at LHR T5 feels like a cavern. A nice, shiny and new cavern, but a cavern nonetheless.

Heathrow improved by leaps and bounds when T5 opened, no doubt about that, but the experience could still be a lot better.


User currently offlinerealsim From Spain, joined Apr 2010, 646 posts, RR: 0
Reply 83, posted (1 year 7 months 1 day 10 hours ago) and read 5872 times:

The merger was quite easy to understand: BA is the largest European airline from Europe to North America, and Iberia is the largest airline from Europe to Latin America. If you own both, then you are the largest airline from Europe to America as a whole.

Another key point here is that BA/IB are, by far, the airlines with most LCC competition in their countries and home cities. Just until recently, apart from IB, JK, UX, FR and U2 had all bases in MAD, and we have to add the high speed competition with the lines to the largest Spanish cities (BCN, VLC and SVQ) and others such as AGP and soon ALC. The same can be said about London and the huge LCC competition to almost every single city in Europe. In fact, it would be interesting to see, for example, in how many routes AF, KL or LH have direct competition, and compare the numbers to BA's and IB's. In addition, IB has home long haul competition from UX, and BA from VS, which is not the case in CDG, AMS or FRA.

However, I think that, if IB can manage to solve its cost problems, it could have a better future. Taxes in MAD aiport have been increased because they were quite cheap compared to the other big European hubs, and LCC competition will decrease. However, the train competition will increase and this is why IB's domestic network will continue to be a problem.

Quoting CuriousFlyer (Reply 28):
An example is the shuttle service that exists between AMS and CDG: hourly flights. Is LHR MAD anywhere near this?

There are more flights and seats between MAD and LHR than between CDG and AMS, so yes, there is coordination between both airlines.

Indeed, CDGMAD has more passengers than CDGAMS, CDGMAD being the busiest international route from CDG, despite IB flying only from ORY.


User currently offlinePihero From France, joined Jan 2005, 4515 posts, RR: 76
Reply 84, posted (1 year 7 months 1 day 8 hours ago) and read 5715 times:
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Quoting VV701 (Reply 80):
In this case there was an element of what might be considered a subsidy because the British government, as owner of BA, had guaranteed to meet any change in the Sterling value of the debt relating to aircraft purchases as a result of a change in the £/$ exchange rate (but not any of the debt itself).

So, as a matter of fact you confirmed that Thatcher's governement footed a bill of 901 M £ for fleet investment at a time when the company was just about to be sold to investors.
I tried to find the article on some British papers at the time. they've ALL disappeared for being too old and funny enough, there is scarcely a trace of the process in later documents, all of them showing, as your link does - report which I have known for some time - only the improvement in the airline results after the privatisation.( which btw nobody disputes )
There's one report, though that very partly tells of the story : " Over 23,000 jobs were shed in the early 1980s,[7] though King managed the considerable trick of boosting staff morale and modernising operations at the same time. Offering generous inducements for staff to leave led to record losses of £545 million, to the cost of taxpayers but to the benefit of the future privatised company.", which you could find here

Quoting VV701 (Reply 80):
Quoting Pihero (Reply 71):
the Thatcher government . . . offered 20% of the shares to the public...
Actually 100 per cent of BA shares were sold. See page labelled 278 here:

Which is true : I should have made myself clearer : 20 % to small private investors.
On the other hand, see, from your link that the value of the company was 2 bn£ whereas the sale to the public brought earnings of 900 M£ - your source said 1 bn. (0.01 % = 200,000 £ )
So if my maths add up, 901 M£ for fleet renewal + 1 bn + 545 M for severance = 2.545 bn £ ; That's by how much the UK governement of the time got short of.
No wonder we now are unable to find sources any more. That's not one episode to be proud of.
As for kettles, pots and black, who was the first offender ? THe UKIP maybe ? or am I mistaken ?..

Regards



Contrail designer
User currently online1400mph From United Kingdom, joined Jan 2013, 1039 posts, RR: 0
Reply 85, posted (1 year 7 months 1 day 1 hour ago) and read 5475 times:
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Quoting Pihero (Reply 76):
What I find extraordinary is you found sources on the state aid for AF, and not one for BA's privatisation, which smacks of, to say the least, biased reporting, and argumentation.

Look firstly I wish Air France every success.

My point is all about timing and that AF seem to have suffered from some sort of time lag within their management circles.

BA ? BA was privatized in 1984 !! Subsequently went from strength to strength because they simply HAD to get their act together.

As is the case with AF's current woes they have failed to adapt quickly enough to a dramatically changing market environment.

That's all I'm saying. Apart from that I'm sure they will do very well indeed when they get their house in order.

Kind regards.


User currently online1400mph From United Kingdom, joined Jan 2013, 1039 posts, RR: 0
Reply 86, posted (1 year 7 months 1 day ago) and read 5451 times:
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Quoting anstar (Reply 81):
So whilst it may be the best at LHR it is certainly not great compared to the better airports out there.

For executive card holders with access to the lounges, Club World and First class passengers travelling frequently to various destinations around the world Terminal 5 is a world class facility. Combined with BA's lounges at the other end or beginning of a flight the experience matches or in many cases beats any other airline in quality.

Considering the % of revenue derived from BA premium travellers and the space available for construction I'd say they got it right perfectly.

As for those of us not fortunate enough to be in this category the Terminal in my experience is a joy.

I love shopping and I love watching aircraft (Terminal 5 commands excellent views) and you can do both these things to your hearts content !!


User currently offlineTYCOON From United States of America, joined Feb 2007, 397 posts, RR: 3
Reply 87, posted (1 year 7 months 23 hours ago) and read 5263 times:

Applause are in order for Pihero for pointing out this oft forgotten fact of UK government subsidies and protectionism of BA as it was being privatized and even after.
In 1987, I wrote my thesis at the London School of Economics on 'Air Transport Policy in France' and a subsequent enlarged thesis in 1991 at MIT on 'Comparative Air Transport Policy in the US, UK and France' and spent alot of time in research. What was evident is the level of protectionism and subsidies in all three countries. One should also read the Monopolies and Mergers Commission report on BA/BCAL... shocking the extent to which BA had to give up little for alot. A very biased piece of "investigation"... but so be it. BA fitted into a political agenda of the governments at that time, and had to be profitable when privatized, so considerable debt was written off (or assumed) by the govt.
I am not saying the French government never has protected their 'chosen instrument' (that would be naive), but to deny the BA has benefitted from government largesse in the past is intellectually dishonest!


User currently online1400mph From United Kingdom, joined Jan 2013, 1039 posts, RR: 0
Reply 88, posted (1 year 7 months 22 hours ago) and read 5214 times:
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Quoting TYCOON (Reply 87):
Applause are in order for Pihero for pointing out this oft forgotten fact of UK government subsidies and protectionism of BA as it was being privatized and even after.
Quoting TYCOON (Reply 87):
I am not saying the French government never has protected their 'chosen instrument' (that would be naive), but to deny the BA has benefitted from government largesse in the past is intellectually dishonest!

No one would disagree with you. However, you point is only valid up until the year 1984.

Air France (not KLM before you compare AF-KLM to IAG) is racking up BILLION euro losses NOW. Why ? Because their management has failed in light of massively increased competition and changing economic reality. AF's peers i.e BA and LH are in the black comfortably.

As for BCAL it was 'unfortunate' that they failed as an airline but just like BD it was equally 'fortunate' (for all concerned) that BA were there to pick up the pieces. France and Germany undertstandably wouldn't understand this because their civil aviation isn't as competitively healthy (by a long shot) as the UK. These islands have seen the introduction of Ryanair, Easyjet, Virgin Atlantic and now their off-shoot 'Little Red' The UK government also aided VS by granting them access to LHR and even in some cases taking landing rights away from BA to allow VS to commence operations.

So you see all that considered your argument really falls rather flat especially when comparing to rather monopolistic environment AIr France has enjoyed. (and they are stilll losing millions)

Cheers.

[Edited 2013-03-04 02:43:21]

User currently offlineTYCOON From United States of America, joined Feb 2007, 397 posts, RR: 3
Reply 89, posted (1 year 7 months 21 hours ago) and read 5117 times:

1400mph, I don't see how you have demonstrated that my argument "falls flat" as it still holds... the UK govt has in the past provided financial support to BA...That was all I was saying... Doesn't really matter when or how or why... but I am just stating that it did in fact exist. Are state subsidies OK during one point in time and not in others? As Pihero pointed out, AF's aid was in the form of a loan that carried detailed stipulations and conditions as to its repayment and what AF could or could not do during the period it was indebted to the state for that amount. In the '80s, BA didn't have to make any similar commitments...
AF has had competition beginning in the 1980s, as many have pointed out, via government subsidized (and owned) French national railways which have seen many of AF/IT's bread and butter local routes (Paris-Lyon, Paris-Marseille, etc...) shrink ... And then the arrival of Ryanair and Easyjet with bases in France has certainly added to the problems...
AF is now going through the pains of restructuring as they can within the limits of French regulations (which I admit are difficult ones)... But I guess only time will tell... but I think for instance the further development of Transavia France, which has just recently turned profitable and whose presence is expected to double, will be a credible reaction to the LCCs.


User currently offlinePihero From France, joined Jan 2005, 4515 posts, RR: 76
Reply 90, posted (1 year 7 months 21 hours ago) and read 5106 times:
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Quoting 1400mph (Reply 88):
No one would disagree with you. However, you point is only valid up until the year 1984.

Rubbish. The British government protected BA for a much longer time : See the slot allocations at LHR (no airline that wasn't prersent before 1977 was allowed to bid. See also the protected BA's presence at LGW, all state decisions that have little to do with fair competition.
As I said,; they had the vision to do BA restructuration in 1987 as three years later, the EU commission would have had a lot to say about it : See the restrictions imposed on AF for a recapitalisation which was lower than BA beneficiated.
To recap : 20bn Francs in four installements from 1993 onwards against 25.45 for BA.

Quoting 1400mph (Reply 88):
Air France (not KLM before you compare AF-KLM to IAG) is racking up BILLION euro losses NOW. Why ? Because their management has failed in light of massively increased competition and changing economic reality. AF's peers i.e BA and LH are in the black comfortably.

Two remarks : Can't really separate entities that are now in a group. There is AFKL, then IAG or BAIB and there is LH Group which we could call LHAUSW...The losses incurred by the first two groups are, in spite of your very weak argumentation, very similar if not downright identical. To say that BA is comfortably in the black is disingenuous. They will be, and in the near future because I honestly believe that, after restructuration and better integration / synergies, IAG could well hold its ground against the other two European alliances. Time will see it that I'm not overly optimistic.
As for success, just have a look at the evolution of the two businesses : In terms of market share, in terms of evollution of size, the "world favourite airline" hasn't fared better than AF, has it ?

Quoting 1400mph (Reply 88):
The UK government also aided VS by granting them access to LHR and even in some cases taking landing rights away from BA to allow VS to commence operations.

I have a feeling, the EU commission had something to say about that point. Otherwise, why the dirty tricks ?

Quoting 1400mph (Reply 88):
So you see all that considered your argument really falls rather flat especially when comparing to rather monopolistic environment AIr France has enjoyed. (and they are stilll losing millions)

Again, your prejudice blinds you : About monoploly, didn't BA buy Air Liberté and TAT, with which they opened a potentially damaging competition with AF ? That they made a mess of that purchase, and basically all those of that time is another subject. And btw, that was at a time when AF was still constrained by the conditions imposed by the EU on its growth... BA had just about the field to themselves.
So, as VV701 said, isnt'it the matter of black kettles and pots ? ( and as we drink colffee, we don't have kettles so we don't really know what that means ).  
Quoting TYCOON (Reply 87):
In 1987, I wrote my thesis at the London School of Economics on 'Air Transport Policy in France' and a subsequent enlarged thesis in 1991 at MIT on 'Comparative Air Transport Policy in the US, UK and France' and spent alot of time in research

Thank you for your kind words, and boy ! what would I give to get a hand on your thesis !

Cheers and regards.



Contrail designer
User currently online1400mph From United Kingdom, joined Jan 2013, 1039 posts, RR: 0
Reply 91, posted (1 year 7 months 21 hours ago) and read 5068 times:
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Quoting TYCOON (Reply 89):
Are state subsidies OK during one point in time and not in others?

Rather depends on with whom the beneficiary is in competition with and whether the two are governed under the same juristiction..................

However, for what it's worth I personally think that a country should be at liberty to provide assistance to any company that is of significant national importance and vital to a nations economy.

Before the predictable responses flood in it is only in my humble opinion that airlines like AF, LH and BA are vital to their respective nations economy. I am sure there are those here that would argue all 3 could vanish overnight with no impact whatsoever to the EU coffers..........


User currently onlinejumpjets From United Kingdom, joined Apr 2012, 834 posts, RR: 0
Reply 92, posted (1 year 7 months 21 hours ago) and read 5065 times:

Quoting TYCOON (Reply 87):
I am not saying the French government never has protected their 'chosen instrument' (that would be naive), but to deny the BA has benefitted from government largesse in the past is intellectually dishonest!

Please, what has this to do with BA-IB merging? If you want to debate who got most subsidies [albeit in some cases 20 years ago] please start a new thread.

BA and IB to me seem a good fit with little overlapping markets. The whole merger process took too long [mainly I believe because of the BA pensions issue] with the result that by the time the merger took effect the unforeseen financial 'crisis' had arrived and the financial performance of both airlines, but particularly IB suffered greatly,

Once IBs internal issues are resolved, which may take 3 or 4 years, and the European economies start to recover then I believe the full benefits of the merger will be felt .

All that has to be resolved then will be the IAG European shorthaul strategy which seems to be in a mess - Iberia Express, Vueling acquisition , BA Gatwick etc all in the melting pot.


User currently online1400mph From United Kingdom, joined Jan 2013, 1039 posts, RR: 0
Reply 93, posted (1 year 7 months 20 hours ago) and read 4986 times:
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Quoting jumpjets (Reply 92):
BA and IB to me seem a good fit with little overlapping markets. The whole merger process took too long [mainly I believe because of the BA pensions issue] with the result that by the time the merger took effect the unforeseen financial 'crisis' had arrived and the financial performance of both airlines, but particularly IB suffered greatly,

Mmmm....IB got a damn good deal if you ask me and now their workforce has the effrontery to blame BA for their losses. I like everyone else do not want to see anyone lose their job or take a pay cut but just as with BA the time for negotiation came and went. The alternative is for everyone at IB to lose their job.

In fact from what I have seen and from what I fear is to come there is just too much ugliness involved here. Combined with the now long suffering Spanish economy and the mood of the Spanish people I think BA should head for the door. (whether that is possible or not I do not know...........?)


User currently offlineTYCOON From United States of America, joined Feb 2007, 397 posts, RR: 3
Reply 94, posted (1 year 7 months 20 hours ago) and read 4990 times:

1400mph, I actually agree with you on government support for certain key industries... believe it or not!
Markets can solve some problems, but not all... as we have all too often seen throughout modern history and even lately...


User currently online1400mph From United Kingdom, joined Jan 2013, 1039 posts, RR: 0
Reply 95, posted (1 year 7 months 20 hours ago) and read 4925 times:
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Quoting TYCOON (Reply 94):
1400mph, I actually agree with you on government support for certain key industries... believe it or not!
Markets can solve some problems, but not all... as we have all too often seen throughout modern history and even lately...

Well it's all just a mess isn't it. Do we really care at the end of the day how they survive as long as they don't go bust and throw everyone that works for them on the scrap heap. I mean do EK's ticket sales really support financially the order of 100 A380's and their other orders ??


User currently offlineLHRFlyer From United Kingdom, joined Apr 2010, 816 posts, RR: 1
Reply 96, posted (1 year 7 months 20 hours ago) and read 4923 times:

Quoting 1400mph (Reply 93):
Combined with the now long suffering Spanish economy and the mood of the Spanish people I think BA should head for the door. (whether that is possible or not I do not know...........?)

In theory, there's nothing preventing IAG from disposing of Iberia (not that there would be willing buyers) or shutting it down (which may feature as some sort of "Plan B").

The Spanish economy is by no means out of the woods yet. But at least, compared to say Italy, things are heading in the right direction and Spain has political stability. The budget deficit is under control. The prospects of Spain leaving the Eurozone or a bailout have diminished. A lot of work still to do and times are still very hard, but Spain is making progress.

So, I think there's reason to be ultimately sanguine about the prospects for Iberia.

[Edited 2013-03-04 04:09:50]

User currently online1400mph From United Kingdom, joined Jan 2013, 1039 posts, RR: 0
Reply 97, posted (1 year 7 months 20 hours ago) and read 4861 times:
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Quoting LHRFlyer (Reply 96):
So, I think there's reason to be ultimately sanguine about the prospects for Iberia.

Yes I do understand that.

BA is 'finally' in a strong position I mean lets face it the last 15 years or so have been a nightmare. I just think it is a shame that now just when they are in this strong position they have lined themselves up for another load of flak !! Someone else here said that if they had known they would acquire the BD slots would they have still merged with IB ?

Granted the benefits if realised will be significant but with the additional BA slots at LHR in mind is it really that necessary for BA ? I guess the city thinks so judging by the share price rise.


User currently offliner2rho From Germany, joined Feb 2007, 2642 posts, RR: 1
Reply 98, posted (1 year 7 months 19 hours ago) and read 4806 times:

Quoting Azure (Reply 34):
IAG was not created with the fiscal year 2012 in mind but with a long term perpective !

Exactly! People are overreacting because IB is going through bad times right now, but they are only seeing an instantaneous picture, without the long-term perspective. IB was profitable for many years up to shortly before the merger, and can return to that profitability if succesfully turned around. The BA-IB route networks are perfectly complementary. MAD is a great airport with plenty of room for growth. LatAm is cited in many market outlooks as the future next big region for air traffic growth. As soon as things at IB can get fixed, there is lots of potential.

Quoting panamair (Reply 12):
Geographically speaking, MAD is only well-positioned for Europe-Latin America flows; LHR is a superior hub for North America-Europe traffic flows...

I don't see any disadvantage. Leave North Atlantic and Asia to BA at LHR, LatAm to IB at MAD. Perfectly complementary split. In addition, I think MAD has a still untapped potential as Africa gateway. All of West Africa can be covered by A319's from there. IB has already launched some routes like that but could do more IMO. The market is not huge but the yields are high and competition small.

Quoting realsim (Reply 83):
Another key point here is that BA/IB are, by far, the airlines with most LCC competition in their countries and home cities. Just until recently, apart from IB, JK, UX, FR and U2 had all bases in MAD

Indeed, this is often overlooked. U2 expanded into France much later than Spain, and AF dominated the French regions for a much longer time than IB did in its own market. In Germany, U2 are virtually non-existent except at SXF, and AB is hardly a big enough competitor for LH to worry about. Even today, hardly any LCC dares to fly to LH's FRA or MUC fortresses, while IB has had to fight U2 & FR at MAD and BCN for years.

Quoting realsim (Reply 83):
BA is the largest European airline from Europe to North America, and Iberia is the largest airline from Europe to Latin America. If you own both, then you are the largest airline from Europe to America as a whole.

   And add AA via OW from North to South America into the mix, and you close the triangle!

Quoting realsim (Reply 83):
the train competition will increase and this is why IB's domestic network will continue to be a problem.

IMO MAD needs to get a HSR station à la CDG/FRA, then IB could just make rail&fly deals with them and stop the bloodbath. It is a shame (and missed opportunity) that Spain's AVE network is not linked up with the major airports. In any case, VY and IB Express seem to be doing well in Spain. Mid-term, IB mainline short-haul cannot survive, it will have to go to those two subsidiaries.


User currently offlineLHRFlyer From United Kingdom, joined Apr 2010, 816 posts, RR: 1
Reply 99, posted (1 year 7 months 19 hours ago) and read 4764 times:

Quoting 1400mph (Reply 97):
just think it is a shame that now just when they are in this strong position they have lined themselves up for another load of flak !! Someone else here said that if they had known they would acquire the BD slots would they have still merged with IB ?

I agree. But it just wouldn't be BA if there wasn't some sort of financial or operational crisis to be dealing with!


User currently offlineVV701 From United Kingdom, joined Aug 2005, 7566 posts, RR: 17
Reply 100, posted (1 year 7 months 14 hours ago) and read 4549 times:

Quoting Pihero (Reply 84):
So, as a matter of fact you confirmed that Thatcher's government footed a bill of 901 M £ for fleet investment at a time when the company was just about to be sold to investors.

Please be good enough to read what you quoted from my earlier post in your Reply 84. The last seven words from your quote are " . . . BUT NOT ANY OF THE DEBT ITSELF." Apparently you have read this as meaning all £901 million of the debt when I clearly said "not any" (of the £901 million). Such very poor comprehension certainly explains why you keep making total erroneous statements of "fact" but have been unable to provide a single source.

Your criticisms of the British government in the lead up to BA privatisation and beyond fly in the face of all the available facts. For example without government approval and support, Virgin Atlantic could not have operated its inaugural service (between LGW and EWR) in June 1984. And without the British government negotiating an amendment to the restrictive UK-USA Bermuda 2 Agreement in 1991, Virgin Atlantic could not have operated from LHR to anywhere in the USA.

Similarly in 1981 BD applied to operate out of LHR for the first time (to EDI and GLA). Their application to the CAA (admittedly a government body) was rejected. So they appealed directly to the Secretary for Trade and Industry, a member of the cabinet of the British government. He over-ruled the CAA and BD entered direct competition with BA for the first time.

As far as I am aware all of this resulted in a higher level of competition at LHR than any other airport in the world. This is because it became the home hub not just of BA but also two other widely recognised international airlines, BD and VS. With the roots of this competitive market all originating between the Thatcher government coming to power in May 1979 and the privatisation of BA in February 1987, protestations about any anti-competitive action by the government of the day look rather silly. For example you say that slots at LHR were only available to airlines operating there before the Thatcher government came to power. Yet it is a fact that BD started to operate in direct competition with BA in 1981. It is also a fact that VS started to operate in direct competition with BA from LHR in 1991.


User currently offlinePihero From France, joined Jan 2005, 4515 posts, RR: 76
Reply 101, posted (1 year 7 months 9 hours ago) and read 4326 times:
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Quoting VV701 (Reply 100):
Please be good enough to read what you quoted from my earlier post in your Reply 84. The last seven words from your quote are " . . . BUT NOT ANY OF THE DEBT ITSELF." Apparently you have read this as meaning all £901 million of the debt when I clearly said "not any" (of the £901 million). Such very poor comprehension certainly explains why you keep making total erroneous statements of "fact" but have been unable to provide a single source.

See my post # 84 above. you'll find my argument and my source.

Quoting VV701 (Reply 100):
Your criticisms of the British government in the lead up to BA privatisation and beyond fly in the face of all the available facts.

I didn't criticize the British government. I was just pointing at some practices which were quite alright in 1984-1987 but not later in tyhe case of AF.

Quoting VV701 (Reply 100):
For example without government approval and support, Virgin Atlantic could not have operated its inaugural service (between LGW and EWR) in June 1984.

Did they fly from LHR at that date ? No.
Could they fly from LHR at that date ? No.
Was the slot allocation protected at LHR and only available to airlines present befopre 1977 ? Yes.

Quoting VV701 (Reply 100):
And without the British government negotiating an amendment to the restrictive UK-USA Bermuda 2 Agreement in 1991, Virgin Atlantic could not have operated from LHR to anywhere in the USA.

That, my friend is twisting the facts . In 1991 came the agreement between the USA and the EU on air trafficas the EU commission took the regulation that bilateral agreements between the USA and individual EU countries were void and had to be renegociated, this time for all EU coutries. The distorsion between the mùight of the US and the exposure of each country disappeared about overnight. That , and only that, broke the monopoly at LHR.

Quoting VV701 (Reply 100):
Similarly in 1981 BD applied to operate out of LHR for the first time (to EDI and GLA). Their application to the CAA (admittedly a government body) was rejected. So they appealed directly to the Secretary for Trade and Industry, a member of the cabinet of the British government. He over-ruled the CAA and BD entered direct competition with BA for the first time.

The fact is BA entered an earlier agreement with British Midland whereby BD would relinquish its continental Europe lines in exchange of a greater access to the UK domestic network. To BA Europe, to BD a piece of the internal market. As it happened, that was a bad decision from BA as it opened an entry for BD to LHR... for two Scottish destinations - Gosh ! what a progress ! And whaty an extraordinary competition !

Quoting VV701 (Reply 100):
With the roots of this competitive market all originating between the Thatcher government coming to power in May 1979 and the privatisation of BA in February 1987, protestations about any anti-competitive action by the government of the day look rather silly. For example you say that slots at LHR were only available to airlines operating there before the Thatcher government came to power. Yet it is a fact that BD started to operate in direct competition with BA in 1981. It is also a fact that VS started to operate in direct competition with BA from LHR in 1991.

You said it . Put aside the BD slots to Glasgow and - I think - Edimburg, LHR only opened to other airlines in 1991 :
"From 1977 to 1991 special rules applied to Heathrow, because of overcrowding. An important restriction was also applied. The airlines that were not operating before 1977 at Heathrow Airport were not allowed to fly there. It really decreased the competition among the airlines, and also gave a competitive advantage to British Airways. And also whole-plane charters were banned. Any new domestic services had to be authorized by the Secretary of State for Transport... 1991 was a turnaround. In spring 1991 two ailing US carriers sought to sell their Heathrow routes to stronger rivals that did not have landing rights, and the UK government decided to end the ban on new airlines to accommodate the newcomers.”
The source is :" Privatisation of BA" by Vicky Kaintura.
But there is a lot more behind the cold facts the author is providing... Especially some arm-twisqting from the EU commission.

[Edited 2013-03-04 15:23:34]


Contrail designer
User currently offlineVV701 From United Kingdom, joined Aug 2005, 7566 posts, RR: 17
Reply 102, posted (1 year 6 months 4 weeks 1 day 19 hours ago) and read 4139 times:

Quoting Pihero (Reply 101):
Did tCould they fly from LHR at that date ? No.
ey fly from LHR at that date ? No.
Could they fly from LHR at that date ? No.


Correct. VS could not fly from LHR because the bilateral agreement with the USA signed in 1977 by the previous (Callaghan) government and not by te Thatcher government, restricted operations from LHR to the USA to three named airlines, BA, PA and TW. But as I have already pointed out BD were granted the right to fly in direct competition with BA by the Thatcher government between LHR and both EDI and GLA in 1984 which was, of course, before BA privatisation. Regrettably the Thatcher government could not allow BD to operate in direct competition to BA on European (as opposed to domestic) routes as, at that time and until the start of EU deregulation in 1992, the French and other European governments would not renegotiate their bilateral agreements with the UK. So direct competition between BA and BD on European routes had to wait.

Returning to the VS situation, the demise of PA and the significant financial problems of TW in the very early 90s meant that if an American airline was to operate into LHR, Bermuda 2 had to be renegotiated. So the British government agreed that the treaty should be amended to allow AA and UA to operate between LHR and the nominated US gateway cities provided that VS was also added to the agreement. So by the start of EU deregulation in 1992 the Thatcher and then the Major governments had effectively introduced deregulation and direct competition for BA into the LHR domestic and Nortg American markets. Similar competition in the European market had to wait until pushed throug by the EU starting in 1992.

Contrary to your assertions that

Quoting Pihero (Reply 90):
The British government protected BA for a much longer time : See the slot allocations at LHR (no airline that wasn't prersent before 1977 was allowed to bid.


BD obtained slots to operate their flights to EDI and GLA, the first destinations they served from LHR, in 1984. Contrary to your assertion boldly and very incorrectly preceded by the word "rubbish", both BD and VS, neither of whom had operated a single flight out of LR in 1977, built up substantial slot holdings at LHR. By the start of Summer Season 2009 BD had built their LHR slot holding to 1,091 weekly slots or 11.5 per cent of the total. And today VS are the third largest operator at LHR (behind BA and LH) with 308 slots. So your assertion was way off the mark.

My source for the slot statistics above is the Airport Coordination Ltd web site.


User currently offlinePihero From France, joined Jan 2005, 4515 posts, RR: 76
Reply 103, posted (1 year 6 months 4 weeks 1 day 18 hours ago) and read 4083 times:
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Please stop twisting the argument :
The argument was BA had been protected from any meaningful competition until 1991 when the EU took over renegociations of all the individual air agreements made with the US.
Prove me wrong, because so far, you just confirmed my so-called "assertion".

IIRC, the slots BD was allocated were in fact in exchange of flights they operated to continental Europe, to AMS and FRA, from Birmingham, for rights to fly from Liverpool to " London Heathrow Airport, Belfast, Dublin, Jersey, the Isle of Man and Glasgow." ( source is Wiki ). That is the event that put BD's foot into LHR. The extension of the LHR Liverpool was a logical development ( and part of the legal argument BD introduced to the Secretary of Transport ). It wasn't a simple gift to please the BD CEO's pretty eyes.

That both BD and VS built up meaningful operations out of Heathrow after 1991 has to do with simple applications of the slot allocation rules which are now still in effect, grandfathers right included, is not in question. I just make the remark that you insistently ignore that the Bermuda 2 agreement cancellation was an EU feat. Not a simple renegociation done by the UK government, suddenly realising the virtues of fair competition.

To sum up , I just repost the questions I asked in # 101 :

"Did they ( VS and BD ) fly from LHR at that date (1984 ) ? No.
Could they fly from LHR at that date ? No.
Was the slot allocation protected at LHR and only available to airlines present befopre 1977 ? Yes
}"

to which you agreed with me.
So where is the problem ?



Contrail designer
User currently offlineVV701 From United Kingdom, joined Aug 2005, 7566 posts, RR: 17
Reply 104, posted (1 year 6 months 4 weeks 1 day 15 hours ago) and read 3969 times:

Quoting Pihero (Reply 103):
Please stop twisting the argument :
Quoting Pihero (Reply 103):
"Did they ( VS and BD ) fly from LHR at that date (1984 ) ? No.
Could they fly from LHR at that date ? No.
Was the slot allocation protected at LHR and only available to airlines present before 1977 ? Yes }"

I did get this wrong. The BD flights in direct competition with BA between LHR and EDI and GLA had actually been in operation for around three years before what I previously stated. They reportedly started in 1981:

"In 1981, an application to fly between Heathrow, Glasgow and Edinburgh was denied by the Civil Aviation Authority. The ruling was overturned after an appeal was lodged with the Secretary of State for Trade and Industry. With the introduction of these services, BMA and BA were now in direct competition."

See here:

http://budgetairlinewatch.com/?page_id=158

I have already explained why VS had to start their trans-Atlantic operations from LGW. They continued to operate only from there in indirect competition with BA until the demise of PA together with TW's problems gave the British government the opportunity to amend Bermuda 2 in 1991. At that point VS, AA and UA replaced PA and TW on flights between LHR and the USA and VS operated in direct, side-by-side competition with BA.

So did BD fly out of LHR from 1981? YES.

Were BD well established in operating in direct competition on domestic flights with BA out of LHR by 1984? YES.

Did the British government try to stop this to protect BA? No, they authorised it by actually over-ruling the UK CAA.

Did the British government authorise VS to operate across the North Atlantic from LGW in indirect competition with BA from 22 June 1984? YES

Could the British government have authorised VS to fly to the USA from LHR at that time? NO. VS could not have obtained landing rights in the USA because of the restrictive bilateral air services agreement of 1977.

Did the British government renegotiate the bilateral air services agreement between the UK and the USA at the earliest opportunity thus allowing VS to compete directly with BA on the North Atlantic as soon as was possible after the May 1979 election? YES . Effectively they said to the American negotiators "add VS to the list of authorised opporators and you can also add any two American airlines of your choice".

Was VS flying in direct competition with BA from LHR before there was any liberalisation of operations between EU member states? YES.

Had BD been flying domestically out of LHR in direct competition with BA for more than a decade when EU deregulation started in 1992? YES.

Was slot allocation at LHR limited to pre-1977 LHR operators during the run up to BA privatisation? How could it be when BD had no LHR operations in 1977 and launched LHR-EDI and LHR-GLA flights in 1991?


User currently offlinePihero From France, joined Jan 2005, 4515 posts, RR: 76
Reply 105, posted (1 year 6 months 4 weeks 1 day 11 hours ago) and read 3794 times:
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your argumentatioin is akin to rerpeating a mantra
If the BA- BD accord of 1981 allowing BD to orerate a LPL-LHR service in exchange for lines to AMS and FRA a sign of competition, you and I have a serious problem of vocabulary.
That BD got a few slots later thanks to a Secretary of transports ruling is IMVHO at last adding a bit of fairness in treatment of "national" airlines. And I never questioned that fact, just saying : such a competition ! How many slots , 40 ? 50 a week compared to the 20,000 slots or so BA did own ?
So, before 1991 BA had the lion share of the international traffic of the UK. No need to dsicuss it, it was a fact of life. Of course, you could claim "there was an "indirect competition between BA and VS... so tell me, is there really a possible comparison between an LHR-JFK and an LGW-EWR ?.. and I don't even delve into frequencies ( I don't know them ).

Quoting VV701 (Reply 104):
Was slot allocation at LHR limited to pre-1977 LHR operators during the run up to BA privatisation? How could it be when BD had no LHR operations in 1977 and launched LHR-EDI and LHR-GLA flights in 1991?

So, I assume the answer is "Yes".
There is no point in going further in circles.
You have the floor.



Contrail designer
User currently offlineVV701 From United Kingdom, joined Aug 2005, 7566 posts, RR: 17
Reply 106, posted (1 year 6 months 4 weeks 17 hours ago) and read 3558 times:

Quoting Pihero (Reply 105):
How many slots , 40 ? 50 a week compared to the 20,000 slots or so BA did own ?


20,000 BA LHR weekly slots? What is your source? Or is this a number plucked out of the air with no basis in fact?

Back in Winter 2003 the total number of weekly LHR slots operated by ALL airlines was 8,971. Of these 3,576 were operated by BA and 1,145 by BD. These numbers can be verified on page 5 of the Winter 2003 report on the web site of the LHR slot coordinator here:

http://www.acl-uk.org/reportsStatistics.aspx?id=98&subjectId=33

On page 3 of the Winter 2012 report you will see that with improvements to ATC the number of available weekly LHR slots has grown to 9,296. So if we assume that back in the 80s BA had half the available slots (which I am pretty sure it did not as the 2003 report shows it then had only 41.9 per cent), the indicative total number of LHR slots based on your assertion of 20,000 BA slots would have been 40,000+. For this to have been physically possible LHR would have had to have nine runways all usable simultaneously assuming ATC was as efficient then as it is today. Be assured that then as now LHR only had two and not nine simultaneously operable runways.


User currently offlinePihero From France, joined Jan 2005, 4515 posts, RR: 76
Reply 107, posted (1 year 6 months 4 weeks 13 hours ago) and read 3421 times:
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OK,Sorry ! one zero too many. I typed too quick from a French keyboard.

Nonetheless, I went searching for some history of BA v VS and finally stumbled on a judgement by a US appelate court on one of the many lawsuits between the two.

A small part of the judgement gives some titillating glimpses on the "competition " :

". When it began operations, Virgin offered only a single daily flight between London's Gatwick Airport (Gatwick) and Newark Airport in New Jersey. The United Kingdom's Traffic Distribution Rules then in effect limited Virgin to operating flights out of Gatwick, because only carriers operating out of Heathrow as of the rules' 1977 effective date could continue to do so. British Airways was one such carrier. The restrictions were imposed because Heathrow was congested and the [*260] British government wished to promote the development of other London airports, such as Gatwick.

...Heathrow is considered superior to Gatwick because it has two runways and a large terminal, while Gatwick has one runway and more limited gate facilities. Heathrow is also located near a number of major corporate offices that generate demand for international travel, while fewer corporate offices surround Gatwick and local ground transportation is less developed. Further, since Heathrow is perceived as the premier airport in Europe, it is preferred by national flag carriers of other countries, resulting in more connecting traffic to the benefit of local hub carriers. Gatwick, on the other hand, serves a large proportion of charter flights, which provide fewer connecting passengers.
"

I think that the subject of the "competition" are very well laid out by the tribunal, don't you ? I especially love the comparative situations on both airport and the advantage of Heathrow - which no sane mind would challenge.
Reminds me of a race when one of the athletes carries an 80 lbs weight on his shoulder !

"...By 1991, seven years after its founding, Virgin had added five new routes out of Gatwick. Since Virgin wanted to operate from Heathrow, it lobbied for access and ultimately the Traffic Distribution Rules were abolished, freeing up a limited number of slots at Heathrow. Virgin promptly transferred three routes from Gatwick: New York (JFK); Tokyo; and Los Angeles. In making this change, it gave up peak operating times at Gatwick for less attractive times at Heathrow. Even though it has gained access to the desired airport, Richard Branson acknowledges Virgin can never replicate British Airways' network due to Heathrow's limited space and the method used for assigning slots."

(follows a description on slot allocation mechanisms ...)

"...At the close of discovery in July 1997, British Airways held the largest number of Heathrow slots for the 1996-97 operating year -- 161,100 -- amounting to 39 percent of those available and totaling nearly three times as many slots as the second-largest holder, British Midland, with 56,500. British Airways operated 19 monopoly routes out of Heathrow, 45 duopoly routes, competed with two other airlines on 19 routes, and competed with three or more airlines on [**8] its remaining 11 routes. "

Not to compare a long haul slot with a short haul one. In terms od ASK, it is peanuts.

"...British Airways considers its United States-United Kingdom routes the most profitable and views Virgin as a "cherry-picker" seeking to take business from those routes. Richard Branson has in fact said that "Virgin Atlantic flies only on intensely competitive routes." By July 1997 Virgin held 6,300 slots at Heathrow -- about two percent of those available -- from which it operated six transatlantic routes, while it flew another three transatlantic routes from Gatwick."

Another comment bon "fair competition", which I do not dispute as, after all VS was the newcomer. But to say, as you do that all was hunky-dory was stretching the truth a little bit.
(Stresses are of course, mine)

The file can be found here

[Edited 2013-03-06 10:41:13]


Contrail designer
User currently offlineVV701 From United Kingdom, joined Aug 2005, 7566 posts, RR: 17
Reply 108, posted (1 year 6 months 3 weeks 5 days 19 hours ago) and read 2932 times:

Quoting Pihero (Reply 107):


Clearly when you say "But to say, as you do that all was hunky-dory was stretching the truth a little bit" you were, to coin a phrase, "stretching the truth a little bit".

Note for example the word "restrictive" in

Quoting VV701 (Reply 100):
the restrictive UK-USA Bermuda 2 Agreement


and

Quoting VV701 (Reply 104):
the restrictive bilateral air services agreement of 1977


Please be assured that when I say something is "restrictive" I am not saying something is "hunky-dory". Accusing me of saying "hunky-dory" when I said no such thing and when I actually used the word "restrictive" is about as far away from the truth as you can get.

Nevertheless thanks for sharing your source. It confirms much of what I said once you accept the fact that the Thatcher government was elected in May 1979. By that time the restrictive - repeat RESTRICTIVE - Bermuda 2 Agreement had been in force for nearly 14 months. Further the new (Thatcher) )government's aviation policy including their intention to privatise BA was not announced until July 1979. What your source describes as "the United Kingdom's Traffic Distribution Rules" by which it means the bilateral air services agreement between the UK and the USA known as "Bermuda 2" was signed by the British Callaghan government and the American Carter Administration in 1977. See paragraph 9 here:

http://www.publications.parliament.u...00/cmselect/cmenvtra/532/53206.htm

Where your source is mistaken is in saying that what it calls "the United Kingdom's Traffic Distribution Rules" ended in 1991. They did not. They ended on 30 March 2008 when the EU-US Open Skies Agreement superseded the Bermuda 2 Agreement.

What happened in 1991 I have previously explained and is detailed in paragraph 12 of the above link that reads:

"12. The most significant amendment of Bermuda II was prompted by the demise of Pan Am and TWA in 1991. The renegotiation of Bermuda II that followed led to an agreement which permitted American Airlines and United Airlines to operate instead from Heathrow. In return a second British carrier, Virgin Atlantic, was permitted to operate trans-Atlantic routes from Heathrow alongside British Airways."

Other airlines were not permitted to operate between LHR and the USA until the EU-US Open Skies agreement came into force. So on 30 March 2008 CO, DL, NW and US all moved the majority of their USA-LON flights from LGW to LHR. The fact that they were able to obtain slots for these flights is also indicative that, if the will exists, obtaining LHR slots is not so difficult as some like to claim. This is confirmed by the way that BA grew its LHR slot holding from 3,602 weekly slots at the start of the Summer 2003 Season to 4,198 at the start of the Summer 2012 Season (which was before they merged BD into their operation on 20 April 2012). With VS operating a total of only 310 slots this growth of 596 slots is the equivalent of adding almost two whole VS operations to BA's slot portfolio. You can check out all of these numbers in the appropriate reports here (although the 2003 data will be found in the 2004 report):

http://www.acl-uk.org/reportsStatistics.aspx?id=98&subjectId=33

So I will summarise the position:

The restrictive Bermuda 2 agreement was signed in 1977 and came into force in 1978.

This agreement was nothing to do with the Thatcher government elected in May 1979 or their civil aviation policy announced in July 1977 except that it was the bilateral air services agreement between the UK and the USA that had only come into force less than 14 months before Thatcher was elected. So it cannot be accurately described as having been designed to protect BA from competition in te pre- and post-privatisation periods.

In 1981 the Thatcher government over-ruled the UK CAA and granted BD rights to operate between LHR and both EDI and GLA, the first time any British airline had been allowed to compete directly against either BA or its predecessors, BEA and BOAC out of LHR.

In 1984 te newly formed VS was granted rights by the Thatcher government to indirectly compete against BA between LON and NYC. This was the first time any British airline had been granted the right to fly between LON and an international destination

In 1987 BA was privatised

In 1991 VS was added to the three airlines allowed to operate between LHR and the USA.

In 1992 te EU adopted responsibility for European Civil Aviation Policy and te process of European deregulation commenced.

In 2008 te EU-USA Open Skies agreement superseded the restrictive Bermuda 2 agreement and CO, DL, NW and US were allowed to move their flights from LGW to LHR and compete directly with AA, BA, UA and VS.

It is therefore my argument thart far from restricting competition with BA in front of privatisation as you claimed it was the Thatcher government that first introduced both direct sort-haul and indirect long-haul competition aganist BA (both prior to privatisation) and that the successor Major government first introduced direct long-aul competition against BA soon after privatisation.


User currently offlinecharliecossie From Germany, joined Oct 2001, 479 posts, RR: 9
Reply 109, posted (1 year 6 months 3 weeks 5 days 19 hours ago) and read 2913 times:

Quoting VV701 (Reply 108):
In 1984 te newly formed VS was granted rights by the Thatcher government to indirectly compete against BA between LON and NYC. This was the first time any British airline had been granted the right to fly between LON and an international destination

What were BCal playing at, then?  


User currently offlinePihero From France, joined Jan 2005, 4515 posts, RR: 76
Reply 110, posted (1 year 6 months 3 weeks 5 days 18 hours ago) and read 2859 times:
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Thius is ludicrous :
Everything you say is about semantics :
-LON instead of LGW, which any sane mind would not compare with LHR : proof is VS accepting less favourable times for LHR slots in exchange for LGW ones ( which I cited in a previous post )
To me, a competition is about fairness : "indirect" competition is about loading one or more of the competitors with some extra weight / restrictions / limitations.
-Forgertting, very conveniently to mention BCal shows your argumenting techniques.
-Apart from that, I won't discuss British politics, so you're well entitled to your opinion. That's only one amongst many.
Btw, you also forgot the leftover slots to NRT BA had to abandon in favour of VS, which caused Mr King to cancel his payments to the Conservative party for a felt "betrayal", which implied he was well aware of some protection from a conservative government, prior to 1992.

Quoting VV701 (Reply 108):
both direct sort-haul and indirect long-haul competition aganist BA (both prior to privatisation)

We've talked about that : British Midlands abandonned flights to big European gateways (AMS and FRA ) in exchange for ONE LPL-LHR and a few lines to Scotland: A very big deal indeed.

Quoting VV701 (Reply 108):
The fact that they were able to obtain slots for these flights is also indicative that, if the will exists, obtaining LHR slots is not so difficult as some like to claim

Agreed. But why did it take so long to open LHR slots to newcomers ? Are you implying that the "prior to 1977 " super grandfathers' right was just a load of bull ? Seems certainly so.



Contrail designer
User currently online1400mph From United Kingdom, joined Jan 2013, 1039 posts, RR: 0
Reply 111, posted (1 year 6 months 3 weeks 3 days 1 hour ago) and read 2512 times:
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http://www.ft.com/cms/s/0/94ef4c7e-8...a0-00144feabdc0.html#axzz2NDDsfGiC

This is a bit worrying.

I don't know about all this.

The Spanish Governement aren't going to let IB possibly go bust no matter how much money the airline is losing or how inefficient it currently is. Understandably they are concerned about the impact on the image of the country and its economy.

I don't care how they do it but I think BA should give up on this one.


User currently offlineBlueShamu330s From UK - England, joined Sep 2001, 2948 posts, RR: 23
Reply 112, posted (1 year 6 months 3 weeks 3 days ago) and read 2432 times:

The Spanish Government, or a misguided member of it, can grand stand and drum beat all he wants in the interest of garnering public support.

However, he and everyone else knows that whilst Iberia is a public traded company, the Government is effectively impotent in becoming involved, whether they want to or not.

What he has said though is going to give the unions false hope that the Government both supports their position and will jump in to save the company from the evil IAG, should it be necessary.

I wonder what the next turn will be; place IB on the market and focus on the purchase and future development of Vueling...?

I still see a real possibility of IAG comprising of BA, Vueling and a stake in LATAM.

Sell Iberia back to the Government; let them cure the sick patient.

Rgds

[Edited 2013-03-11 02:01:16]


So I drive a 4x4. So what?! Tax the a$$ off me for it...oh, you already have... :-(
User currently online1400mph From United Kingdom, joined Jan 2013, 1039 posts, RR: 0
Reply 113, posted (1 year 6 months 3 weeks 3 days ago) and read 2414 times:
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Quoting BlueShamu330s (Reply 112):

IB's employees will latch onto this like a dog with a bone and as far as they are concerned the dye has been cast.

The level of bad feeling however misguided is disturbing and I for one don't like it.


User currently offlineLHRFlyer From United Kingdom, joined Apr 2010, 816 posts, RR: 1
Reply 114, posted (1 year 6 months 3 weeks 2 days 23 hours ago) and read 2387 times:

Bloomberg is claiming IAG has accepted the Spanish mediator's proposals:

http://www.bloomberg.com/news/2013-0...posal-in-iberia-labor-dispute.html


User currently online1400mph From United Kingdom, joined Jan 2013, 1039 posts, RR: 0
Reply 115, posted (1 year 6 months 3 weeks 2 days 23 hours ago) and read 2359 times:
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Quoting LHRFlyer (Reply 114):
Bloomberg is claiming IAG has accepted the Spanish mediator's proposals:

What are they and will they be enough to stem the losses ?

(the share price is up today and has held up throughout....)

[Edited 2013-03-11 02:05:42]

[Edited 2013-03-11 02:25:25]

User currently offlineBongodog1964 From United Kingdom, joined Oct 2006, 3602 posts, RR: 3
Reply 116, posted (1 year 6 months 3 weeks 2 days 23 hours ago) and read 2336 times:

Quoting 1400mph (Reply 111):
http://www.ft.com/cms/s/0/94ef4c7e-8...a0-00144feabdc0.html#axzz2NDDsfGiC

This is a bit worrying.

I don't know about all this.

The Spanish Governement aren't going to let IB possibly go bust no matter how much money the airline is losing or how inefficient it currently is. Understandably they are concerned about the impact on the image of the country and its economy.

I don't care how they do it but I think BA should give up on this one.

If the Spanish Govt wish to interfere, they will need to put their hands into their pockets and pay for the inefficiencies. Two problems however, firstly their pockets are completely empty, and secondly EU rules don't allow them to subsidise airlines.

Conclusion - its all hot air.


User currently online1400mph From United Kingdom, joined Jan 2013, 1039 posts, RR: 0
Reply 117, posted (1 year 6 months 3 weeks 2 days 23 hours ago) and read 2314 times:
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Quoting Bongodog1964 (Reply 116):
Conclusion - its all hot air.

Maybe but how far are the staff prepared to go and what further losses will be incurred by more damaging strikes ?

Will relations between IB staff and the British parts of their management be damaged irrevocably creating a long standing unproductive grudge ?

After years of tittle-tattle with VS....... etc etc

[Edited 2013-03-11 02:33:50]

User currently offlineLHRFlyer From United Kingdom, joined Apr 2010, 816 posts, RR: 1
Reply 118, posted (1 year 6 months 3 weeks 2 days 22 hours ago) and read 2307 times:

I don't know the exact detail of the arbitrator's decision but it is still a very significant number of job losses.

The unions have to accept the proposals but, assuming they do, IAG has an agreed settlement that gives certainty rather than pursuing another option on its own that carries huge uncertainty that could drag on for months.


User currently offliner2rho From Germany, joined Feb 2007, 2642 posts, RR: 1
Reply 119, posted (1 year 6 months 3 weeks 2 days 16 hours ago) and read 2119 times:

Quoting LHRFlyer (Reply 114):
Bloomberg is claiming IAG has accepted the Spanish mediator's proposals

And the unions have agreed "in principle" but will announce their final decision wednesday.

3,141 employees fired (versus 3,807 proposed by IAG), of which 2,256 ground staff, 627 cabin crew and 258 pilots, in the period 2013-15. Those who remain will have to accept a salary reduction of 14% (flight&cabin crew) or 7% (ground staff). No profit sharing and freezing of other benefits. One more month to negotiate productivity improvements (basically more flight hours), if no agreement reached then a further 4% salary reduction occurs automatically. Cancellation of all remaining strikes. Maintenance and handling services can remain "if a competitive cost base is achieved".

Links in Spanish:
http://www.elmundo.es/elmundo/2013/03/06/economia/1362588086.html

http://www.elmundo.es/elmundo/2013/03/10/economia/1362942660.html

http://www.elmundo.es/elmundo/2013/03/11/economia/1362988448.html


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