columba
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LTU Thinks Of Buying Air Madrid

Tue Dec 26, 2006 11:21 pm

According to several news sites in Germany the CEO of LTU Mr. Marbach will travel to Madrid tomorrow to talk about a possible acquisition of Air Madrid shares.
"Air Madrid is serving a very interesting market for us", a company spokesman is quoted. Air Madrid mostly flies to destinations in South American and the Carribean.
Also a big plus is that Air Madrid operates Airbus aircraft and LTU also has an all Airbus fleet.
Links in German:
http://www.aero.de/news.php?varnewsid=2037

http://www.zeit.de/news/artikel/2006/12/26/85938.xml
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Magyarorszag
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RE: LTU Thinks Of Buying Air Madrid

Tue Dec 26, 2006 11:34 pm

In the case LTU takes control of NM, what would be the wisest move? To keep it as a separate airline, or to merge it ?
 
bongo
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RE: LTU Thinks Of Buying Air Madrid

Tue Dec 26, 2006 11:59 pm

Quoting Magyarorszag (Reply 1):
what would be the wisest move? To keep it as a separate airline, or to merge it ?

Since Air Madrid´s corporate image and reputation are in a really bad shape, I assume the wisest is to merge it...It would be nice to see LTU´s around here in Southamerica.
MDE: First airport in the Americas visited by the A380!
 
IberiaA319
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RE: LTU Thinks Of Buying Air Madrid

Wed Dec 27, 2006 12:02 am

Actually five different companies were interested in acquiring Air Madrid shares:

-Gestair
-a Spanish company related with the lease of jets (?)
-an investment fund related to Swiftair
-LTU
-Constructora San José, a Spanish construction group which is not interested anymore

Also Marsans might be interested now.

The offers were well under the real market value, according to Air Madrid's president, J. L. Carrillo, which should be around 120 million Euro.

Air Madrid has lots of debts. In 2004 they had a loss of 6.5 million Euro, in 2005 the losses were of 15.28 million Euro. Their debts are now well over 39 million Euro, they have to return the sold tickets of future months, plus they have to pay the chartered planes leased by the government.

[Edited 2006-12-26 16:06:56]
 
Beaucaire
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RE: LTU Thinks Of Buying Air Madrid

Wed Dec 27, 2006 12:41 am

Despite their debt, Air Madrid (.or the remains..) could reveal as an astute investment for a carrier with a good feeder-infrastructure. I always thought that Air Berlin could have taken a stake in the company and manage it seriously.
If LTU thinks about Air Madrid- it would make sense...
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JJJ
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RE: LTU Thinks Of Buying Air Madrid

Wed Dec 27, 2006 1:04 am

It's not like NM has nothing particularly valuable to keep it as a company.

IIRC, the aircraft were all leased, and not in particularly good shape, the airports they were operating were not particularly slot-restricted and the staff will surely be willing to find a new job.

I'm sure some cash would be enough to set up a new Air Madrid-ish airline for whoever is willing to operate the same routes on the same philosophy.

Of course, purchasing the company would give an image boost for whoever was to do it, but that could also be done with a good advertising campaign.
 
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LTU932
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RE: LTU Thinks Of Buying Air Madrid

Wed Dec 27, 2006 3:13 am

Does LT even have enough cash to buy NM? Besides, if they wanted to serve South and Central America, they could have done it themselves with their own metal. They already served SJO from 1990 to 1998, along with other destinations such as ADZ, so it's not like they don't have any experience in the region.

Bottom line: a buyout of NM by LT ain't gonna happen. They need the cash, LT is still somewhat cash strapped after all. They should think about getting back to profitability and start planning for the future fleet replacements, instead if flirting with the idea of them buying out another airline.
 
ORDagent
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RE: LTU Thinks Of Buying Air Madrid

Wed Dec 27, 2006 4:40 am

LTU could improve their bottom line as S. America routes could be very profitable for them if they actually had flights that are reliable and punctual. The air Madrid brand needs to be retired. Even if a new company takes it over the brand has such a bad reputation that no amount of improvments will help. BTW does LTU still use the LTE (Luft Transport Espania) brand? If not it could be a good time to reinstate it.
 
Humberside
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RE: LTU Thinks Of Buying Air Madrid

Wed Dec 27, 2006 6:00 am

Quoting ORDagent (Reply 7):
BTW does LTU still use the LTE (Luft Transport Espania) brand? If not it could be a good time to reinstate it.

LTE is a separate airline now so I dont think LTU have any say over the LTE brand anymore
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airevents
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RE: LTU Thinks Of Buying Air Madrid

Wed Dec 27, 2006 8:14 am

I think the main asset that LTU could bring into whatever liaison would happen between the two is their maintenance base in Dusseldorf, mainly dealing with A320/A330 aircraft. The maintenance base would see improved use and the Air Madrid aircraft less technical difficulties probably. From my armchair here I would say that Air Madrid´s strategy was perfectly right, offering direct flights at competitive price to a market which still seems to be underserved as demand was definitely very strong for NM flights. When establishing an operation that complies with what the schedule promises, NM could be a very successful airline. I don´t know exactly if LTU could operate Spain to South America in terms of traffic rights and somehow doubt it. Spain is definitely the main market to / from South America in Europe but at the same time South America is widely underserved from e.g. Germany and other European countries and Spain is on the way anyways, so why not establish a hub in MAD competing with IB and channelling passengers from Germany onto a number of flights to South America. Makes absolute sense and I think that LTU would be an airline that could help establish a more reliable operation here.
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Curious
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RE: LTU Thinks Of Buying Air Madrid

Wed Dec 27, 2006 8:40 pm

did Air Madrid have soem kind of exclusivity on these routes? cant other airlines simply takeover there routes and the void left?
 
JJJ
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RE: LTU Thinks Of Buying Air Madrid

Wed Dec 27, 2006 9:01 pm

Quoting Curious (Reply 10):
did Air Madrid have soem kind of exclusivity on these routes? cant other airlines simply takeover there routes and the void left?

IB, UX, A7 and others have all announced they will add routes and increase frequencies.
 
Curious
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RE: LTU Thinks Of Buying Air Madrid

Wed Dec 27, 2006 10:50 pm

Quoting JJJ (Reply 11):
IB, UX, A7 and others have all announced they will add routes and increase frequencies.

So if others are taking Air Madrids routes then why would it be such an attarctive investment for LTU or others?
 
JJJ
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RE: LTU Thinks Of Buying Air Madrid

Wed Dec 27, 2006 11:10 pm

Quoting Curious (Reply 12):
So if others are taking Air Madrids routes then why would it be such an attarctive investment for LTU or others?

I never said it was Big grin
 
aerosol
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RE: LTU Thinks Of Buying Air Madrid

Wed Dec 27, 2006 11:41 pm

LTU is my hometown carrier, but I consider it as an airline which is not well managed.
The did not anticipate major market changes.

This merger idea is something which is creteated in a bar.

General rules for a succcessful merger:
- you should be financially sound and successful (no)
- you should not have other major projects (not sure but I thin they still are in the middle of a restructuring program)
- the market should be in/or shortly before a major upswing (well depends on the point of view but I think charter is on the way dowwn)
- the price of the takeover candidate (I do not know if they Air M. are publ. traded)
Further:
- Though this merger no major competitor is eliminated (Like LH/Swiss)
- Different languages and cultures (we dance the Walz, they flamneco)

My thoughts!
 
Humberside
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RE: LTU Thinks Of Buying Air Madrid

Thu Dec 28, 2006 3:30 am

Quoting Aerosol (Reply 14):
- the market should be in/or shortly before a major upswing (well depends on the point of view but I think charter is on the way dowwn)

Air Madrid weren't in the charter market and LTU have an expanding number of scheduled routes (especially long haul), so I wouldn't say either airline is in a declining market
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EddieDude
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RE: LTU Thinks Of Buying Air Madrid

Thu Dec 28, 2006 4:01 am

Quoting LTU932 (Reply 6):
Besides, if they wanted to serve South and Central America, they could have done it themselves with their own metal.

... which makes me ask: Can LT serve Latin American cities from Spanish airports? What does European law say about that? If LT is interested in acquiring NM, it is because they see great potential in the market served by NM. If LT is prevented from operating to Latin America non-stop from Spanish airports, then they cannot "do it themselves with their own metal" and therefore need to acquire an entity that is authorized to do so. If, on the other hand, LT has no restrictions to fly to Latin America from Spain, then I am in complete agreement with your posting.
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LTU932
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RE: LTU Thinks Of Buying Air Madrid

Thu Dec 28, 2006 4:46 am

Quoting EddieDude (Reply 16):
... which makes me ask: Can LT serve Latin American cities from Spanish airports?

I don't know, but I do know they did it out of DUS and sometimes also from MUC and FRA (and probably still do also for their flights into the Dominican Republic and Mexico).
 
IberiaA319
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RE: LTU Thinks Of Buying Air Madrid

Thu Dec 28, 2006 7:39 am

According to the following article, Air Madrid says to its employees that the Spanish Ministry of Public works is blocking the sale of the company as their licence won't be granted in a short term. Also the feasability plan presented by some of the employees a few days ago was rejected by the Spanish Authorities.

http://www.cincodias.com/articulo/em...a/cdscdi/20061227cdscdiemp_11/Tes/

Air Madrid will probably face some judicial procedures, they may be accused now of fraud, according to some Spanish attorneys. Apparently Air Madrid kept selling tickets when they already knew that the shutdown was inevitable.

http://www.elpais.com/articulo/econo.../elpepueco/20061227elpepueco_9/Tes

Anyway there's a potential for long-haul to Southamerica, the demand is very strong.
 
IberiaA319
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RE: LTU Thinks Of Buying Air Madrid

Sat Dec 30, 2006 2:03 am

Latest news: LTU is not interested anymore in acquiring Air Madrid shares. The main problems for the sale are the requirements of the Spanish Civil Aviation Authority, the temporary receivership and the possible bankruptcy, as well as several judicial procedures that will be started within the next weeks. The lessors are trying to get their planes back and lease them to other companies. Several Spanish and foreign carriers are interested in the former Air Madrid planes.

http://www.elmundo.es/mundodinero/2006/12/29/economia/1167395701.html

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