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8herveg
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Should/could Virgin Atlantic and Flybe merge?

Tue Dec 20, 2016 9:43 am

Flybe has just announced two new routes to LHR, from ABZ and EDI. This got me thinking, could - or should - Flybe merge with Virgin Atlantic? Virgin Little Red didn't seem to work out, but given VS doesn't operate any short-haul/feeder routes, Flybe could be their answer. With VS expanding at MAN, it would be the perfect airline for it to feed into VS flights from the regions. I know you can already do this through the VS website, but could their relationship deepen at all?

It would create an even better competitor to BA.

They could rename Flybe to Virgin Regional or Virgin Express or similar...
 
LifelinerOne
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Re: Should/could Virgin Atlantic and Flybe merge?

Tue Dec 20, 2016 10:16 am

Yes, and Flybe should be called Be Virgin or something... :-)

Cheers! :wave:
Only Those Who Sleep Don't Make Mistakes
 
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GCT64
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Re: Should/could Virgin Atlantic and Flybe merge?

Tue Dec 20, 2016 10:36 am

Even if Flybe became part of / associated with / branded with / owned by Virgin, it would still be better to keep the two companies separate as there would be few operational economies to be achieved (and plenty of inefficiencies that could be incurred by merging). There are reasons why IAG keeps BA, IB, Vueling, EI as separate companies.
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Softaero
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Re: Should/could Virgin Atlantic and Flybe merge?

Tue Dec 20, 2016 11:11 am

Delta wouldn't want Virgin to take over the basket case of Flybe.
According to all known laws of aviation, there is no way a bee should be able to fly
 
skipness1E
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Re: Should/could Virgin Atlantic and Flybe merge?

Tue Dec 20, 2016 11:12 am

The calibre of posts on here lately is often lacking commercial acumen or context.

In terms of shareholder and commercial benefit, er...why? Any VS codeshare with BE gives VS the bulk of the benefit without the overheads of an operation like Little Red. VS is a long haul airline focussed on a JV on the North Atlantic with Delta, flybe is a mrore of a niche player competing with SouthWest trains to Cornwall.
A full on UK airline merger is rare, FCA and TOM were complimentary in similar markets. BA bought BCAL before they collapsed, similar with DA. easyJet simply added capacity in similar markets buying GB. VS and BE are different airlines, with different focuses and cultures. Dumb idea IMHO.

As for Virgin Express, well that's been done and didn't end well. As has Continental Express, Lufthansa Express, British Airways Express (!) There's a reason they all failed as they tried to be a half way house between two aims and failed in both. Virgin is only a franchise brand after all, flybe could rebrand as Virgin Express but they'd be competing with Virgin Trains (!) flybe need some stability after a turbulent period, not a re-brand that risks alienating existing partners.
 
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ikolkyo
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Re: Should/could Virgin Atlantic and Flybe merge?

Tue Dec 20, 2016 11:53 am

Makes zero sense, to me anyways.
 
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FlyCaledonian
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Re: Should/could Virgin Atlantic and Flybe merge?

Tue Dec 20, 2016 9:06 pm

Revert BE to its original name; merge with VS; welcome to the world... Jersey Virgin.
Let's Go British Caledonian!
 
DeltaB717
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Re: Should/could Virgin Atlantic and Flybe merge?

Tue Dec 20, 2016 11:03 pm

Softaero wrote:
Delta wouldn't want Virgin to take over the basket case of Flybe.


Except that DL did exactly that when it bought 49% of VS...

skipness1E wrote:
The calibre of posts on here lately is often lacking commercial acumen or context.

In terms of shareholder and commercial benefit, er...why? Any VS codeshare with BE gives VS the bulk of the benefit without the overheads of an operation like Little Red. VS is a long haul airline focussed on a JV on the North Atlantic with Delta, flybe is a mrore of a niche player competing with SouthWest trains to Cornwall.
A full on UK airline merger is rare, FCA and TOM were complimentary in similar markets. BA bought BCAL before they collapsed, similar with DA. easyJet simply added capacity in similar markets buying GB. VS and BE are different airlines, with different focuses and cultures. Dumb idea IMHO.

As for Virgin Express, well that's been done and didn't end well. As has Continental Express, Lufthansa Express, British Airways Express (!) There's a reason they all failed as they tried to be a half way house between two aims and failed in both. Virgin is only a franchise brand after all, flybe could rebrand as Virgin Express but they'd be competing with Virgin Trains (!) flybe need some stability after a turbulent period, not a re-brand that risks alienating existing partners.


I totally agree with you. Perhaps merging in the corporate sense but continuing both brands operating in their respective niches makes some sense. Perhaps VS/DL could do for BE what DL did for VS, if that makes sense. Do VS and BE codeshare or interline currently? Could they? lol also, the irony if BE became Virgin Express (or similar) and competed with Virgin Trains ('faster than road or rail... except for our rail, of course').

I kinda feel for BE a little bit - it's like the toy that just keeps being passed around to different owners.
 
sevenair
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Re: Should/could Virgin Atlantic and Flybe merge?

Wed Dec 21, 2016 1:11 am

FlyBE need to just stick with a plan for five minutes instead of constant chopping and changing.

Well, after they get rid of the the jets anyway. They should go back to UK domestic/CI and nearby mainland destinations and focus on that. Not trying to get a bit of everything in one.

The Q400 have the legs to do many beach flights from the southern coast. No they're not jet services but have the convenience of local airport departures so people will put up with them on longer stage lengths.

I'm convinced the LHR routes will end in tears. They have plenty of connections available in MAN/BHX. Keep at them instead of feeding LHR flights.
 
Armaghman
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Re: Should/could Virgin Atlantic and Flybe merge?

Wed Dec 21, 2016 8:37 am

Makes no sense to me, so few Heathrow slots and focus is on a regional European airline.

At least with IAG even though running seperatley we can see the operational benefits happening with things like aircraft souricing.

Just because they are both airlines doesn't make them right to merge
 
jetwet1
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Re: Should/could Virgin Atlantic and Flybe merge?

Wed Dec 21, 2016 3:30 pm

Would BA be willing to sell their % of ownership ? (it's early here but I think BA still own part of them right?)
 
gilesdavies
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Re: Should/could Virgin Atlantic and Flybe merge?

Wed Dec 21, 2016 5:49 pm

jetwet1 wrote:
Would BA be willing to sell their % of ownership ? (it's early here but I think BA still own part of them right?)


BA/IAG off loaded their stake in FlyBE in 2014, it would appear...

http://www.wsj.com/articles/british-air ... 1403275077
 
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Channex757
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Re: Should/could Virgin Atlantic and Flybe merge?

Wed Dec 21, 2016 6:14 pm

Here's a thought. Why do people assume VS would be the surviving entity?

DL paid SQ £250 million for the 49% stake, valuing VS at £500m. How much is FlyBE worth? Market cap is £90 million at the moment. Yes you might assume VS would be the surviving/acquiring entity but could BE actually do a reverse takeover in the same way US Airways took over American? The smaller entity arranges financing and then reverses into the larger one, assuming its identity. Even if it was a case of BE buying out Branson and then licencing the trademark name, it would essentially leave BE in control of Virgin Atlantic.
Last edited by Channex757 on Wed Dec 21, 2016 6:16 pm, edited 1 time in total.
 
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Channex757
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Re: Should/could Virgin Atlantic and Flybe merge?

Wed Dec 21, 2016 6:15 pm

Channex757 wrote:
Here's a thought. Why do people assume VS would be the surviving entity?

DL paid SQ £250 million for the 49% stake, valuing VS at £500 million. How much is FlyBE worth? Market cap is £90 million at the moment. Yes you might assume VS would be the surviving/acquiring entity but could BE actually do a reverse takeover in the same way US Airways took over American? The smaller entity arranges financing and then reverses into the larger one, assuming its identity. Even if it was a case of BE buying out Branson and then licencing the trademark name, it would essentially leave BE in control of Virgin Atlantic.


(edited for rubbish maths....)
 
airzona11
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Re: Should/could Virgin Atlantic and Flybe merge?

Wed Dec 21, 2016 7:15 pm

FlyBE seems to be in a position where they could codeshare with all on the non-Oneworld/IAG affiliated airlines for internal UK flights.

KLM (and AF) offer a lot of 1-stop connections to many of the larger markets in the UK and are closely integrated with Delta. I agree with others above, the merger would be on the corporate level, keeping the entities separate. If the price is right, why not cast a bigger net to capture passengers or keep them "in the family?"
 
AerostarUK
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Re: Should/could Virgin Atlantic and Flybe merge?

Thu Dec 22, 2016 5:10 pm

Agree that LHR will be a tough gig but they have too much capacity right now and are looking for stories (contribution). The previous CEO did a great job reducing costs and with the interline deals and LHR offering a £10 discount they may just have a chance.

The timing here is interesting. The remedy slots become theirs to use on other routes after three years by which time Heathrow may have started the third runway development and the whole place will be a mess (M4/M3/M40 and the western M25 motorways will be jammed). This could provide Flybe with a great opportunity to connect the unserved domestic markets and receive valuable support from the UK Govt along the way. The third runway is a political hot potato and anything that can demonstrate that Heathrow is for 'Everyone' will help their cause no end.
 
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LAX772LR
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Re: Should/could Virgin Atlantic and Flybe merge?

Fri Dec 23, 2016 1:31 am

Channex757 wrote:
it would essentially leave BE in control of Virgin Atlantic.

And the benefit of that, to just about anyone, would be _________?
I myself, suspect a more prosaic motive... ~Thranduil
 
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Channex757
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Re: Should/could Virgin Atlantic and Flybe merge?

Fri Dec 23, 2016 7:51 am

LAX772LR wrote:
Channex757 wrote:
it would essentially leave BE in control of Virgin Atlantic.

And the benefit of that, to just about anyone, would be _________?

It's a thought exercise.

BE could do it were Branson to give an indication that he wants out. There is the requirement for a new owner to be British or European, which rules out another foreign carrier or US partner. If Sir Beard were to cash in and retire then BE could organise financing and buy up the stock, which could even go below that notional £250m. It would give BE a LHR presence for the price of five slot pairs.

Brexit would mean a European carrier might not bid as the fifty per cent rule would start to apply, and Delta is already sat in that position.
 
rbavfan
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Re: Should/could Virgin Atlantic and Flybe merge?

Fri Dec 23, 2016 9:57 am

LifelinerOne wrote:
Yes, and Flybe should be called Be Virgin or something... :-)

Cheers! :wave:


Or Virgin Bea. she never puts out. lol
 
runway23
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Re: Should/could Virgin Atlantic and Flybe merge?

Fri Dec 23, 2016 11:31 am

Channex757 wrote:
Here's a thought. Why do people assume VS would be the surviving entity?

DL paid SQ £250 million for the 49% stake, valuing VS at £500m. How much is FlyBE worth? Market cap is £90 million at the moment. Yes you might assume VS would be the surviving/acquiring entity but could BE actually do a reverse takeover in the same way US Airways took over American? The smaller entity arranges financing and then reverses into the larger one, assuming its identity. Even if it was a case of BE buying out Branson and then licencing the trademark name, it would essentially leave BE in control of Virgin Atlantic.


AA/US was a merger not reverse takeover. The reverse takeover was HP with US.

Second, how would BE finance the debt needed to buy 51% of VS and would Virgin group be willing to sell that stake ?

Finally, what would BE or VS get out of it ? They operate in different sectors, there's no overlap, no real synergies to get out of any merger and absolutely nothing to gain out of it. It makes zero sense. A codeshare will probably bring just as much without any complications, not withstanding the fact that BE will probably last 18 months at most on their LHR operation.
 
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Channex757
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Re: Should/could Virgin Atlantic and Flybe merge?

Fri Dec 23, 2016 12:37 pm

runway23 wrote:
Channex757 wrote:
Here's a thought. Why do people assume VS would be the surviving entity?

DL paid SQ £250 million for the 49% stake, valuing VS at £500m. How much is FlyBE worth? Market cap is £90 million at the moment. Yes you might assume VS would be the surviving/acquiring entity but could BE actually do a reverse takeover in the same way US Airways took over American? The smaller entity arranges financing and then reverses into the larger one, assuming its identity. Even if it was a case of BE buying out Branson and then licencing the trademark name, it would essentially leave BE in control of Virgin Atlantic.


AA/US was a merger not reverse takeover. The reverse takeover was HP with US.

Second, how would BE finance the debt needed to buy 51% of VS and would Virgin group be willing to sell that stake ?

Finally, what would BE or VS get out of it ? They operate in different sectors, there's no overlap, no real synergies to get out of any merger and absolutely nothing to gain out of it. It makes zero sense. A codeshare will probably bring just as much without any complications, not withstanding the fact that BE will probably last 18 months at most on their LHR operation.

Your questions are entirely valid as I again state, this is a thought exercise. Not impossible though as BE could arrange backbreaker loans, then after the takeover refinance the deal against the assets of their new Virgin/BE merged entity.

I have a feeling BE may be playing the long game on LHR. If they can start operations and be at least marginally profitable, it gives them incumbency status for when the eventual T6 project and the third runway happens. When the new shorthaul and domestic T6 is built together with the third runway slots become available and BE would be in choice position to pick some well-timed slot pairs up. As EZY has at times stated they might be a possible new entrant they could be looking to close them out or be in a better position when it happens.

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