UAL777UK
Posts: 2346
Joined: Sun Nov 20, 2005 1:16 am

Re: Branson Changes Mind on Selling VS stake to AFKL

Tue Dec 03, 2019 8:02 am

winginit wrote:
So much nonsense in this thread.

Between the FlyBe acquisition and the approval of the trilateral joint venture between DL/AFKL/VS, the stake is simply now worth more than it was previously. VS probably wanted more money, and AFKL, dealing with their own financial matters at present, wasn't willing to pony up. Not a slight to Delta, not the beginning of the end for the relationship.


Bingo. We have a winner. Talk of VS, jumping into bed with anyone else is nonsense. DL and VS are tight as. One might argue too tight but that ain't going to change anytime soon.
 
Boeing74741R
Posts: 1237
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Re: Branson Changes Mind on Selling VS stake to AFKL

Tue Dec 03, 2019 8:53 am

One thing that people are forgetting is that since the sale of the stake was first announced almost 2 years ago, there have been changes at AF/KL with a new CEO now in place making his mark with things such as fleet decisions and closing down subsidiaries such as Joon which would indicate their focus is on cost cutting. An interesting question would be to ask if Ben Smith would have sanctioned the acquisition if he was CEO at the time?

If AF/KL are more focused on getting its house in order instead of spending and if VS are now getting cold feet on the deal (who themselves are in a different position compared to 2017 with the Flybe acquisition), I can see why there's talk of calling off the deal at the eleventh hour.

I can't see how this will impact the recent tie-up with VS adnd AF/KL to codeshare on each other's flights, as that has mutual benefits all round. It's also not going to change DL's involvement or stake in VS, so any talk of DL taking its ball home or others such as UA getting involved at this stage does come across as far-fetched.

questions wrote:
LAXintl wrote:
...Virgin Atlantic Airways Ltd... as it resumes a path for expansion... adds new routes and aircraft to end a period of relative stagnation.


What expansion? What new routes? The article makes it sound like VS has a major growth plan.


TLV has been launched, GRU is following, a return has been made to BOM, frequencies are increasing at MAN with more potentially following in the future, Flybe has been bought and 14 A330neo's are on order.
 
jfk777
Posts: 7128
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Re: Branson Changes Mind on Selling VS stake to AFKL

Tue Dec 03, 2019 9:02 am

MIflyer12 wrote:
jfk777 wrote:
Why SRB would ever sell 31% of Virgin Atlantic for Two Hundred million pounds seems low ball to me ti Air France. He cashed out of Virgin when he sold the 49% to Singapore Airlines 20 years ago and when he sold his record company. He has been paid close to $2 billions dollars for his businesses. SRB should keep 51% of VA unless Delta, Air France/KLM or someone else writes a check for close to a billion dollars.


You have a problem with valuation math. Delta bought 49% for $360 million. If GBP 220 million was the agreed price for the AFKL stake pending regulator approval, that's the price.

https://www.businesstraveller.com/busin ... -approved/


Delta didn't buy the 49% from Virgin, they got it from Singapore Airlines which paid a huge amount, over 600 million pounds sterling. The 31% is the FIRST TIME Delta is buying( Air France) directly from Virgin themselves. My point is that now Delta and AF are getting a huge discount to the original Singapore Airlines Valuation and maybe SRB had second thoughts because of that. Maybe SRB feels Delta is too involved and doesn't want them to change his airline.
 
HunterATL
Posts: 38
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Re: Branson Changes Mind on Selling VS stake to AFKL

Tue Dec 03, 2019 9:11 am

rbavfan wrote:
MesabaXJ wrote:
I was reading an article that popped on Google that KL/AF can force a deal for them to purchase the 31% stake if they wish. The problem is KL/AF don't have a history of doing this. I say KL/AF buy 2% with DL owning 49% they have full control of the airline. :-)


There was a good point in % listed in earlier post. UK does not allow more than 49% foreign ownership. Delta already owns 49%, meaning thanks to Brexit, no non UK company can buy any more of it.


That is not consistent with the tentative agreements between the UK and the EU and between the UK and the US.

The EU and the UK have tentatively agreed that the status quo regarding ownership and operating rights will remain in place for all carriers in the UK and the EU. So long as 50% plus one of an airline is ultimately owned by EU citizens and UK subjects combined, then the airline can continue to exercise the operating rights it has pre-Brexit and can fly between any two points in the EU, any two points in the UK, and any points between the EU and the UK.

Without this tentative agreement, IAG will have to break up since it is a Spanish corporation, whose ultimate majority owners are British, which owns airlines incorporated in the UK and various the EU countries. The tentative agreement, for example, permits Iberia to retain its EU operating rights which require actual and ultimate EU ownership even though its ultimate ownership is majority British and allows BA to continue to operate within the UK even though it is wholly owned by a Spanish company. Importantly, IAG is by no means the only carrier that would be impacted without the tentative agreement. EasyJet, Norwegian, RyanAir, etc. would all have to break up. The tentative agreement will enable VS to operate as a British carrier even if 31% were sold to AF/KLM with 49% held by Delta.

The tentative bilateral with the US will also not require divestiture of the various IAG carriers and will permit the SRB transaction with AF/KLM. Any airline whose actual or ultimate ownership is majority British, majority EU, or combined majority of UK and EU owners will be permitted to operate to the US from the UK and the EU under the present terms of the open skies agreement between the US and the EU. In fact, the UK was very upset and concerned when it first approached the US about Brexit because the initial US offer was a standard open skies agreement with majority national ownership requirements. This would have declared Iberia, for example, a British airline which could no longer operate from Spain to the US except by way of fifth-freedom flights originating in the UK and BA a Spanish airline which could not fly from the UK to the US except by way of fifth-freedom flights originating in the EU. Naturally, the UK did not desire that result.

Obviously, the agreements have not been executed but the UK has already been clear that it does not want to return to an ownership system that would require the break up of IAG, EasyJet, etc. It is fairly safe to say that the original agreement between SRB and AF/KLM would not create any regulatory problems for VS without creating greater regulatory problems for BA and IAG. It is doubtful that the UK government desires these problems for IAG.
 
Bhoy
Posts: 393
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Re: Branson Changes Mind on Selling VS stake to AFKL

Tue Dec 03, 2019 10:31 am

HunterATL wrote:
rbavfan wrote:
MesabaXJ wrote:
I was reading an article that popped on Google that KL/AF can force a deal for them to purchase the 31% stake if they wish. The problem is KL/AF don't have a history of doing this. I say KL/AF buy 2% with DL owning 49% they have full control of the airline. :-)


There was a good point in % listed in earlier post. UK does not allow more than 49% foreign ownership. Delta already owns 49%, meaning thanks to Brexit, no non UK company can buy any more of it.


That is not consistent with the tentative agreements between the UK and the EU and between the UK and the US.

The EU and the UK have tentatively agreed that the status quo regarding ownership and operating rights will remain in place for all carriers in the UK and the EU. So long as 50% plus one of an airline is ultimately owned by EU citizens and UK subjects combined, then the airline can continue to exercise the operating rights it has pre-Brexit and can fly between any two points in the EU, any two points in the UK, and any points between the EU and the UK.

Without this tentative agreement, IAG will have to break up since it is a Spanish corporation, whose ultimate majority owners are British, which owns airlines incorporated in the UK and various the EU countries. The tentative agreement, for example, permits Iberia to retain its EU operating rights which require actual and ultimate EU ownership even though its ultimate ownership is majority British and allows BA to continue to operate within the UK even though it is wholly owned by a Spanish company. Importantly, IAG is by no means the only carrier that would be impacted without the tentative agreement. EasyJet, Norwegian, RyanAir, etc. would all have to break up. The tentative agreement will enable VS to operate as a British carrier even if 31% were sold to AF/KLM with 49% held by Delta.

The tentative bilateral with the US will also not require divestiture of the various IAG carriers and will permit the SRB transaction with AF/KLM. Any airline whose actual or ultimate ownership is majority British, majority EU, or combined majority of UK and EU owners will be permitted to operate to the US from the UK and the EU under the present terms of the open skies agreement between the US and the EU. In fact, the UK was very upset and concerned when it first approached the US about Brexit because the initial US offer was a standard open skies agreement with majority national ownership requirements. This would have declared Iberia, for example, a British airline which could no longer operate from Spain to the US except by way of fifth-freedom flights originating in the UK and BA a Spanish airline which could not fly from the UK to the US except by way of fifth-freedom flights originating in the EU. Naturally, the UK did not desire that result.

Obviously, the agreements have not been executed but the UK has already been clear that it does not want to return to an ownership system that would require the break up of IAG, EasyJet, etc. It is fairly safe to say that the original agreement between SRB and AF/KLM would not create any regulatory problems for VS without creating greater regulatory problems for BA and IAG. It is doubtful that the UK government desires these problems for IAG.


I don't recall having seen confirmed anywhere that previous ownership regimes would continue beyond Brexit. In fact IAG and Ryanair have both restricted selling stock to non nationals until this is resolved. easyJet isn't as affected, as the family of their founder, Stelios Haji-Ioannou, own 35% of the stock, but are UK-Cypriot dual nationals, so satisfy both the conditions of being UK Citizens AND EU Citizens.
 
DobboDobbo
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Re: Branson Changes Mind on Selling VS stake to AFKL

Tue Dec 03, 2019 2:55 pm

questions wrote:
LAXintl wrote:
...Virgin Atlantic Airways Ltd... as it resumes a path for expansion... adds new routes and aircraft to end a period of relative stagnation.


What expansion? What new routes? The article makes it sound like VS has a major growth plan.


Based on publicly available information, their expansion plans revolve around LHR and MAN.

LHR - they are expanding incrementally, with new services to BOM, DEL, GRU. They appear to be picking up further slots and adding capacity via the A35K. Longer term, they have a campaign to become the UK’s second flag carrier at an expanded LHR.

MAN- they have year on year seat capacity growth of (approximately - these numbers are based from my memory) 15%, 20% and 11% over the last three years. The acquisition of FlyBe appears to indicate that VS will develop a hub at MAN although the extent of that is up for debate. The collapse of Thomas Cook has presented them with an opportunity to expedite these plans.
 
BrianDromey
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Re: Branson Changes Mind on Selling VS stake to AFKL

Tue Dec 03, 2019 3:13 pm

Boeing74741R wrote:

TLV has been launched, GRU is following, a return has been made to BOM, frequencies are increasing at MAN with more potentially following in the future, Flybe has been bought and 14 A330neo's are on order.


FlyBe has NOT been bought. VS have taken a 20% stake in the new holding company, called Connect Airways and the Virgin Group has licensed the use of the Virgin name to the new company. The airline will be known as Virgin Connect, not Virgin Atlantic Connect, it will not use Flying Club as its FFP and will not have anything like enough slots to grow at LHR. There will be some opportunity to grow connections at MAN, but the airport is a logistical and customer service nightmare while the two airlines operate from separate terminals for the time being.

VS and BE have talked up a big game about Connect Airways and gotten the internet and commentators over-excited. Providing serious competition to BA is figment of the imagination there just aren't enough slots between the two airlines at LHR. VS has always been about service the lucrative O&D London market, not about connections or alliances. The Manchester operation is similar, built out from the long standing Orlando route and opportunistically grown, still very much an O&D operation.

The relationship with DL has made them a serious player over the Atlantic by joining a JV, but DL and AF/KL are winners too. They gained LHR as a focus city and a big flying club database. AF have long wanted to make long-hal from London work for them - remember AF attempted to fly LHR-LAX and LHR-JFK for example.
 
mandyhaslott
Posts: 28
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Re: Branson Changes Mind on Selling VS stake to AFKL

Tue Dec 03, 2019 10:52 pm

chrisp390 wrote:
The key is the very high value flyers use AC and UA, the people using WS and DL are much less valuable. So in the interest of increasing the value of Virgin Atlantic, it would be in Branson’s interest to explore a relationship between AC and UA. Maybe it wouldn’t mean the DL relationship ends, but it could mean a balancing act between both.

THIS IS HILARIOUS. PLEASE POST MORE.
 
Boeing74741R
Posts: 1237
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Re: Branson Changes Mind on Selling VS stake to AFKL

Wed Dec 04, 2019 8:59 am

BrianDromey wrote:
FlyBe has NOT been bought. VS have taken a 20% stake in the new holding company, called Connect Airways and the Virgin Group has licensed the use of the Virgin name to the new company. The airline will be known as Virgin Connect, not Virgin Atlantic Connect, it will not use Flying Club as its FFP and will not have anything like enough slots to grow at LHR. There will be some opportunity to grow connections at MAN, but the airport is a logistical and customer service nightmare while the two airlines operate from separate terminals for the time being.


I'm fully aware of the technicalities of the deal and the breakdown of the stakes between the various companies behind it. I'm also fully aware how nowadays most new companies with the name 'Virgin' on it is usually on a licence basis and that Virgin/SRB's stake is minimal - not like the old days when his earlier businesses had SRB as the sole/largest shareholder. In the eyes of many and particularly those who don't take as much interest in aviation as we do (call it bad reporting, good PR by Virgin, ignorance, whatever you like) Flybe is seen as being taken over by Virgin and the airline will soon be rebranded with the iconic Virgin scribble logo and a lot of noise has been made about how Flybe's business model will place emphasis on feeding VS at LHR and MAN in the fullness of time.

My point of mentioning Flybe was that when the stake sale was first announced back in 2017 Flybe being part of the Virgin family wasn't on the cards. Whether that is the true reason for SRB wanting out of the deal we may never know, but in short circumstances have changed in that time. The same is true of AF/KL with respect to changing circumstances at their end, hence my question whether Ben Smith would have authorised the acquisition of the stake had he been CEO at the time or had the idea been floated after he took over.
 
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GCT64
Posts: 1764
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Re: Branson Changes Mind on Selling VS stake to AFKL

Wed Dec 04, 2019 10:51 am

BrianDromey wrote:
The airline will be known as Virgin Connect, not Virgin Atlantic Connect, it will not use Flying Club as its FFP and will not have anything like enough slots to grow at LHR.


Has the bit about not using Flying Club as its FFP been confirmed? If so that would seem to be missed opportunity to engender VS loyalty among swathes of SOU, BHX, EDI, GLA etc. frequent business travellers.
Flown in: A20N,A21N,A30B,A306,A310,A319,A320,A321,A332,A333,A343,A346,A359,A388,BA11,BU31,(..56 more types..),VC10,WESX
 
DobboDobbo
Posts: 927
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Re: Branson Changes Mind on Selling VS stake to AFKL

Wed Dec 04, 2019 11:15 am

[twoid][/twoid]
GCT64 wrote:
BrianDromey wrote:
The airline will be known as Virgin Connect, not Virgin Atlantic Connect, it will not use Flying Club as its FFP and will not have anything like enough slots to grow at LHR.


Has the bit about not using Flying Club as its FFP been confirmed? If so that would seem to be missed opportunity to engender VS loyalty among swathes of SOU, BHX, EDI, GLA etc. frequent business travellers.


I don’t know the present position, but I’d be staggered if you couldn’t earn VS FFP by using Virgin Connect in time.
 
DobboDobbo
Posts: 927
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Re: Branson Changes Mind on Selling VS stake to AFKL

Wed Dec 04, 2019 11:18 am

Boeing74741R wrote:
BrianDromey wrote:
FlyBe has NOT been bought. VS have taken a 20% stake in the new holding company, called Connect Airways and the Virgin Group has licensed the use of the Virgin name to the new company. The airline will be known as Virgin Connect, not Virgin Atlantic Connect, it will not use Flying Club as its FFP and will not have anything like enough slots to grow at LHR. There will be some opportunity to grow connections at MAN, but the airport is a logistical and customer service nightmare while the two airlines operate from separate terminals for the time being.


I'm fully aware of the technicalities of the deal and the breakdown of the stakes between the various companies behind it. I'm also fully aware how nowadays most new companies with the name 'Virgin' on it is usually on a licence basis and that Virgin/SRB's stake is minimal - not like the old days when his earlier businesses had SRB as the sole/largest shareholder. In the eyes of many and particularly those who don't take as much interest in aviation as we do (call it bad reporting, good PR by Virgin, ignorance, whatever you like) Flybe is seen as being taken over by Virgin and the airline will soon be rebranded with the iconic Virgin scribble logo and a lot of noise has been made about how Flybe's business model will place emphasis on feeding VS at LHR and MAN in the fullness of time.

My point of mentioning Flybe was that when the stake sale was first announced back in 2017 Flybe being part of the Virgin family wasn't on the cards. Whether that is the true reason for SRB wanting out of the deal we may never know, but in short circumstances have changed in that time. The same is true of AF/KL with respect to changing circumstances at their end, hence my question whether Ben Smith would have authorised the acquisition of the stake had he been CEO at the time or had the idea been floated after he took over.


I think the OP is slightly out in numbers - I think the ownership of Virgin Connect is 30% Each for Virgin Atlantic and Stobart, and 40% Cyrus Capital.

I think Cyrus are Venture capitalists, and therefore I would expect they will have an existing strategy with their 40% stake potentially split between Virgin Atlantic and Stobart (which would make it a 50:50 partnership).
 
Boeing74741R
Posts: 1237
Joined: Tue Apr 17, 2007 5:44 am

Re: Branson Changes Mind on Selling VS stake to AFKL

Wed Dec 04, 2019 12:14 pm

GCT64 wrote:
Has the bit about not using Flying Club as its FFP been confirmed? If so that would seem to be missed opportunity to engender VS loyalty among swathes of SOU, BHX, EDI, GLA etc. frequent business travellers.


Agreed. I've seen nothing yet indicating either way. You used to be able to collect Avios points on Flybe flights before they left the scheme a few months after the takeover was announced, so you would think some sort of loyalty scheme would be implemented in its place and FC would make sense given the planned business model moving forward.
 
skipness1E
Posts: 4584
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Re: Branson Changes Mind on Selling VS stake to AFKL

Wed Dec 04, 2019 12:42 pm

If you can't earn Flying Club points connecting to Virgin Atlantic on an aircraft branded as "Virgin Connect" then you're setting this up to fail badly. It's a non competitive proposition to market, which they will be well aware of, let's see what transpires.

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