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Blerg
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Re: Rumour: IAG and EY interested in creating a hub at VIE

Sun May 10, 2020 9:50 am

Meanwhile it is reported that in the period 2020-2023 Austrian Airlines plans to fire 1.100 of its 7.000 workforce and to reduce salaries by 13%. With their fleet shrinking this makes absolute sense. I just wonder when first Q400s, A319s and B767s will start leaving the fleet. Will they wait for the winter season or will they start now in summer and when they will start announcing changes in their network. Will be interesting to see what and where they cut.

https://de.investing.com/news/stock-mar ... en-2003430
 
LJ
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Re: Rumour: IAG and EY interested in creating a hub at VIE

Sun May 10, 2020 9:53 am

GLANKG wrote:
ÖVP wants 267m for 7% stake. SPÖ insisted on taking stakes and now pushing for blocking minority. (Green wants carbon emissions cut.)


7% doesn't give you anything in a company (AFAIK it's also too low for a seat on the Board). Unless they consider it a financial investment, it's throwing away EUR267mn.

BTW there is another reason why LH Group doesn't want it. When the Austrians are getting a stake for state aid, be sure the Belgians are demanding this as well.
 
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Terrier79
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Re: Rumour: IAG and EY interested in creating a hub at VIE

Sun May 10, 2020 10:05 am

LJ wrote:
Terrier79 wrote:
LJ wrote:
If you want to have any influence you need to buy for at least EUR500mn in LH Group stock (which will get you around 15%). If you really want some influence you've to buy for at least EUR1bn of LH Group stock. I sincerly wonder if this is something the Austrian taxpayers will agree to and see as a worthwhile investment given the current crisis. The current shareholders will be pleased though.

Austria cannot just buy 15% or more of LH on the stock market. They would immediately be forced to sell these stakes again due to German laws regarding foreign ownership of Airlines.
Austria can only gain some control over LH with the consent of LH and Germany e.g. through a foundation based in Germany, which will not happen.


AFAIK no EU member state can restrict the purchase of stock in an EU company when the buyer is an EU resident (if not it would trigger a court case at the ECJ whether German law is in line with EU law). Issues regarding traffic rights will only be an issue when the shares are majority controlled by a non-resident, though in case of LH Group the investment is not in the airline but in the overall Group (and I reckon LH Group would be smart to have ensured its German traffic rights for LH and EW by structuring it in such a way that both EW and LH are meeting the requirements to be German from a traffic rights point of view).

There is no legal entity „LH Group“. If you invest in Lufthansa, you invest into the airline.
Aviation is not the ordinary industry, it’s an industry with special rules, e.g. regarding foreign ownership.
Law allows to control that at least 50% of the shares remain in German hands. LH had always a high share of foreign ownership, so with Austria buying 15% or so there is a certain likelihood that foreign ownership is over the limit. In such cases it is possible and required by law to squeeze foreign shareholders out according to the LIFO principle.
 
Blerg
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Re: Rumour: IAG and EY interested in creating a hub at VIE

Sun May 10, 2020 10:08 am

Terrier79 wrote:
LJ wrote:
Terrier79 wrote:
Austria cannot just buy 15% or more of LH on the stock market. They would immediately be forced to sell these stakes again due to German laws regarding foreign ownership of Airlines.
Austria can only gain some control over LH with the consent of LH and Germany e.g. through a foundation based in Germany, which will not happen.


AFAIK no EU member state can restrict the purchase of stock in an EU company when the buyer is an EU resident (if not it would trigger a court case at the ECJ whether German law is in line with EU law). Issues regarding traffic rights will only be an issue when the shares are majority controlled by a non-resident, though in case of LH Group the investment is not in the airline but in the overall Group (and I reckon LH Group would be smart to have ensured its German traffic rights for LH and EW by structuring it in such a way that both EW and LH are meeting the requirements to be German from a traffic rights point of view).

There is no legal entity „LH Group“. If you invest in Lufthansa, you invest into the airline.
Aviation is not the ordinary industry, it’s an industry with special rules, e.g. regarding foreign ownership.
Law allows to control that at least 50% of the shares remain in German hands. LH had always a high share of foreign ownership, so with Austria buying 15% or so there is a certain likelihood that foreign ownership is over the limit. In such cases it is possible and required by law to squeeze foreign shareholders out according to the LIFO principle.


How is that even legal? I mean there shouldn't be any limitation on companies that originate in the European Union.
 
davidjohnson6
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Re: Rumour: IAG and EY interested in creating a hub at VIE

Sun May 10, 2020 10:18 am

If an airline based in the EU wants to fly only within the EU, then there are no nationality-of-owners restrictions. As soon as it wants to fly anywhere else, those restrictions come into force. If Lufthansa wants to fly between Germany and (for example) China, it needs to ensure it follows the rules...
Last edited by davidjohnson6 on Sun May 10, 2020 10:20 am, edited 1 time in total.
 
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Terrier79
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Re: Rumour: IAG and EY interested in creating a hub at VIE

Sun May 10, 2020 10:20 am

Blerg wrote:
Terrier79 wrote:
There is no legal entity „LH Group“. If you invest in Lufthansa, you invest into the airline.
Aviation is not the ordinary industry, it’s an industry with special rules, e.g. regarding foreign ownership.
Law allows to control that at least 50% of the shares remain in German hands. LH had always a high share of foreign ownership, so with Austria buying 15% or so there is a certain likelihood that foreign ownership is over the limit. In such cases it is possible and required by law to squeeze foreign shareholders out according to the LIFO principle.


How is that even legal? I mean there shouldn't be any limitation on companies that originate in the European Union.


It is very legal.

„The Aviation Compliance Documentation Act (LuftNaSiG) requires listed German airlines to fulfil certain requirements in respect of their ownership and control status to maintain their air traffic rights.

By the terms of EU Regulation No. 2407/92 an airline must, to maintain and acquire an air traffic operating licence, be owned directly or via a majority shareholding by EU member-states or their nationals and be controlled by them at all times. Aviation agreements concluded by the Federal Republic of Germany with non-EU states require proof that the majority of the airline’s share capital is in German hands for it to exercise air traffic rights.“

https://investor-relations.lufthansagro ... tures.html
 
Jetty
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Re: Rumour: IAG and EY interested in creating a hub at VIE

Sun May 10, 2020 12:22 pm

LJ wrote:
LH Group owns the airline is is not required to give a national government a seat on the board or any other guarantee for the future. It can close down the airline, take the assets back to the LH Group and let Austrian go bankrupt. Only assets tied to Austrian will remain, but will be sold to a bidder during insolvency procedures.

LH can’t take assets back if it knows OS will go bankrupt, that’s fraudulent conveyance. Which OS assets aren’t tied to OS? :?

If LH doesn’t invest in OS and the Australian government doesn’t help out OS will go bankrupt and can be sold as a whole, to the Austrian government i.e. So the government does have bargaining power.
 
airhansa
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Re: Rumour: IAG and EY interested in creating a hub at VIE

Sun May 10, 2020 1:09 pm

eurotrader85 wrote:
InnsbruckFlyer wrote:
airhansa wrote:
OS is a full service high quality airline IMO, offering a better product that BA or Iberia. I'm not quite sure why they would focus on shuttling people between EE and WE.

AMS for example is in a good position to act as a hub for the wealthy and isolated areas of Northern Europe and the eastern Atlantic Ocean (distance from Stockholm to Madrid is greater than from Athens to London).

Eurowings is closing its Munich operations, so maybe bringing that company over to VIE might work?


Just because someone is better than BA or IB doesn't make them a high quality airline, but you are totally entitled to your opinion. Being a fairly frequent OS flyer (10 times last year), the only good thing I have to say about them is that there long haul J is passable. I think that everything else about them basically sucks. VIE is a bad airport (from a passenger standpoint), the onboard service in Europe is mediocre, and the whole brand just feels....cheap. I would much rather see OS ops closed and the company folded into LH. They are definitely the weakest link in the LH Group, imo.


Well said. I really don't understand the flag waving for OS on this feed. It's a distinctly average airline, average product, far behind LH or LX in its group and VIE as a hub is a terrible airport. LH management have been right to put the screw on it, i.e. no investment until its turned around.

I'd agree its probably in better hands with the LH group as the quad hub mechanism between FRA, MUC, ZRH and VIE works well for multiple long haul departures, and LH and LX product is decent, so improving it to same standard would be ideal. However, what you could say is if IAG got their hands on it, it would give OS management the slap they need to move forward and turn it around, whether you like the end product or not. Something LH group have seemingly been unable to do so far. Austrian government would need to have a real think of what they really want as it hasn't been working as well as it should.


IAG would be best of taking over the ailing Alitalia airline then. It's already got experience in dealing with latin countries through Iberia and all three of them have image concerns over their product.

I don't disagree that the OS product isn't the best, it's just that the products offered by IAG are worse. My preference is for Lufthansa to merge the airline into the brand. If some people want VIE to become a Intra-European hub then I suggest moving Eurowings there.
 
davidjohnson6
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Re: Rumour: IAG and EY interested in creating a hub at VIE

Sun May 10, 2020 1:15 pm

Airlines are a bit of a confidence game - when pax cease to believe in the airline, ticket sales fall fast
If OS ends up in serious bankruptcy (not some magical Chapter 11 style but a 'everything stops and anyone with a ticket loses their money' bankruptcy) then that will hurt the airline

When Sabena became SN Brussels, it shrank heavily. When Swissair became Swiss, it also shrank heavily. If Austrian should go through bankruptcy, expect a much smaller airline to emerge. I don't think the Austrian Govt will want OS to be state-owned in the long term. Experience with Austrian, Swiss and Brussels Airlines, shows that each struggled as independents, even when inside *A. OS can forget about any future help from LH following a bankruptcy event - and IAG would then be able to dictate terms

Letting OS go into bankruptcy is an option for the Austrian Govt but a very drastic and nuclear option.
Last edited by davidjohnson6 on Sun May 10, 2020 1:23 pm, edited 1 time in total.
 
airhansa
Posts: 380
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Re: Rumour: IAG and EY interested in creating a hub at VIE

Sun May 10, 2020 1:20 pm

MLIAA wrote:
airhansa wrote:
InnsbruckFlyer wrote:

Just because someone is better than BA or IB doesn't make them a high quality airline, but you are totally entitled to your opinion. Being a fairly frequent OS flyer (10 times last year), the only good thing I have to say about them is that there long haul J is passable. I think that everything else about them basically sucks. VIE is a bad airport (from a passenger standpoint), the onboard service in Europe is mediocre, and the whole brand just feels....cheap. I would much rather see OS ops closed and the company folded into LH. They are definitely the weakest link in the LH Group, imo.


I'm not too sure on the differences between LH and OS, but I usually place them at a similar level, along with the likes of KLM, SAS and Finnair. The point is that the likes of BA, IB, AZ etc... offer worse products in comparison and that Austria would lose out by selling to IAG. Hence I'd be against selling to IAG.

I am also a fan of merging the entire Lufthansa brand into one entity. But I can see a future for Eurowings being based in Vienna and I don't think that Eurowings should be merged into Lufthansa.

tl;dr I agree with your view.


All of that makes sense, but OS will remain in LH’s shadow and will not ever be more than it is now.

IAG and oneworld have been looking for a partner in Central Europe for a long time. Even if Austrian’s product is dumbed down to IAG standards, the potential for profitability and growth at the VIE hub to be a contender to other primary European hubs would make it worth it, no?


Where do you expect the IAG-OS to fly passengers to? It's unlikely that there will be a significant market for short haul travel from Eastern Europe to Western Europe with a stopover in VIE, especially since there are cheaper full service airlines, low cost airlines and superior direct full service airlines. For mid-haul and long-haul, surely a cheaper base such as MAD or FCO would be better? Any full service airline from Western Europe would eclipse IAG-OS as well so there's no room for competition.

The only use for OS would be to create a competitor in Germany. But a better company to achieve that would be KLM or even AF (differentiating on type of service). I believe LOT was going to buy Condor which would have open the possibility of outsourcing staff to Eastern Europe.
 
xiaotung
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Re: Rumour: IAG and EY interested in creating a hub at VIE

Sun May 10, 2020 1:43 pm

If LH could pick between an OS bail out with vast conditions and a nationalized AZ tie up,I suspect they would pick the latter.
 
airhansa
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Re: Rumour: IAG and EY interested in creating a hub at VIE

Sun May 10, 2020 2:36 pm

xiaotung wrote:
If LH could pick between an OS bail out with vast conditions and a nationalized AZ tie up,I suspect they would pick the latter.


A positive of having a base in Southern Europe would be the lower cost of operating. I'm unsure about the bureaucracy of Italy, but I know that Spain has the potential for a low cost long-haul airline hub (along with Greece, which I'm sure that SQ has figured out through TX.

But AZ is so horrendous in terms of service that it would take a lot for LH to revive it. If IAG really wants a hub in Central Europe, then surely MXP and AZ would be a better option? MXP is already one of the cheapest options for flyers from Asia that want to avoid the Middle East.
 
Vicenza
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Re: Rumour: IAG and EY interested in creating a hub at VIE

Sun May 10, 2020 3:48 pm

airhansa wrote:
MLIAA wrote:
airhansa wrote:

I'm not too sure on the differences between LH and OS, but I usually place them at a similar level, along with the likes of KLM, SAS and Finnair. The point is that the likes of BA, IB, AZ etc... offer worse products in comparison and that Austria would lose out by selling to IAG. Hence I'd be against selling to IAG.

I am also a fan of merging the entire Lufthansa brand into one entity. But I can see a future for Eurowings being based in Vienna and I don't think that Eurowings should be merged into Lufthansa.

tl;dr I agree with your view.


All of that makes sense, but OS will remain in LH’s shadow and will not ever be more than it is now.

IAG and oneworld have been looking for a partner in Central Europe for a long time. Even if Austrian’s product is dumbed down to IAG standards, the potential for profitability and growth at the VIE hub to be a contender to other primary European hubs would make it worth it, no?


Where do you expect the IAG-OS to fly passengers to? It's unlikely that there will be a significant market for short haul travel from Eastern Europe to Western Europe with a stopover in VIE, especially since there are cheaper full service airlines, low cost airlines and superior direct full service airlines. For mid-haul and long-haul, surely a cheaper base such as MAD or FCO would be better? Any full service airline from Western Europe would eclipse IAG-OS as well so there's no room for competition.



I would fully agree, and I see no valid reason whatsoever for VIE as a hub for IAG and would say, like yourself, to/from where?
 
LJ
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Re: Rumour: IAG and EY interested in creating a hub at VIE

Sun May 10, 2020 5:43 pm

Terrier79 wrote:
LJ wrote:
Terrier79 wrote:
Austria cannot just buy 15% or more of LH on the stock market. They would immediately be forced to sell these stakes again due to German laws regarding foreign ownership of Airlines.
Austria can only gain some control over LH with the consent of LH and Germany e.g. through a foundation based in Germany, which will not happen.


AFAIK no EU member state can restrict the purchase of stock in an EU company when the buyer is an EU resident (if not it would trigger a court case at the ECJ whether German law is in line with EU law). Issues regarding traffic rights will only be an issue when the shares are majority controlled by a non-resident, though in case of LH Group the investment is not in the airline but in the overall Group (and I reckon LH Group would be smart to have ensured its German traffic rights for LH and EW by structuring it in such a way that both EW and LH are meeting the requirements to be German from a traffic rights point of view).

There is no legal entity „LH Group“. If you invest in Lufthansa, you invest into the airline.


I stand corrected as I alwyas forget that they sell themselves as LH Group whilst Lufthansa is the only entity which is not a seperate company within what they call "Lufthansa Group".....

Jetty wrote:
Which OS assets aren’t tied to OS?


Miles & More. Moreover, I would be surpised if LH wouldn't have some internal secured loans ensuring that its debt are paid and when insolvent could seize certain assets.

Jetty wrote:
If LH doesn’t invest in OS and the Australian government doesn’t help out OS will go bankrupt and can be sold as a whole, to the Austrian government i.e. So the government does have bargaining power.


It would be an airline without a frequent flyer program, without the financial and operational support of LH, without being in Star and having to deal with OEMs themselves (if they want new aircraft). Not a good prospect I would say.
 
concordeforever
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Re: Rumour: IAG and EY interested in creating a hub at VIE

Mon May 11, 2020 9:36 am

Willie Walsh, CEO of IAG has just publicly stated live on British television that IAG are not interested in buying or investing in Austrian Airlines at all, and that is was all a rumour.
 
Blerg
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Re: Rumour: IAG and EY interested in creating a hub at VIE

Mon May 11, 2020 10:35 am

Seems like Austrian Airlines is also preparing an insolvency plan. I suppose this will become a must in case negotiations between Lufthansa and the Austrian government take too long.

From the article:

'As an alternative, AUA management has also started preparations for an insolvency plan that would lead to self-administration, APA said.

Such a path could offer AUA a further option to recapitalise so that insolvency proceedings would not lead to a total loss of the company. The Austrian government has considered that option as a possible rescue plan as well.'

Source: https://www.reuters.com/article/us-heal ... SKBN22I38F
 
RvA
Posts: 380
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Re: Rumour: IAG and EY interested in creating a hub at VIE

Mon May 11, 2020 12:01 pm

LJ wrote:
It would be an airline without a frequent flyer program, without the financial and operational support of LH, without being in Star and having to deal with OEMs themselves (if they want new aircraft). Not a good prospect I would say.


And they would have no staff outside of Austria either. All the sales and airport staff unless it’s in an area Austrian is the only in the group to serve it. (And then still might be the case for historic reasons or some other reason that those employees are employed by another entity in the group).
 
Junglejames
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Re: Rumour: IAG and EY interested in creating a hub at VIE

Mon May 11, 2020 2:04 pm

airhansa wrote:
InnsbruckFlyer wrote:
airhansa wrote:
OS is a full service high quality airline IMO, offering a better product that BA or Iberia. I'm not quite sure why they would focus on shuttling people between EE and WE.

AMS for example is in a good position to act as a hub for the wealthy and isolated areas of Northern Europe and the eastern Atlantic Ocean (distance from Stockholm to Madrid is greater than from Athens to London).

Eurowings is closing its Munich operations, so maybe bringing that company over to VIE might work?


Just because someone is better than BA or IB doesn't make them a high quality airline, but you are totally entitled to your opinion. Being a fairly frequent OS flyer (10 times last year), the only good thing I have to say about them is that there long haul J is passable. I think that everything else about them basically sucks. VIE is a bad airport (from a passenger standpoint), the onboard service in Europe is mediocre, and the whole brand just feels....cheap. I would much rather see OS ops closed and the company folded into LH. They are definitely the weakest link in the LH Group, imo.


I'm not too sure on the differences between LH and OS, but I usually place them at a similar level, along with the likes of KLM, SAS and Finnair. The point is that the likes of BA, IB, AZ etc... offer worse products in comparison and that Austria would lose out by selling to IAG. Hence I'd be against selling to IAG.

I am also a fan of merging the entire Lufthansa brand into one entity. But I can see a future for Eurowings being based in Vienna and I don't think that Eurowings should be merged into Lufthansa.

tl;dr I agree with your view.


As someone that has flown BA numerous times, Iberia, KLM, Air France, Swiss and Finnair, to name the majority of the European Airlines I know. I do not recognise this BA bashing.

In reality, there is little between airlines, especially in economy.
Out of those named, Iberia really does stand out as being the worst. Food is poor, and overall service mediocre. Entertainment also poor. Only saving grace are the A340s and how quiet an airframe they are, but with Iberia they are poor inside.

Of the rest, BA are easily on a par or just above.
Very friendly crew, comfortable ish aircraft (modern Seats aren't really that comfortable), good entertainment and usually good food.
The standout item being they have A380s, and have a very good economy section on the upper deck.
Other points to mention are the unlimited goodies (chocolate) and the fact you can get a proper cup of tea, often with real fresh milk if the crew have any left.

The ease with which you can play about with your seats and food choice beforehand are good, as is the ease with which you can add your frequent flyer number if not put in at booking (if I remember rightly Swiss weren't very good in these respects).

It all seems very simple, but so many airlines fail on some things (especially actually having A380s!!)

Out of those airlines mentioned, none of them are actually better than BA overall in Economy. In fact, they are the European Airline I base all others on, and sit second only to Singapore Airlines when the whole world is taken into account. Etihad being close with their smart planes, but not quite the overall package.

So a little less BA bashing.

Unfortunately I have never experienced Austrian. Perhaps one day.



Sent from my SM-G930F using Tapatalk
 
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SQ22
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Re: Rumour: IAG and EY interested in creating a hub at VIE

Mon May 11, 2020 4:27 pm

concordeforever wrote:
Willie Walsh, CEO of IAG has just publicly stated live on British television that IAG are not interested in buying or investing in Austrian Airlines at all, and that is was all a rumour.


Here is a link confirming this:

news.yahoo.com

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