dme
Topic Author
Posts: 92
Joined: Wed Mar 17, 2004 11:10 pm

BA Takes 100% IB (with TPG And Others)

Tue May 22, 2007 2:27 am

Dear All,

According to the newspaper 'El Mundo'
(http://www.elmundo.es/mundodinero/2007/05/21/economia/1179766984.html
?a=DUO8cf4e696403e479e5a91a3d2b06002d3&t=1179768165), BA (UK), together with TPG (Texas Pacific Group, USA), as well as with Vista Capital (ES), Ibersuizas (ES) and Quercus (ES) is prepared to offer a bid for the 100% of Iberia.

Regards,
Dme.
 
elmothehobo
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RE: BA Takes 100% IB (with TPG And Others)

Tue May 22, 2007 4:59 am

Y en ingles...

http://www.iht.com/articles/ap/2007/...1/business/EU-FIN-Spain-Iberia.php

The english article is translated almost verbatum from the the El Mundo article.

The article doesn't say whether or not BA will add any capital though.
 
steve6666
Posts: 491
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RE: BA Takes 100% IB (with TPG And Others)

Tue May 22, 2007 5:02 am

Yes but BA is only going to maintain their 10% stake.

They will have to add capital assuming the valuation is higher now than when they originally bought that 10%.
A306, A318, A319, A320, A321, A332, A333, A343, A346, A388, B722, B732, B733, B734, B735, B73G, B738, B742, B744, B752, B753, B762, B763, B764, B772, B773, B77W, B787-8, BAe-146, Cessna Something, DC-10, E175, E195, ERJ145, MD-11, MD-80, PA Something
 
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Asturias
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RE: BA Takes 100% IB (with TPG And Others)

Tue May 22, 2007 5:13 am

Quote:
[British Airways] has said it will not make an independent bid for Iberia but had not ruled out joining a consortium. It has said it will not make a further capital investment as part of any consortium offer.

BA is essentially just giving the TPG and the other investors the green light that they will not stand in their way. BA is not going to (and probably cannot at the moment) increase its investment in IB. Instead they will offer their co-operation in this bid.

This move, if successful, will prevent anyone else (Lufthansa in particular) from attempting an IB takeover, which suits BA just fine at the moment.

51% will remain in the hands of Spanish investors and a BA/IB merger is not about to happen any time soon. We shall see how this bid goes, but it is as I have long predicted. BA is in no position to make a move for increased investment in IB, let alone a merger.

saludos

Asturias
Tonight we fly
 
Concorde001
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RE: BA Takes 100% IB (with TPG And Others)

Tue May 22, 2007 5:25 am

Does anyone know whether BA secured its condition of agreeing to the takeover by TPG and others in return for retaining first right of refusal on their respective shares?

It was reported in the FT last week that BA wanted the ability to acquire all of IB when ownership laws were removed and that it was looking for an agreement with TPG and others on this issue.
 
LHStarAlliance
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RE: BA Takes 100% IB (with TPG And Others)

Tue May 22, 2007 5:29 am

Mmm seems I was too slow  Smile

Well I think this is the best solution LH doesn´t need a whole Airline to serve south america , adding some routes like LIM or BOG is enough for them .


Konstantin
Boycott The Olympic Games In Beijing !
 
LHStarAlliance
Posts: 2096
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RE: BA Takes 100% IB (with TPG And Others)

Tue May 22, 2007 5:39 am

Wow but LH-LX will be still bigger !

BA+IB = 63 000000 Passengers

LH+LX = 64 500000 Passengers

Konstantin
Boycott The Olympic Games In Beijing !
 
BestWestern
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RE: BA Takes 100% IB (with TPG And Others)

Tue May 22, 2007 5:48 am

BA wont be investing any capital, but you can be sure that they increase their shareholding free of charge due to the work they are doing to bring together the consortia.
Greetings from Hong Kong.... a subsidiary of China Inc.
 
Ken777
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RE: BA Takes 100% IB (with TPG And Others)

Tue May 22, 2007 10:45 am

Quoting Steve6666 (Reply 2):
They will have to add capital assuming the valuation is higher now than when they originally bought that 10%.

They have a set number of shares. Anything that increases the value of the shares just makes BA's holdings more valuable. BA will simply sit back and let TPG work on the bidding and financial side and will probably start participating at some level if & when the deal goes through.

At least this deal keeps IB in oneworld and allows for closer co-operation between BA & IB.
 
dme
Topic Author
Posts: 92
Joined: Wed Mar 17, 2004 11:10 pm

RE: BA Takes 100% IB (with TPG And Others)

Tue May 22, 2007 4:45 pm

Dear All,

More news (in Spanish and English),

http://libertaddigital.com/noticias/noticia_1276306050.html,
http://www.expansion.com/edicion/exp...mpresas/es/desarrollo/996950.html,
http://www.elmundo.es/mundodinero/2007/05/21/economia/1179766984.html,
http://business.timesonline.co.uk/to...ors/transport/article1822780.ece).

In summary, BA will maintain its 10% shares in IB, TPG will take 39%, and the Spanish funds will take the 51%. BA will wait to do any investment in the near future but will have a right to buy from TPG. The Spanish funds are Vista Capital, a private equity group owned by Bank Santander and Royal Bank of Scotland, Ibersuizas, owned by Fernando Martin, and Quercus Equity, which already has a stake in Clickair, Iberia’s own low-cost.

However, IB has some risks in the future, as well as other Spanish companies (IMO).
1. Easyjet and Ryanair (and might be Air Berlin) will open in the next years many routes in Spain, both domestic and international, with MAD, BCN and PMI as main hubs (might be one or two other hubs, i.e., Málaga and/or Alicante, since these airports are increasing their capacity with new terminals). For example, Easyjet is the main company in Alicante.
2. Clickair has only 40-50% of occupancy. We have to wait one-two years more to see if they succeed against other low-cost, but supposedly IB will give some/many routes to Clickair. It is also a danger itself, because in that case Clickair will be treated identically to any other low cost and will be not associated any more to IB.
3. Vueling is doing very well in the domestic and international market but, as with Clickair, we have to wait one-two years more to see if they succeed against other low-cost.
4. Spanair might be sold to Lufthansa so that LH might open a way to Central and South America.
5. Air Comet/Aerolíneas is trying to open more routes from MAD and BCN to Central and South America (against IB and LAN).
6. Air Nostrum, the regional franchise of IB, might consider to have its own live independently of IB (if IB is centered in the long range routes).
7. Many other companies are trying to get some part of the cake (Monarch, Air Berlin-LTU, Condor, BMI, and a large etc).
8. You can add many other things I suppose.

Regards,
Dme.
 
bullpitt
Posts: 757
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RE: BA Takes 100% IB (with TPG And Others)

Tue May 22, 2007 7:42 pm

Vueling is doing very well? In waht sense? all they have done so far is loose more and more money.They keep anouncing profits and show bigger and bigger loses. The question is how long will vueling hold out if they don't start to show some profit.
These are my principles but if you don't like them I have others
 
dme
Topic Author
Posts: 92
Joined: Wed Mar 17, 2004 11:10 pm

RE: BA Takes 100% IB (with TPG And Others)

Tue May 22, 2007 10:22 pm

Dear Bullpitt,

What I would like to say is that they think to have profits supposedly in two years time. However, Vueling and Clikair (as well as the other ones) should be aware that there is a high possibility of halting their activity due to the big competition between companies in Spain (and Europe also). If in two years time they have no real profit, imo they will have to disappear.

Best regards,
Dme.

Quoting Bullpitt (Reply 10):
Vueling is doing very well? In waht sense? all they have done so far is loose more and more money.They keep anouncing profits and show bigger and bigger loses. The question is how long will vueling hold out if they don't start to show some profit.

Pd. Would it be possible to remove '100%' from the title of the topic?
 
vv701
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RE: BA Takes 100% IB (with TPG And Others)

Tue May 22, 2007 10:25 pm

Quoting ElmoTheHobo (Reply 1):
The article doesn't say whether or not BA will add any capital though.

BA have issued a short statement. It reads:

'British Airways has joined together with TPG Capital, Vista Capital, Invessiones Ibersuizas and Quercus Equity to investigate a possible consortium offer for Iberia. There is no guarantee that a formal bid will be made. The airline has previously ruled out further capital investment as part of any consortium offer and will not make an independent bid for the airline.'
 
vv701
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Joined: Fri Aug 19, 2005 10:54 am

RE: BA Takes 100% IB (with TPG And Others)

Tue May 22, 2007 10:36 pm

Quoting VV701 (Reply 12):
BA have issued a short statement.

I cannot find any statement from IB yet. I expect they would like to wait until a formal bid is made or is abandoned. However they will be meeting with their shareholders at their Annual General Meeting in Madrid on 29 May and I doubt if that will pass without some form of reaction. However unless a bid has been made by then - doubtful - or indication of its value made there will be little they can say.
 
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Aisak
Posts: 911
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RE: BA Takes 100% IB (with TPG And Others)

Wed May 23, 2007 2:17 am

Quoting Dme (Reply 9):
2. Clickair has only 40-50% of occupancy.

Loads are low, ok. From my view they made a HUGE mistake by treating Clickair as a separate airline. They could be different, with own staff, planes.... They should've established a transition period using clickair like they do with Air Nostrum. A stand-alone company but operating for Iberia. Iberia webpage, booking system, check-in staff, counters, online/self check-in , Iberia Plus benefits (lounges, points...) with their own livery/staff, just like Air Nostrum or Audeli but with no reserved seating or connections.... Nobody would have notice the change. A second stage with Clickair counters and flight codes and bookings, using the IB code as a codeshare (like Tarom, CSA, Royal Air Maroc, Iberworld.....) But they had to do it the hard way.
Hence, that's why they have poor loads.... They're starting over instead of having a smooth transition.

Quoting Dme (Reply 9):
4. Spanair might be sold to Lufthansa so that LH might open a way to Central and South America.

Spanair can't fly to Central-South America as they're not Spanish. If they're bouth by LH, the situation wouldn't change.

Quoting Dme (Reply 9):
6. Air Nostrum, the regional franchise of IB, might consider to have its own live independently of IB (if IB is centered in the long range routes).

Unlikely. They don't have the right equipment to do so.... and I don't really think they want to. They fell pretty comfortable under the Iberia umbrella. Remember "Si Iberia se constipa, Air Nostrum tose" (If Iberia get a cold, Air Nostrum cough)
 
SKY1
Posts: 611
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RE: BA Takes 100% IB (with TPG And Others)

Wed May 23, 2007 9:50 am

Quoting Aisak (Reply 14):
Spanair can't fly to Central-South America as they're not Spanish. If they're bouth by LH, the situation wouldn't change

When JK served 7 years ago EZE and IAD, what % was Spanish? Nowadays SAS has a 95% in Spanair, and I have a huge doubt someone, including LH, want buy JK.
Time flies! Enjoy life!
 
GatoVolador
Posts: 140
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RE: BA Takes 100% IB (with TPG And Others)

Fri May 25, 2007 4:06 am

Quoting Dme (Reply 9):
6. Air Nostrum, the regional franchise of IB, might consider to have its own live independently of IB (if IB is centered in the long range routes).

This won't happen in the mid term. The franchise contract was renewed some weeks ago until 2010. Futhermore, as somebody said, Air Nostrum is performing very well operating on behalf of Iberia.
 
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Aisak
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RE: BA Takes 100% IB (with TPG And Others)

Fri May 25, 2007 4:39 am

Quoting SKY1 (Reply 15):
When JK served 7 years ago EZE and IAD, what % was Spanish? Nowadays SAS has a 95% in Spanair, and I have a huge doubt someone, including LH, want buy JK.

Obviously those 2 particular destinations won't have a problem with ownnership. The 2 biggest airlines in argentina are foreign and for USA now we have the open skies. I don't know how it was dealt with in the past.

If LH want to but Spanair in order to fly to LatAm they will face the same 'spaniship issue' BA-TPG-IB are now facing with the take-over.
 
r2rho
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RE: BA Takes 100% IB (with TPG And Others)

Fri May 25, 2007 4:54 am

I have to disagree with the title of this thread. BA is not taking over anybody. They're not leading the operation nor taking any initiative, TPG is. BA is simply reacting to the events and trying to keep up.

For now it's the only thing they can do. As has been mentioned many times, BA is in no financial position for a full takeover, let alone a merger. They are not going to increase their stake in IB, either. What they're doing is simply joining what they think is the winning team, so as to not be left out of the future IB. The main goal is achieved: to stop a takeover from LH. BA will retain a certain influence in the future IB, and maybe in the future if things are better they will make a stronger move for IB.

This will not result in a merged airline nor a BA-IB à la AF-KL. IB will continue to operate independently as they have, but now under the control of TPG & friends.

Personally, I do not like the way that private equity groups are taking control over so many companies lately (not just airlines)...  worried 
 
SKY1
Posts: 611
Joined: Sun Apr 09, 2006 11:03 am

RE: BA Takes 100% IB (with TPG And Others)

Fri May 25, 2007 8:19 am

The Times gets wrong telling BA they must do:

Much fuss is made about Iberia’s position in Latin America, but so what? If BA wants to be a world leader, it needs to look east, not southwest. If it is to expand profitably, it needs a bigger share of the highway to Bombay, not a pitstop in Paraguay. It means a strong partner in Asia, the fastest-growing airline market, not Iberia, with its price wars to Málaga.

http://business.timesonline.co.uk/to...ness/columnists/article1826671.ece

Both BA and LH are interested in IB because the South America-Europe market ...the unique market where the 3 biggest european carriers are weak, specifically BA and LH.

Does BA will make another mistake Swiss style?

Quoting R2rho (Reply 18):
Personally, I do not like the way that private equity groups are taking control over so many companies lately (not just airlines)...

 checkmark 

I agree, but sometimes they put money on the table and it is a minor bad in order to get the goal set.
Time flies! Enjoy life!
 
r2rho
Posts: 3096
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RE: BA Takes 100% IB (with TPG And Others)

Tue May 29, 2007 4:08 am

A swiss (unknown) and a british (unknown, possibly Apax) investment group have shown interest in IB. The swiss one could be in negotiations with LH. The TPG-British Airways-Vista Capital-Ibersuizas-Quercus offer is not the end of the story, but rather just the beginning!

In Spanish: http://abc.hoyinversion.com/noticias...o-otro-britanico_200705281728.html
 
FlySSC
Posts: 5330
Joined: Tue Aug 12, 2003 1:38 am

RE: BA Takes 100% IB (with TPG And Others)

Tue May 29, 2007 4:15 am

Quoting LHStarAlliance (Reply 6):
Wow but LH-LX will be still bigger !

BA+IB = 63 000000 Passengers

LH+LX = 64 500000 Passengers

But AF + KL remain # 1 with 66 300 000 passengers in 2003, 70 000 000 in 2006.
 
bastew
Posts: 752
Joined: Fri Sep 15, 2006 9:21 pm

RE: BA Takes 100% IB (with TPG And Others)

Mon Jun 04, 2007 8:01 am

Latest update: (ironically in the aussie press!) "BA to have Iberia ownership guarantee".

http://au.news.yahoo.com/070603/2/13ngi.html
 
vv701
Posts: 5895
Joined: Fri Aug 19, 2005 10:54 am

RE: BA Takes 100% IB (with TPG And Others)

Mon Jun 04, 2007 11:17 am

Quoting BAStew (Reply 22):
Latest update: (ironically in the aussie press!)

Here is the British article that is referenced in the Australian newspaper:
http://www.telegraph.co.uk/money/mai...l?xml=/money/2007/06/03/cnba03.xml
Note that it, like other articles before it, refers to BA's 10 per cent plus their option on a further 27 per cent of Iberia equity. However despite this the Iberia stock price remains above the BA consortium's offer price suggesting that there might be some truth in saying:

Quoting R2rho (Reply 20):
The TPG-British Airways-Vista Capital-Ibersuizas-Quercus offer is not the end of the story, but rather just the beginning!

However with 37 per cent of Iberia's equity effectively controlled by BA any other consortium has a lot of running to do yet. I believe that the only part of the story we are yet to hear is an Iberia Board of Directors' rejection of the bid on the basis it is not high enough. Following that there are three alternatives:

1. The TPG consortium makes a higher bid.

2. The TPG consortium goes over the Iberia board's head and makes an offer directly to the shareholders

3. The whole thing is dropped at least at this time with BA retaining effectively 37 per cent of IB's equity.

However what I see as most relevant about this latest report - if it is true - is the guaranteed option it says that BA will have to purchase 100 per cent of Iberia in a few years time if the TPG consortium buys IB.

Until now BA has played a totally passive role in the IB saga apart from giving its tacit support to the TPG consortium. But it seems unlikely that the consortium would give BA a 'guarantee' over a future purchase of 100 per cent of IB unless BA had expressed some interest in buying the 90 per cent it does not own. This suggests that BA has now moved off the fence it was sitting on.

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