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LH Buying Stake In Jetblue

Thu Dec 13, 2007 6:07 pm

Interesting to say the least.

http://dealbook.blogs.nytimes.com/20...-prepares-to-buy-stake-in-jetblue/


My apologies if it's already being discussed.
Yes, I actually *do* work for an airline,how about you?
 
ANother
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LH Buying Stake In Jetblue

Thu Dec 13, 2007 6:16 pm

Er, they are limited to less than 25% voting, 49% equity - would likely be allowed only 1 or 2 board members that would have to recuse themselves on any sensitive subjects like fleet planning etc.

They would be better putting their money into a bank. Better return, better control over their assets.
 
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LAXintl
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LH Buying Stake In Jetblue

Thu Dec 13, 2007 6:33 pm

Stock market likes it.... JBLU up 20%

Deal might be announced as soon as later today
http://www.marketwatch.com/News/Stor...5865093D2%7d&siteid=yhoo&dist=yhoo
From the desert to the sea, to all of Southern California
 
kiwiandrew

LH Buying Stake In Jetblue

Thu Dec 13, 2007 6:38 pm



Quoting ANother (Reply 1):
Er, they are limited to less than 25% voting, 49% equity - would likely be allowed only 1 or 2 board members that would have to recuse themselves on any sensitive subjects like fleet planning etc.



on the other hand LH's *A partner UA has been rumoured on and off to be interested in Jetblue - with LH as a hypothetical 25% holder and UA with say 26% that could effectively give both airlines control of the airline without UA having to cough up for a controlling interest on their own ? I would think that a lot of the current ( and future ) *A airlines who fly to JFK would be quite happy to have some sort of arrangement like this
 
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United787
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LH Buying Stake In Jetblue

Thu Dec 13, 2007 6:50 pm



Quoting Kiwiandrew (Reply 3):
on the other hand LH's *A partner UA has been rumoured on and off to be interested in Jetblue - with LH as a hypothetical 25% holder and UA with say 26% that could effectively give both airlines control of the airline without UA having to cough up for a controlling interest on their own ? I would think that a lot of the current ( and future ) *A airlines who fly to JFK would be quite happy to have some sort of arrangement like this

I was thinking the same thing! UA could get the NY hub it could use and also get a FLL hub which could give it a southern gateway from which it could it increase it's presence in Latin America!

Very interesting development in the specualtive merger front. This would be a lot easier and cheaper merger than DL or CO and in the long run, have the same benefits.

Maybe we won't see mergers between the big guys, but maybe the big guys will buy up some of the little ones like AS...
 
thirteenright
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LH Buying Stake In Jetblue

Thu Dec 13, 2007 7:12 pm

Could this be the precursor to B6 joining *A?
 
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United787
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LH Buying Stake In Jetblue

Thu Dec 13, 2007 7:22 pm



Quoting ThirteenRight (Reply 5):
Could this be the precursor to B6 joining *A?

And dropping US? It seems B6 could replace the East Coast presence that US provides. I have never flown US but I don't recall hearing a single positive comment about them on A-Net since they have turned into a LCC. At least B6 offers a better product.
 
lowecur
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LH Buying Stake In Jetblue

Thu Dec 13, 2007 7:44 pm

B6 shares are halted pending announcement.
 
lowecur
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LH Buying Stake In Jetblue

Thu Dec 13, 2007 7:56 pm

If it pans out, this should give B6 additional capital. LH will probably run their international operations out of new B6 terminal, thus infusing even more revenue into both companies. In the coming recession, this will allow B6 to grow while the legacys look to M&A to reduce domestic capacity. Very nice job by B6 mgt.
 
InTheSky74
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LH Buying Stake In Jetblue

Thu Dec 13, 2007 8:09 pm

JetBlue's new terminal does not have customs facilities.
 
avek00
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LH Buying Stake In Jetblue

Thu Dec 13, 2007 8:15 pm



Quoting United787 (Reply 6):
It seems B6 could replace the East Coast presence that US provides.

B6 would not even come close to replacing US in this regard.
Live life to the fullest.
 
thirteenright
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LH Buying Stake In Jetblue

Thu Dec 13, 2007 8:23 pm



Quoting Avek00 (Reply 10):
B6 would not even come close to replacing US in this regard.

I dont think United787 means replace US in regards to amount of flights operated, what United787 probably means is in quality of product. Yes US has a large presence in LGA, CLT, DCA, BOS, etc. but in terms of product and customer perspective, B6 is perceived as superior. Plus, B6 is the largest airline at JFK where LH has 2x to FRA, 1x to MUC daily.
 
airbazar
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LH Buying Stake In Jetblue

Thu Dec 13, 2007 8:26 pm



Quoting ANother (Reply 1):
They would be better putting their money into a bank. Better return, better control over their assets.

Besides the possibility of a combined LH/UA majority ownership of B6 (as it was mentioned above), even if that is not the goal, 20% is still a big chunk and LH is quite respected so I doubt any of the other partners would go against LH on any decision.
 
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OzarkD9S
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LH Buying Stake In Jetblue

Thu Dec 13, 2007 8:32 pm



Quoting ThirteenRight (Reply 11):


I dont think United787 means replace US in regards to amount of flights operated, what United787 probably means is in quality of product. Yes US has a large presence in LGA, CLT, DCA, BOS, etc. but in terms of product and customer perspective, B6 is perceived as superior. Plus, B6 is the largest airline at JFK where LH has 2x to FRA, 1x to MUC daily.

If you take out PHL, a B6/UA tie-in covers the NE pretty well, BOS/JFK/IAD and smaller ops at LGA and EWR. US then becomes pretty much reduntant in the US vis-a-vis Star. That might well send US scurrying over to oneworld, if oneworld will have them.
"True, I talk of dreams,
Which are the children of an idle brain." -Mercutio
 
panamandy
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LH Buying Stake In Jetblue

Thu Dec 13, 2007 8:33 pm

just see on cnbc that lufthansa already took a 19% stake in jetblue, inorder to feed pax into jfk flights for both carriers
 
vfw614
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LH Buying Stake In Jetblue

Thu Dec 13, 2007 8:33 pm

Overlooked this thread. As just reported in my separate thread, breaking news on German TV is that Lufthansa has acquired a 19% stake in Jetblue.
 
roseflyer
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LH Buying Stake In Jetblue

Thu Dec 13, 2007 8:38 pm

LH has acquired 19% stake in jetBlue. I don't think we need to be discussing B6 entering the Star Alliance.

Lufthansa is a big wealthy company that has many assets. JetBlue is rather cheap right now because their financial outlook isn't as good as it once was. This might be Lufthansa seeing an opportunity to infuze some cash into jetBlue to help out operations. LH is one of the best run airlines and has strongly influenced the management and operation of other airlines. They might really help out jetBlue and let those profits increase.
If you have never designed an airplane part before, let the real designers do the work!
 
Someone83
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RE: LH Buying Stake In Jetblue?

Thu Dec 13, 2007 8:40 pm

Quoting RoseFlyer (Reply 16):
Lufthansa is a big wealthy company that has many assets. JetBlue is rather cheap right now because their financial outlook isn't as good as it once was

I'm not too convinced that LHs motives are purely financial....if so it would be better to for the shareholders if they had paid it out in dividends instead. Remember LH is NOTa financial institution

[Edited 2007-12-13 12:42:16]
 
vfw614
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RE: LH Buying Stake In Jetblue

Thu Dec 13, 2007 8:49 pm

Press conference tomorrow in Frankfurt at 12pm with both airlines' CEOs.

Lufthansa press release below.

Quote:
Lufthansa erwirbt 19 Prozent der Aktien der JetBlue Airways Corporation zu USD 7,27 pro Aktie

Frankfurt und New York, 13.12.2007

JetBlue Airways Corporation (Nasdaq: JBLU) und die Deutsche Lufthansa AG (Xetra: WKN 823212) haben heute bekannt gegeben, dass Lufthansa einen Minderheitenanteil an JetBlue übernehmen wird. Die geplante Transaktion ist die erste signifikante Kapitalbeteiligung einer europäischen Fluggesellschaft an einem US-amerikanischen Punkt-zu-Punkt-Carrier.

Lufthansa wird in einer Privatplatzierung rund 42 Millionen neu emittierte Aktien von JetBlue
übernehmen. Dies entspricht einem Anteil von 19 Prozent, zu einem Gesamtpreis von rund
USD 300 Mio. Die Übernahme der Aktien erfolgt als Paket im Rahmen der heute vom Board of Directors der JetBlue Corporation beschlossenen Kapitalerhöhung. Lufthansa erwirbt die Aktien zu einem Preis von USD 7,27 pro Aktie.

Die Vereinbarung sieht vor, dass Lufthansa nach Abschluss der Transaktion einen Sitz im JetBlue Board of Directors erhalten wird. Der Lufthansa Vertreter ist ein Class II Direktor und wird auf JetBlues Hauptversammlung von JetBlue 2008 gewählt.

"Wir freuen uns, ein Investor von JetBlue zu werden", sagte Lufthansa Vorstandsvorsitzender Wolfgang Mayrhuber. "Unsere Investition ist Ausdruck unseres Vertrauens in die Qualität von JetBlue, die Wachstumsmöglichkeiten und sein Management. Die Beteiligung gibt Lufthansa die Möglichkeit, in den dynamischen US-amerikanischen Punkt-zu-Punkt Verkehr zu investieren. Die Transaktion verbindet zwei Airlines, die hinsichtlich Qualität, Innovation und Service-Kultur weltweit einen exzellenten Ruf genießen."

"Wir begrüßen das Engagement von Lufthansa, eine der weltweit führenden Luftverkehrsgesellschaften", sagte Dave Barger, CEO von JetBlue. „Die Vereinbarung stärkt unseren Glauben in JetBlues Wachstumspfad. Sie wird unsere Bilanz verbessern und unsere finanzielle Flexibilität auf dem Weg in das Jahr 2008 erhöhen."

Beide Airlines werden im Sinne ihrer Kunden nach weiteren Möglichkeiten der Zusammenarbeit suchen. Konkrete Kooperationsmöglichkeiten wurden bislang nicht vereinbart.

Die Aktionäre von JetBlue müssen der Transaktion nicht zustimmen. Der Aktientransfer steht unter dem Vorbehalt der Zustimmung durch die US-Kartellbehörde. Der Abschluss wird im ersten Quartal 2008 erwartet.



It clearly states that there are no plans for connceting flights etc. at this point and that the purchase is simply a strategic move.

Lufthansa will have a Class II director on Jetblue's board.

[Edited 2007-12-13 12:50:56]
 
Someone83
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RE: LH Buying Stake In Jetblue

Thu Dec 13, 2007 8:54 pm



Quoting Vfw614 (Reply 18):
It clearly states that there are no plans for connceting flights etc. at this point and that the purchase is simply a strategic move.

Which support my theories, that this is not a financial placement...
 
wepaman
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RE: LH Buying Stake In Jetblue

Thu Dec 13, 2007 9:08 pm



Quoting InTheSky74 (Reply 9):

B6 @ MCO is getting ready for Customs Gates at least that what I hear from GOAA...

Wepa
Is a Blue Thing!! - Green is Lovely!!!!
 
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United787
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RE: LH Buying Stake In Jetblue

Thu Dec 13, 2007 9:09 pm



Quoting Vfw614 (Reply 18):
It clearly states that there are no plans for connceting flights etc. at this point and that the purchase is simply a strategic move.



Please explain. Strategy to do what?
 
vfw614
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RE: LH Buying Stake In Jetblue

Thu Dec 13, 2007 9:20 pm

Err, my excuses. I meant to say "simply an investment" - obviously not a "strategic move". Although no investment by an airline is without strategic considerations.
 
EXAAUADL
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RE: LH Buying Stake In Jetblue

Thu Dec 13, 2007 9:24 pm



Quoting United787 (Reply 4):
I was thinking the same thing! UA could get the NY hub it could use and also get a FLL hub which could give it a southern gateway from which it could it increase it's presence in Latin America!

UA would lose their @ss flying the B6 routes....no one makes any money flying JFK-Florida, plus if UA tried to pull down JFK and drive up yields that would just encourage some LCC to step in and take the pent up demand....would UA be successful taking over B6? Nope..are they dumb enough and desperate enough to try..YUP
 
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LAXintl
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RE: LH Buying Stake In Jetblue

Thu Dec 13, 2007 9:29 pm

Jetblue has a webcast for investors at 4:30pm Eastern to discuss the LH deal.

Listen in via investor relations portion of B6 website.
From the desert to the sea, to all of Southern California
 
LawnDart
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RE: LH Buying Stake In Jetblue

Thu Dec 13, 2007 9:31 pm

Live webcast from JetBlue at 4:30 EST:

http://investor.jetblue.com/phoenix.zhtml?c=131045&p=irol-irhome

Listen before you speculate.
 
Mir
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RE: LH Buying Stake In Jetblue

Thu Dec 13, 2007 9:31 pm



Quoting Lowecur (Reply 8):
LH will probably run their international operations out of new B6 terminal, thus infusing even more revenue into both companies.

Very unlikely. As mentioned, T5 will not have customs facilites, and IIRC LH is one of the founding airlines of T1.

Quoting WepaMan (Reply 20):
B6 @ MCO is getting ready for Customs Gates at least that what I hear from GOAA...

That's more for Caribbean flights than LH.

-Mir
7 billion, one nation, imagination...it's a beautiful day
 
voodoo
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RE: LH Buying Stake In Jetblue

Thu Dec 13, 2007 9:32 pm

To me the most interesting thing is how informed/complicit UAL is/isn't in this. Not that we will be privy to that.

Star Alliance is a strange beast sometimes. Like when Singapore owning a major stake in Virgin Atlantic while code-sharing with Continental across the Pond presumably against UAL.

[Edited 2007-12-13 13:42:47]
` Yeaah! Baade 152! Trabi of the Sky! '
 
ORDagent
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RE: LH Buying Stake In Jetblue

Thu Dec 13, 2007 9:34 pm

There is absolutely NOTHING compatible between the two airlines. I just don't get it. As far as UA or others buying B6 it would be a disaster as the legacies have legacy costs.
 
EXAAUADL
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RE: LH Buying Stake In Jetblue

Thu Dec 13, 2007 9:42 pm



Quoting ORDagent (Reply 28):
There is absolutely NOTHING compatible between the two airlines. I just don't get it. As far as UA or others buying B6 it would be a disaster as the legacies have legacy costs.

there is lots of merger speculation..some people just want mergers for merger sake..wall street/media and some here on A.net
 
vfw614
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RE: LH Buying Stake In Jetblue

Thu Dec 13, 2007 9:44 pm

Don't think sbout Lufthansa as just an airline, it is a major investor in the transportation business. They have a basket full of minority and majority shares in national and foreign legacy carries, LCCs, cargo airlines, charter airlines. They are even about to set up a biz-jet division. Jetblue is just another egg in the basket.
 
voodoo
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RE: LH Buying Stake In Jetblue

Thu Dec 13, 2007 9:45 pm

If LH buys a signif. chunk of BMI... they could establish a single brand/synergy on either side of the Atlantic. ?
Wild but... just trying to connect the two current LH threads here.
` Yeaah! Baade 152! Trabi of the Sky! '
 
charlipr
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RE: LH Buying Stake In Jetblue

Thu Dec 13, 2007 9:48 pm

Listening to the conference call right now, B6 executives are stressing that it is a "financial" transaction ONLY and no code-sharing or alliance at this moment.
 
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stasisLAX
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RE: LH Buying Stake In Jetblue

Thu Dec 13, 2007 9:58 pm

Per the conference call, LH was the first party to approach B6 regarding financing opportunities. This is strictly a financial transaction according to B6 execs. There is currently no plans for code-sharing between B6 and LH at this point in time. Questions regarding the transaction's impact on *A partners (mainly UA) was nicely danced around by B6 and further questions on *a were referred directly to LH management. A press conference will be held tomorrow in Frankfort with execs from both LH and B6 attending.
"Those who would give up essential liberty to purchase temporary safety deserve neither liberty nor safety!" B.Franklin
 
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United787
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RE: LH Buying Stake In Jetblue

Thu Dec 13, 2007 9:59 pm



Quoting EXAAUADL (Reply 23):
UA would lose their @ss flying the B6 routes....no one makes any money flying JFK-Florida, plus if UA tried to pull down JFK and drive up yields that would just encourage some LCC to step in and take the pent up demand....would UA be successful taking over B6? Nope..are they dumb enough and desperate enough to try..YUP

Sounds like a great TED route!

Quoting Charlipr (Reply 32):



Quoting Charlipr (Reply 32):
Listening to the conference call right now, B6 executives are stressing that it is a "financial" transaction ONLY and no code-sharing or alliance at this moment.

Key words "At the moment".

Never say never...whatever LH's intentions are, this could certainly make future alliances/code-sharing etc. much easier...
 
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LAXintl
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RE: LH Buying Stake In Jetblue

Thu Dec 13, 2007 10:00 pm

Some notes I took from the webcast:

-LH approached JetBlue late summer
-LH acquires 42m shares @ $7.27 for 19% ownership stake
-Expect transaction closing in 1Q2008
-Expects no regulatory difficulties. DOT already has indicated warm reception for deal.
-LH a stable and experienced investor
-LH will get 1 member on BOD
-Jetblue plans to keep its LCC model and long term growth strategy
-No current plans for commercial alliance with Lufthansa, however very much looks forward to exploring options
-Still pursuing International alliances including previously announced interest from Aer Lingus. Hopes to announce something "very soon"
-No discussions regarding JFK terminal use with LH however no current plans for widebody gates nor FIS facilities in new B6 terminal
-Positive for customers, vendors, shareholders and 11,000 employees.
-B6 has been on the look out for added liquidity in '07 or '08 so this was well timed.
-Suggested people ask Lufthansa for more details about any future commercial collaboration or Star Alliance implications as B6 was not in a position to comment.
-Lufthansa plans conference on Friday December 14th to discuss the transaction.
From the desert to the sea, to all of Southern California
 
clipperone
Posts: 3
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RE: LH Buying Stake In Jetblue

Thu Dec 13, 2007 10:37 pm

If Delta indeed was interested in buying B6, it just got a lot more expensive. Interesting move by Lufthansa to protect the Star Alliance from Delta's potential market share grab??? Just a thought...
 
cloudboy
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RE: LH Buying Stake In Jetblue

Thu Dec 13, 2007 11:00 pm

I think we are seeing the future trend of airline travel. There is going to be a divergence of discount cheap seat travel and premium offerings. United Express now offers a premium economy and is doing well with it. Several other airlines do the same. Northwest just took an interest in Midwest, which is a premium product. While everyone still thinks of JetBlue as discount, in fact it offers a premium product, just at current fare levels. Lufthansa is good at taking a much longer-term view than most American companies or investors. I think they realize change is happening and are simply positioning themselves. They see JetBlue as a value to get right now, so in case they do eventually need, and can legally acquire with the upcoming regulation changes, another domestic connection service in the US they already have a start. Does anyone know when Lufthansa's call will be?
"Six becoming three doesn't create more Americans that want to fly." -Adam Pilarski
 
0newair0
Posts: 362
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RE: LH Buying Stake In Jetblue

Thu Dec 13, 2007 11:19 pm

Could it be possible that Lufthansa is doing this to help strengthen jetBlue against future competition from Virgin America (Technically not a Virgin Company but it will most likely link up with Virgin Atlantic in the future)? Just a thought.

[Edited 2007-12-13 15:27:32]
That's not how this works! That's not how any of this works!
 
RDUDDJI
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RE: LH Buying Stake In Jetblue

Thu Dec 13, 2007 11:22 pm

"If I woke up tomorrow with my head sewn to the carpet, I wouldn't be more surprised than I am now"

-Clark Griswold "Christmas Vacation"

WTF? This is v. surprising to say the least...
Sometimes we don't realize the good times when we're in them
 
FlyPNS1
Posts: 5484
Joined: Wed Dec 01, 1999 7:12 am

RE: LH Buying Stake In Jetblue

Fri Dec 14, 2007 12:07 am



Quoting EXAAUADL (Reply 23):
plus if UA tried to pull down JFK and drive up yields that would just encourage some LCC to step in and take the pent up demand

Except that JFK is likely going to be slot controlled in the near future which would prevent a new entrant from filling all the pent up demand. I think this is part of why LH is interested in B6. In all likelihood, B6 is going to be grandfathered into the new slot controls and will have about 400 slots (200 landing/200 departing). These slots could be valuable for LH should they want to expand more internationally given the EU Open Skies.

Of course, a 19% stake in B6 doesn't give LH anything right now, but it never hurts to get your foot in the door.
 
MCOflyer
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RE: LH Buying Stake In Jetblue

Fri Dec 14, 2007 12:18 am

I think LH is making a wise decision. As everyone has said, not only will LH have a new partner, but will they gain service to new airports as well. IF LH were to unleash a big transatlantic movement, this would be phase 1: gain access to cities by investing in a US airline. Phase 2 is anyones guess.

Hunter
Never be afraid to stand up for who you are.
 
gq
Posts: 69
Joined: Mon Jul 16, 2007 9:41 pm

RE: LH Buying Stake In Jetblue

Fri Dec 14, 2007 12:32 am

Great news for all parties involved, even the they are saying it is purely a "financial" move, this development has the potential to create some interesting dynamics come 2008 with the EU/US open sky agreement
 
icebird757
Posts: 423
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RE: LH Buying Stake In Jetblue

Fri Dec 14, 2007 12:32 am

You must be dreaming if you think that UA is going to have any control of B6. That is very wishful thinking!
I kick chocks
 
jetbluefan1
Posts: 3305
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RE: LH Buying Stake In Jetblue

Fri Dec 14, 2007 12:51 am

As a JetBlue investor, I think this is very positive news. LH's rather large stake will be an advantage to JetBlue that other US airlines don't have.

JetBluefan1
 
hoya
Posts: 547
Joined: Wed Jun 23, 2004 2:25 pm

RE: LH Buying Stake In Jetblue

Fri Dec 14, 2007 1:16 am



Quoting Icebird757 (Reply 43):
You must be dreaming if you think that UA is going to have any control of B6. That is very wishful thinking!

UA does have around $4 billion in cash on hand, so making any sort of transaction, such as purchasing a stake in another airline, is actually quite possible. The questions is whether something like this is likely. LH is only paying $300 million for the 19% stake. If it really wanted to, UA could pay that kind of money.
Hoya Saxa!!
 
wireless
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RE: LH Buying Stake In Jetblue

Fri Dec 14, 2007 1:30 am

UA just gave back $250M to its shareholders, a cash stake or an outright cash/stock purchase of B6 is not out of the question.

I'm sure LH wouldn't mind some money in a stronger UA (UA + B6's route network out east). I'm sure the feds would swallow such a merger much easier than say UA + DL or other major.

The armchair CEO'ing on this is fun  Smile
 
flyingcat
Posts: 528
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RE: LH Buying Stake In Jetblue

Fri Dec 14, 2007 1:33 am

perhaps the overseas alliance partners are getting antsy and want the US airline industry consolidation to begin ASAP.

I am curious how AF/KL will react, they seem to be distracted with the AZ deal.

However from all accounts this is a money transaction and they are not taking over strategic functions.

Secondly, LH must see B6 stock as massively underpriced. The whole industry is in a downturn right now, yet they did not buy some UA stock?

I wonder if BA wil com out of their UK shell and get serious about strategy outside the UK. Project lauren is a good start but the scope is far smaller than any other Euro carriers moves.
 
eghansen
Posts: 281
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RE: LH Buying Stake In Jetblue

Fri Dec 14, 2007 1:45 am



Quoting Charlipr (Reply 32):
Listening to the conference call right now, B6 executives are stressing that it is a "financial" transaction ONLY and no code-sharing or alliance at this moment.

Lufthansa has a lot of investments outside its core area. They have interest in Air One and Eurowings. They do airplane maintenance with Lufthansa Technik which has major maintenance bases in such places as Manila. They also have built airline terminals in Manila and Moscow. Their LSG Sky Chefs caters for airlines worldwide. They also own the Thomas Cook leisure travel company. None of these really mesh with the basic Lufthansa operations.
Nowadays, it is hard to tell when the commercials end and real life begins
 
avek00
Posts: 3233
Joined: Mon Oct 25, 2004 5:56 am

RE: LH Buying Stake In Jetblue

Fri Dec 14, 2007 1:45 am



Quoting Flyingcat (Reply 47):
perhaps the overseas alliance partners are getting antsy and want the US airline industry consolidation to begin ASAP.

Can you explain this further?
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