Virgin hires Deutsche Bank to help it see into the future

See here.

I didn't know Deutsche Bank was that expert in the airline industry, or perhaps to negotiate to buy BMI ... ?

Has been reported today in that freebie

http://www.thisislondon.co.uk/standard- ... ne-wars.do

[Scrooge]

I'm surprised this hasn't been commented on more.

The implications of this are huge for VS, it helps clarify the place that VS is in right now and it's status as a stand alone carrier.

I'm surprised this hasn't been commented on more.

The implications of this are huge for VS, it helps clarify the place that VS is in right now and it's status as a stand alone carrier.

Whats everyone's gut feeling:
1. join *A
2. Merge/ sell into Lufthansa/BMI
3. Buy BMI, and go it alone
4. Go it alone
5. Leave LHR slots as is, and expand elsewhere..
6. Other?

Eitherway assume the implications are likely to be swift & critical??

My gut feel is option 5. They just don't have the whack to take on BA/AA further and their new fleet is nimble enough for secondary airports maintaining their niche status. Certainly the expansion of Virgin Holidays shops in the north of the UK suggests regional airport status will likely highten.
Without frequencies I just don't see them moving out of O&D traffic and the only way they'll get significant frequencies is to buy the poorly performing bmi.

See here.

I didn't know Deutsche Bank was that expert in the airline industry, or perhaps to negotiate to buy BMI ... ?

or bring back the T10, polos and pens (will keep Jackie happy ...)

Guess this is a confession from SRB/Senior Management that VS is in something of a strategic malaise and they don't know how to proceed!

bmi is a basketcase and I think would be too big a mess for VS to digest at the moment. Also the noises from LH are that they are not pursuing a bmi merger or sale with another airline... "at present" ):

Option 6

Other choices are very difficult for a private company with 49% of the shares out to someone who wants to take out rather than put in. Option 2 would leave Australia & America out.

I'd have to agree with Option 6 as the others are pretty much well understood and, if clear to act on, would have been acted on. I'm not exactly sure how DB would be able to change SRB or Singapore's minds on 1-5, as Bill says. And you usually bring in someone from outside because you feel you've pretty much exhausted the obvious - not that it always helps all that much.

Well, that's an interesting one.

I'm curious as to why Virgin chose DB - seems a strange choice to me, and there must be a specific reason - but for the life of me, I can't find it.

Really, I can't help thinking that the options are very limited.

Another (horrible) option is that they simply narrow the business model and become another holiday charter - it's all there, VH etc...although, I can't really see this happening.

Buying BMI (if it were for sale) might work, but they'd have to buy and harvest, being very decisive with what they were looking to achieve. Lots more LHR slots, feeder routes and used to be a similar(ish) servie offering - they'd have some additions to the longhaul fleet as well.

Tie up with LH - not entirely sure I can see the obvious benefits there....if it ever happened, you'd probably see a change in the service offering with VAA...

I really can't help thinking that go it alone is actually the best, albeit, highest risk option - although, I can't help thinking favouring the buy BMI option.

They have a good brand name, loyal customers, a service offering that generally retains customers - why not expand on that...snap up slots when they come up, expand the fleet, equalise schedules from Man/LHR/LGW/GLA bring on BHX and DUB/Shannon...who needs feeders then, it's quicker to drive or take the train.

Taking the above a little further, why not focus on the premium/UC customers and reduce economy - leaving that to the "bulk" carriers - that's where the loyalty is...

SRB understands customer service - why not focus on that and attract the customers that demand it, they'll come back time after time - provided you keep up the service level...

Most agree that BMI would be a great fit for VS, but at the moment BMI seems to be a bit of a basket case.

Why not do a Virgin America for the UK/Europe who have only taken a few years to grow to a reasonable size.

Instead of merging/buying BMI, why not just start up the routes you would have cherry picked from a bought BMI and do it yourself with a fleet of leased A319/320's

There must be (is) scope for feeder services from GLA, EDI, NCL, MAN etc into London (and of course the other way round) plus a huge untapped band of Virgin fans in Europe that could feed into LON, MAN and GLA.

Of course this would have been much easier to do before BMI was swallowed into LH group when they had no money/direction, but should still be do-able.

It is a huge amount of grief for anyone wanting to use VS that needs a shuttle down to London with bad connection times, baggage allowances etc

?| who knows what might happen

David

David,

There must be (is) scope for feeder services from GLA, EDI, NCL, MAN etc into London (and of course the other way round) plus a huge untapped band of Virgin fans in Europe that could feed into LON, MAN and GLA.

I'd love to see this happen! From the NE there is only one airline that flies into LHR and that is from NCL i.e. BA. (and Fly BE into LGW from NCL ). I've just looked into booking a BA shuttle down to LHR for next April (to link up with a yet unbooked VS flight) and BA want to charge me 515.00 for the privilege.

I just wish there was some competition on the route. A VS Europe would be ideal

Needless to say we're driving down....

i would like to see a Virgin Europe short-haul operation. but if VS have to tie up with another airline or alliance i would like to see them keep some Independence and join either the *A with Singapore airlines & LH/BD, or Sky Team as i believe may have been mentioned on here or somewhere before although this is unlikely being half owned by SQ

I have had two main thoughts on all of this recently.

1. BD is not the best option for VS. 5-10 years ago it was but one only has to look at how much of BD has been stripped out by LH and you begin to realise that any link up with LH will not benefit VS. What VS would want from BD is its short haul domestic feed (from UK and Eire destinations plus places like BRU). These are the exact routes that have been cut since the LH deal.
Since then all they have done is open up routes that "assist" LH (ie: TXL on behalf of LH etc) and enter these mid haul markets, which I am sure VS looked at c.2000 when the 321s where in the fleet (so if mid haul offered excellent feed VS would have done it---lets not forget VS had a real option of opening up Moscow but snubbed the mid haul market). BD as it is now serves no real option for VS.


2.I can see why so many people think Star Alliance will be the way forward for VS. However perhaps a huge curve ball is Skyteam. The Skyteam option is gaining alot of chatter on a.net and does have some real merit. Star will mean a closer relationship with LH. Skyteam offers a lot more to VS. Skyteam are working very closely with DJ regarding a possible membership (further enhanced by the DJ/VA/DL agreement) and its clear that SRB et al would like to see Virgin branded companies under one alliance (if they go that way). Secondly Skyteam is AF/KL's baby....the significance of this is that AF has just signed a rather extensive codeshare agreement/potential buyout of BE....and guess which carrier would now be able to offer VS some semi decent domestic feed...yep BE. Couple that with the whole Cityjet equation and it becomes clear that perhaps Skyteam membership could suit VS. The way I would see it would be that DL/VS would enter into an agreement, similar to that of DJ/VA/DL, AF will leave VS as is but provide it with excellent feed through BE/Cityjet/AF/KL etc. The reason AF/KL will welcome VS with open arms is that it gives a stronger LHR foothold and lets face it AF have shown more than a passing interest in long haul from LHR. And then VS is well placed to take on BA/AA/IB as it will be VS/DL/AF/KL. AS for the SQ 49% well lets not forget that SQ has hardly the best relationship with Star and has in the past almost walked out.

I guess the third is VS goes it alone. However I fail to see exactly what more VS can gain by being alone- how much further growth can there be at LHR without additional assistance.

The biggest failing of VS in the last 18 months (minus the cuts to service etc) has been to throw its toys out of the pram with regards to BA/IB/AA. Instead of putting its efforts into a doomed publiciyt campaign against something that would have always gained the green light, they should have been working out who they could get into bed with to make them stronger. Maybe just maybe they are finally getting round to it.

From a purely selfish point of view I would favour *A, allowing a strong tie with BD who will service LHR well from regional airports (including BHD five minutes from my door), but also permitting VS to keep its independence and character. I do not think LH would allow this with Option 2.
Skyteam are attractive as an alternative but do not offer an opportunity for LHR domestic connections AFAIK. VS LGW routes don't offer much for me.

Skyteam are attractive as an alternative but do not offer an opportunity for LHR domestic connections AFAIK. VS LGW routes don't offer much for me.

But they could do and I think that is the point. If there was to be some kind of link up with VS into Skyteam it would not take a genius to see that AF/KL could do a little slot swap and provide someone like Cityjet with the slots to be able to feed into VS. At LGW domestic feed would be easy as I would imagine that any closer tie with AF/KL will mean a closer tie in with BE.

And lets not forget that for VS domestic feed may not be the key to a succesful future. Sure for most of us on here it would be a huge help but for VS the top criteria of Skyteam (or any other alliance) may well be areas other than domestic feed.