VA to buy BMI? again...

Looks like Lufthansa are trying to sell their stake in BMI, and prospective buyers are VA or BA...

click here


{mcuth - edited to tidy up link}

[fozzyo]

This really is a recurring theme every few months a new rumour / opportunity for VA to buy / merge with BMI.

Foz )

[mcmbenjamin]

I hope VA does buy it. Then VS would be much stronger in the MAN and certianly at LHR. But the big question is BD is *A where virgin is sorta there own alliance. If VS merged/bought BD, would VS/BD be *A or just the BD routes? Or (and i think more probable) *A would use the Red Carpet Club and VS gold would use the clubhouse so VS would still have there branding and high level of service, also no opups for *A members
Comments welcomed

I guess what happens with respect to Star membership depends on which bit of the Virgin Group may pick up the stake in BMI - though I wouldn't be surprised either way if VS ended up being joining Star Alliance. Unless something drastic happens, VS could end up in a Star "pincer movement".

If VAA buy the LH stake in BMI, then I wouldn't be surprised if there is a) pressure from the other owners of BMI (Bishop and SAS) for VS to join Star, b) pressure from SQ (49% owners of VAA) for VS to join Star, to make it one big "happy family".

Remember, Bishop owns 50% +1 share. LH own 30% -1 share. SAS own 20%.

If some other bit of the Virgin Group takes the stake in BMI, then there may be increased co-operation, but no change in Star membership, unless Virgin increase their stake in BMI in the future (e.g. through acquiring Bishop's share), which could signify a drop out.

If VS do join Star, I'm sure they will be expected to play the game properly, which includes Star Gold signs outside Clubhouses. Remember, even with that, it's partly up to the airline owning the lounge on the rules.

From my experience, many Star airlines seem to only allow Star Gold members from other airlines in their lounge if they are ticketed on one of their flights that day. So, for example, if you are Star Gold (maybe BMI), ticketed on Air Canada, and tried to use the UA Red Carpet Club (masochism, maybe?), they would usually bounce you back to the London Lounge (the ACA/SAS joint lounge, which is actually rather nice). However, they usually don't have a problem if you use your "home" airline's lounge, regardless of who you are ticketed on.

Whatever happens, BMI does need to pull their socks up and decide what they want to be. What are they? Regular (business?) airline with several flights spread across the day, or lo-co with one round trip per day?

Part of the reason that BMI are losing money is because they gave away large chunks of their European flying to other Star members, and don't seem to be able to operate attractive business schedules on other routes. BMI used to fly LHR-TXL, but they gave that up, and LH didn't take it over - gifting BA a monopoly on that route! They have been pretty well bullied out of Spain by Oneworld (BA and Iberia) and Ryan/Ezy, and gave a load of stuff away (e.g. all the EMA flying) to kickstart BMI Baby.

They have this great Transatlantic product, yet this wishy-washy, bitty coverage of Europe.

BMI needs an injection of something. Not exactly sure what.

Cheers,
Mike

quote:Originally posted by mike-smashing
If VS do join Star, I'm sure they will be expected to play the game properly, which includes Star Gold signs outside Clubhouses. Remember, even with that, it's partly up to the airline owning the lounge on the rules.

Don't forget, SQ do not offer Star Gold access to their main lounge in SIN -- they created a separate *Gold lounge. There is no way VS would want the huge increase in lounge access unless there was a massive change... there is simply not the capacity.

quote:From my experience, many Star airlines seem to only allow Star Gold members from other airlines in their lounge if they are ticketed on one of their flights that day.

That's why you always need to take a copy of the rules:

"Star Alliance Gold card holders and one guest, have access to any lounge that is identified with a Star Alliance Gold lounge sign when departing on a Star Alliance flight."

So, if VS was in *A then you can guarantee that every *Gold would make a beeline for the CH since it is just so much better than every other *Gold lounge. Not going to happen...

BC

quote:Originally posted by BlackCat
"Star Alliance Gold card holders and one guest, have access to any lounge that is identified with a Star Alliance Gold lounge sign when departing on a Star Alliance flight."

That doesn't seem to be worth the paper it's printed on anymore, certainly in these days of belt tightening. I'm a UA Star Gold member, and I've been told in no uncertain terms that I'm no longer allowed a guest in the GlobeGround lounge at AMS if I'm departing on a BMI flight (but I am if I'm departing on a UA flight!) - and I've been given a copy of the memo from GlobeGround HQ stating this!

I have noticed that the handler operated lounges are far more uptight than the airline operated ones about this sort of thing.

quote:
So, if VS was in *A then you can guarantee that every *Gold would make a beeline for the CH since it is just so much better than every other *Gold lounge. Not going to happen...

So, do an SQ. Have a "real Clubhouse" restricted to ticketed VS Upper and Gold Pax, and a "Clubhouse lite" (no hot food, no v-touch, no waitress service) for the great unwashed masses... maybe even offer FC Silver or PE pax access to "Clubhouse lite" (and that will annoy BA).

I believe one of the things that SRB believes in is "never say never". He never wanted to sell Virgin Music to EMI, but he still did it. He keeps his options open.

Cheers,
Mike

quote:Originally posted by hamishbrown
Looks like Lufthansa are trying to sell their stake in BMI, and prospective buyers are VA or BA...

A very interesting story. LH are in a deep whole with 30% of BMI. losing money and reddening their profit and loss account with massive write offs of goodwill. PLUS, they might be forced to buy another 50% at a price that is far above today's value. PLUS, PLUS if Bishop has been just a little bit clever, he wants his money in cash - a resource I doubt LH has too much of.
But then, neither do VS or BA. BA is probably in a better position to take on LH's 30% because it could raise some cash with a share placement. VS, on the other hand, cannot do that and I doubt that either LH or Bishop would want some VS shares - even if SRB and SQ were willing to be diluted (remember any dilution of SRB's shareholding would take him below 50%).
So, what might happen? LH fails to sell its 30%. Bishop exercises his option, but LH cannot complete the purchase through a lack of funds. BMI continues to lose money. All this forces LH and Bishop to renegotiate their deal, with Bishop wanting a clean exit via a sale of BMI before it collapses. If no sale can be agreed, then you might see BMI being asset-stripped of it most valuable assets. But don't forget the SAS shareholding, too.
Whatever the result, it would be great to have a fly-on -the-wall view of the negotiations.

There's an article in the Biz section of the Sunday Times today implying that although Virgin would be the natural choice and fit, only BA expressed an interest (albeiti a luke warm one), but accepted that they wouldn't be allowed to due to competition issues.

Also suggests that niether VS or BA were too happy (naturally) that they would be buying a loss making entity and have little managerial control in it's future. Suggests that LH will buy it completley.

We'll see - this story has been doing to rounds for yonks.

Ales