BA are intending to sell a majority stake in OpenSkies….
BA explores options for selling majority share in OpenSkies
David Kaminski-Morrow, London (17Jul09, 10:38 GMT, 416 words)British Airways is gearing up to sell control of its OpenSkies premium transatlantic operation, although it intends to retain a degree of interest in the carrier.
The carrier has recruited a London-based investment bank, Reynolds Partners, to explore options for the airline.
OpenSkies operates all-business Boeing 757-200s from Amsterdam and Paris to New York, but the collapse of the premium market has already forced BA to hold back on expanding the airline.
BA is confining itself to saying that it is “reviewing all aspects” of its activities, given the economic environment and the financial pressure on the carrier.
But a spokeswoman for BA points out: “OpenSkies is a small part of our business and its losses are not significant compared with losses in other parts of the company.”
Reynolds Partners declines to comment on the issue.
But the bank has recently appointed former BA head of joint ventures and investments Tim Hammond to lead a newly-created transport division, and ATI understands that he will take charge of the OpenSkies assignment.
A source familiar with the situation confirms that BA is to task the bank with assessing options for OpenSkies and, although the carrier is not setting a timescale, it expects to have an initial idea of possible paths within “a couple of months”.
“The issue is really that BA does not want to put investment in to make this work, but wants to remain involved,” says the source, indicating that sale of a majority shareholding appears to be the preferred outcome.
Despite the depressed economy, the source adds, there are already “several potential interested investors” in the carrier and a view that the OpenSkies business, in principle, is “potentially very good”.
BA has already committed to grounding and selling its 11 remaining mainline 757-200s rather than use them to reinforce the OpenSkies fleet. Eight will be parked this winter and the other three in summer 2010.
When BA pushed through the creation of OpenSkies last year – risking a revolt by mainline pilots in the process – it set a target of profitability within three years.
But the premium travel sector has been badly hit by the economic crisis. BA chairman Martin Broughton even warned shareholders this week that the market for premium travel “may never fully recover”.
OpenSkies’ management has remained upbeat about the carrier’s performance and prospects. The carrier, which began services in June last year, subsequently took over the similar French carrier L’Avion. It has a fleet of four 757-200s, operating under a single brand.
Source: Air Transport Intelligence news
By: PMN - 22nd July 2009 at 11:56
BA are intending to sell a majority stake in OpenSkies….
Had it been a majority steak I may have been interested, but I’ll pass on the majority stake I think! 😀
Paul
By: tenthije - 22nd July 2009 at 11:46
Absolutely, GO was on the verge of making a profit after all the start-up costs and establishment hit when BA decided to sell!!
True, but I don’t think that in the current market conditions a premium airline like Open Skies will be that popular.
If you are looking to sell an airline, you ususally ring Lufthansa or Aeroflot. Would either of them be interested in OpenSkies? Perhaps to fly into LHR?
Lufty is already working on buying BMI so why would they be interested in Open Skies? Besides, the Open Skies venture is if I recall correctly not really LHR based. They are BA’s attempt at gaining a foothold at airports outside LHR such as AMS, BRU and CDG. Neither of those airports are slot restricted (mostly anyway, AMS is saturated in the morning) so buying Open Skies for slots is not interesting.
By: rdc1000 - 22nd July 2009 at 10:24
BA’s history with spin off airlines really isn’t that good is it..? Maybe Easyjet will snap up Open Skies too.
Absolutely, GO was on the verge of making a profit after all the start-up costs and establishment hit when BA decided to sell!!
By: alangirvan01 - 22nd July 2009 at 09:00
If you are looking to sell an airline, you ususally ring Lufthansa or Aeroflot. Would either of them be interested in OpenSkies? Perhaps to fly into LHR?
By: Ren Frew - 18th July 2009 at 16:00
BA’s history with spin off airlines really isn’t that good is it..? Maybe Easyjet will snap up Open Skies too. I must admit between Open Skies and the new LCY business flights venture they’ve really muddied the brand somewhat.
By: *ALLIANCE - 17th July 2009 at 22:52
Im starting to follow this BA caper(as a business) with interest now. Personaly i have no real interest in them as an airline, hardly ever fly with them, and have no “national pride” towards them, but its interesting to see how they are reacting to these times as an airline. Media can hype things up no end, for the worse but, it now looks like they are really starting to worry. Im sure they will get some kind of government bail out if they really get in the s**t.
By: cloud_9 - 17th July 2009 at 20:51
They are also looking to raise up to £600m in ’emergency’ funding…and they are predicting they will have lost £100m in the first quarter of this year too!
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July 17, 2009 at 11:30 am