Virgin in talks to take over BMI

I personally don’t think any current member of Star, would have been denied Oneworld membership had they chosen to go that route. They are all world class airlines that have a niche in their respective marketplace. They just chose to join the best alliance. I am a posterboy for somebody that takes full advantage of his frequent flyer benefits, by being loyal to a particular airline and the alliance it belongs to; and who goes out of his way to make sure that he flies on one of the members in every instant.

Lastly, totally agree with you on the whole El Al thing, Mongu. I think it would be impossible for them to be in any alliance, and no, they don’t offer much other than access to Israel, which other Euro airlines have, as well.

Absolutely

Absolutely agree with your points Mongu.

I was simply pointing out how Star and Oneworld view their own methods of expansion.

Hmmm. lots of permutations.

I should think Virgin would scrap some of the BMI slots at LHR, in order to use them to move Virgin services across from LGW. The vacated slots could be used to start up short haul operations from LGW, perhaps competing with Easyjet.

OneLeft, in principle I agree with you about the membership criteria of Star as opposed to Oneworld. I’d add some caveats though:

– Star is a better connected and more closely integrated alliance than Oneworld.

– Some of the Star members are easily good enough for Oneworld.

– Some of the Oneworld members are nothing to write home about.

PS – El Al – you serious?? Wouldn’t that be an operational nightmare, with all their security checks and so on? It might also preclude further Middle and Far eastern expansion from a political perspective. Not sure if El Al is a good member for those reasons. What on earth can they offer apart from more frequencies to Israel?

Alliances and takeovers

The big difference between joining Star and Oneworld is that Star welcomes pretty much any company that approaches it. To join Oneworld a carrier has to prove the ability to deliver certain services to both its own customers and to those of the other members.

Swiss is currently working through this process and expects to join as a full member soon. Other carriers rumoured to be interested in joining Oneworld are JAL and EL Al.

The VS/BD link up has gone by the wayside if you believe The Times and Sunday Business today, with Michael Bishop ‘fending off’ Richard Bransons approaches. Indeed they report BA now looking at a possible take over of either company.

1L

I still think if Swiss slimmed down, Oneworld would admit them. They have a lot of agreements with other members and with less competition to BA with fleet and route cutbacks, it would seem that one day, hopefully, they may join. However, at the moment I don’t think so. With the bigger BA/AA relationship getting started and BA in a good position, I doubt Swiss would be welcome though that is going off the point of the matter 🙂

This would definitely be an interesting move for Virgin. I also think that it would vault them into serious LHR competition with BA. They can only go so far as a long distance airline, and to that extent, would it not be better to entice people to your long distance flights by offering them convenient connections at LHR?

Although Branson has been tentative about joining alliances in the past, he must recognize the advantages now, especially in today’s climate. Also, with their “cheap” concept expanding throughout the world why not extend it to LHR? Didn’t he say in the past that he regrets not setting up no frills in the UK? Although, I think that would forgo an alliance, but may make up for it in sales.

It seems like a good marriage to me. BMI gets international routes, and Virgin gets domestic. Also, with BA getting Terminal 5 Virgin must be desperate to increase their presence at LHR.

I remember that whole Swiss thing. Euro carriers are one thing, but what about expansion with carriers from every other region? Surely they should feel threatened by them.

GD, British Airways has been a little bit anally retentive as regards oneworld expansion I think.

They don’t want any more partners who have European hubs (eg. Swiss) because of the “competition” which their hub might cause LHR for long haul traffic.

i hope bmi don’t go under, although an allience or partnership between the two would be good for each side – bearing in mind bmi couldn’t get LHR slots for the Transat jobbies…

Found this on the bbc news website section:

http://news.bbc.co.uk/1/hi/business/3051069.stm

If BMI and Virgin and join forces and the latter subsequently joins Star, then AA and BA should be allowed to do their thing, in my opinion. Alternatively, why hasn’t Oneworld expanded the way Star has? Star has been gaining members continously since the original 5. BA and AA are only 2 of the airlines involved. Their little holdup should in no way shape and form prevent carriers from other parts of the globe from joining.

At an EU level, they would be entitled to view it in the context of Oneworld vs. Star

On that basis, Star gains a lot more influence at LHR than at present. It would presumably be a trigger for BA for to say “OK, go ahead, but as pay off we want to resurrect BA/AA”.

Combine BMI and Virgin and you still get an airline that’s maybe a 3rd of the size of BA. Why should the competition authorities trip?

Well it would be a shame for BMI to disapear, but it might be a step to get a netwrok of flights to their hub for international flights…

I would expect the competition authorities to take a look at it though.

If UA goes under, which they won’t, there’s no way AA joins Star. Given their existing partnerships, it just doesn’t make sense. Unless of course, they were to sever all ties with BA, QF, etc. I don’t even want to think about that, however, what I do like to think about, is this whole Virgin/BMI deal. I’ve been saying for a while now that it would be in both their best interest if they joined forces against BA. The best case scenario here, is perhaps a takeover of a certain amount of shares by Virgin, but yet allowing BMI to keep their identity, livery etc. Them having a loss in 2002 after profitable in 2001, doesn’t make them volatile, from an economic sense. Everybody lost in 2002, which few exceptions. This would then hopefully open the door for Virgin to join the Star Alliance, which I’ve been saying makes total sense for years now. Branson has made it clear that he doesn’t want to join an alliance, but he would benefit from it. As it is, SIA owns 49% of them, and they are a leading member of Star. It makes sense on many fronts.

It would be good for Virgin to get a feeder carrier into Heathrow with the European and regional network of bmi linking with the long haul operations of Virgin. However, I don’t think it would be wise for Virgin to take-over a company which is loss making and not in the best financial position, would it be good for Virgin to take over a shorthaul airline when there is so much competition around also?

Mikeconnell,
I think AA would offer Star the best advantages if UA were to go under, which I find highly unlikely. BA and AA do not have a full alliance because of Openskies and so cannot get ATI, this is a major disadvantage. As I have said before that the Oneworld transatlantic operation is a joke, what is the point of an alliance if two airlines cannot codeshare across the Atlantic? However, I find it now unlikely that either would move. To be honest I think it is just like the Qantas rumours.
If AA left Oneworld then in my wildest dreams I would hope to see a BA/NW/CO/KL link up but still that is just a pipe dream.

Originally posted by Hand87_5
Interesting .

BMI is in StarAlliance isn’t it?

Yes it is, and so is SIA which owns a big chunk of Virgin Atlantic. Personally, I can’t help thinking Virgin are a likely member in the not too distant future, especially if (God Forbid!!!) United go belly up.

Is it also likely that if United went under American could be enticed into the alliance, with consequences on OneWorld?

Mike

inteligent of Virgin there…more dominance for them.

I found this on Ananova:

Virgin Atlantic has held takeover talks with bmi British Midland.

A Virgin Atlantic spokeswoman confirmed the airline had been discussing a range of “co-operation” issues with bmi, including the possibility of a tie-up.

She said nothing had yet stemmed from the talks, which also covered sharing of facilities, code sharing and joint lobbying on matters of common interest.

A statement added: “There have been no definitive conclusions reached on the potential commercial opportunities, nor any other form of more permanent tie-up between the two companies, such as the acquisition of bmi by Virgin.”

BMI British Midland is controlled by founder and chairman Sir Michael Bishop, with Lufthansa and Scandinavian airline SAS holding the remaining 49% stake.

It is thought Virgin is keen to get hold of bmi’s short-haul routes into Heathrow, which would then act as a feeder into its long-haul empire.

Virgin added: “bmi and Virgin have for some time been exploring possible areas for greater co-operation in expanding their respective businesses, including code sharing expansion, potential sharing of facilities and joint lobbying on matters of common interest.

Bmi, which operates a fleet of 41 aircraft and employs almost 5,000 people, made a loss of £19.6 million last year after profits of £12.4m in 2001.

It is a member of the Star Alliance code sharing agreement involving 15 other airlines and which is effectively a competitor to Virgin. United Airlines and Lufthansa are among the other Star members.