BA considers buying bmi

[Keith T 2]

http://www.telegraph.co.uk/money/main.jhtm.../28/cnbmi28.xml

 

BA considers making a bid for rival BMI

 

By Alistair Osborne, Business Editor

 

British Airways is mulling a bid for BMI, though any move would face big competition hurdles and a possible veto from the smaller airline's 30pc shareholder, German carrier Lufthansa.

 

Senior BA sources are known to covet BMI, which is majority-owned by its founder and chairman Sir Michael Bishop.

 

BMI's strategic value has been greatly enhanced by last week's "open skies" agreement because the airline has more than 12pc of the take-off and landing slots at Heathrow.

 

...

[Y. J. Foo 0]

IIRC Richard Branson just said earlier that Virgin held talk with bmi to form a merged airline to form a rival against BA?? :help:

 

Now BA wants to buy them... :shok: let's see what happens next...

[Keith T 2]

Any takeover has to be subjected to a competitive bid process.

Virgin has confirmed that it'd submit a bid.

There's also indication that LH will veto BA, match the highest bid, and take complete control of BMI. One expects LH to fend off BA and other bidders quite fiercely due to BMI's slots at LHR.

[Pieter C. 5]

BA is really shifting it's intentions, selling the 'regional' part to FlyBe and now wanting to bid for Bmi (for the LHR slots of the latter ?)...

[Seth K 3]

Or perhaps they purchase BMI so that they can overfly Russia

Edited March 28, 2007 by Seth K

[Keith T 2]

BA is really shifting it's intentions, selling the 'regional' part to FlyBe and now wanting to bid for Bmi (for the LHR slots of the latter ?)...

 

There're also persistent rumours of a BA/IB merge - have you heard anything more with that?

[Pieter C. 5]

There're also persistent rumours of a BA/IB merge - have you heard anything more with that?

 

Open skies may lead to open season on Iberia

 

Wednesday March 28, 2007

Talk of a possible bid for Iberia continued to soar in the wake of last week's approval of the EU-US open skies agreement, with Texas Pacific Group--a member of Airline Partners Australia and among those shortlisted to bid for Alitalia--added to the list of potential suitors that already includes British Airways, Lufthansa and an unnamed Spanish investment fund.

 

Iberia issued a statement last week saying there was "no agreement with, no offer from, and no proposal by any third party." However, the IB board confirmed it "had taken note of the interest of the market and expressly authorized" Chairman Fernando Conte to supply information to potential investors "who indicate a genuine interest in participating in some significant corporate operation, and who possess sufficient economic solvency and technical capacity to engage in operations of this nature." The company reportedly hired Goldman Sachs and Credit Suisse to advise on a possible sale.

 

Like IB, BA and LH repeatedly have dismissed a merger or acquisition. But last Sunday, BA CEO Willie Walsh conceded he might be prepared to launch a £2.4 billion ($4.71 billion) bid for Iberia, of which his airline already holds 10%. "We'll bid only if it is in the best interests of BA," Walsh told the Financial Mail. He said BA prefers a partnership with IB but admitted it is ready to buy if a third airline bids for the Spanish carrier.

 

 

[Pieter C. 5]

More news on this subject !

 

Iberia Hires Banks To Advise Possible Sale

 

March 29, 2007

Spanish airline Iberia has hired investment banks Goldman Sachs and Morgan Stanley to advise it on a possible sale, people familiar with the situation said on Thursday.

 

Iberia's share price has risen to all-time highs on speculation private equity firms or rival carriers were considering bids of up to EUR4 billion euros (USD$5.34 billion) for the Spanish flag carrier and its established long-haul business to Latin America.

 

An Iberia spokeswoman declined to comment on the matter on Thursday. Goldman Sachs and Morgan Stanley also declined to comment.

 

Shares in the airline moved higher again on Thursday after several Spanish newspaper reports cited Lufthansa and British Airways as possible buyers.

 

"This is what currently supports the strong price, as our fundamental valuation for the Spanish airline and the recent surge in oil prices should point to lower levels," Portuguese broker BPI said in a research note.

 

"We believe that an offer price for Iberia could stand above 4 euros per share and could reach at least 4.4 euros per share in a fight-for-control situation."

 

Earlier this week, people familiar with the matter said private equity firm Texas Pacific Group was considering making an offer to buy Iberia.

 

British Airways, which owns 10 percent of Iberia, also said it was keeping options open about the Madrid-based airline.

 

Lufthansa declined to comment on the speculation on Thursday, but said it was keeping a close eye on proceedings.

 

"We want to play an active role, we are watching closely, but there is nothing in the pipeline," a spokeswoman for the airline said.

 

(Reuters)

 

[Keith T 2]

Interesting...

 

I look forward to fiery bidding wars.

[Pieter C. 5]

No doubt: the merging 'wars' have started, whether in the EU or US

[Pieter C. 5]

Open skies deal leaves bmi's network, independence up in air

 

Friday March 30, 2007

Bmi has not decided whether it will expand its transatlantic service from London Heathrow when open skies takes effect next year.

 

"Much will depend on aircraft availability, on market possibilities and on partnerships," Commercial Director Adrian Parkes said while in Brussels to celebrate the 15th anniversary of the carrier's Belgian service. "Of course we have the desire to go for it as soon as we are ready." Bmi will be looking to add new long-haul aircraft if it opts to enhance its US operation. It currently has no orders or options for such aircraft.

 

"Like so many people, we had not anticipated the two blocs would come to an agreement," Parkes conceded, admitting the irony of the timeframe. Some eight years ago, bmi was so confident Bermuda II would be scrapped that it ordered four A330s and moved to rebrand itself. It wound up leasing several aircraft to Star Alliance partners. It now operates three A330s, flying to Saudi Arabia from LHR and to Chicago O'Hare, Las Vegas, Barbados and Antigua from Manchester.

 

Parkes said he could not say if new US routes would be operated as bmi or as Lufthansa, which holds a 30%-minus-one share in the group. "I'm sure a lot of talk is going on between the shareholders," he laughed.

 

Regarding rumors of a possible takeover by British Airways, he said he "will not speculate on speculation," noting that Chairman Michael Bishop reiterated his desire to remain independent in several articles in the UK press.

 

The open skies accord has resulted in an overload of takeover and merger rumors, including a reopening of negotiations between Virgin Atlantic Airways and bmi. Virgin yesterday was quick to denounce a possible BA-bmi configuration, arguing it would "damage the aviation industry" by creating a dominant player. BA holds about 40% of the slots at LHR while bmi has 12%.

 

 

[Pieter C. 5]

Walsh details BA's limited merger interest

 

Monday April 9, 2007

British Airways is not in talks to acquire a stake in bmi and is not really interested in Iberia either, CEO Willie Walsh told The Guardian.

 

"I have had no contact with him [bmi Chairman Michael Bishop] at all and I have read that he is not selling. It is his airline," Walsh said. He did confirm that BA bought some London Heathrow slots from bmi and said he would look at bmi if it became available. He stressed BA would not acquire its smaller rival just to protect its market position on US routes. "I have always said I would have no difficulty competing with bmi on the transatlantic route. I don't believe in closing off threats like that."

 

He also indicated BA is not interested in taking over Iberia and reiterated that a sale of its 10% stake in the carrier remains an option. The Spanish carrier's strength is its Latin American network, which is underpinned by bilateral agreements, Walsh noted.

 

He said BA considered a bid for Alitalia for "1.5 seconds" before deciding not to approach the loss-making carrier.

 

 

[Keith T 2]

Humph... back to square 1.

[KK Lee 5]

 

LH won’t let BA to take over BMI especially with those valuable slots at LHR. However, whether LH will veto on Virgin bid will be very interesting.

 

[Pieter C. 5]

BA CEO Willie Walsh conceded he might be prepared to launch a £2.4 billion ($4.71 billion) bid for Iberia,

 

 

Earlier this week, people familiar with the matter said private equity firm Texas Pacific Group was considering making an offer to buy Iberia.

British Airways, which owns 10 percent of Iberia, also said it was keeping options open about the Madrid-based airline.

 

Iberia Asks TPG For Bid Partner Details

April 12, 2007

Iberia has not shown its books to Texas Pacific Group and will ask the private equity bidder to name its partners in the deal, the airline said on Thursday.

 

An Iberia spokeswoman said the airline wanted to know if any Spanish companies were partnering with TPG in its EUR3.4 billion euro (USD$4.57 billion) bid for the Spanish flag carrier.

 

"The board is going to ask TPG to offer more information about Spanish partners that are joining it in the project and whether an airline is included," the spokeswoman said after Iberia's board met to discuss the US group's approach.

 

"The books have not been opened at the moment," she added.

 

TPG has offered an indicative price of 3.60 euros a share for Iberia.

 

European rules limit a US firm like TPG from owning more than 49 percent of an EU airline. Under a new "open skies" pact between Washington and Brussels, the European Union would potentially have the power to cut that limit to 25 percent.

 

Lufthansa and British Airways -- which owns 10 percent of Iberia and has first refusal to buy another 32 percent -- have been named as possible rivals or partners for TPG.

 

Yu Jen Shih from fund managers Baring Asset Management said TPG's bid undervalued Iberia because of the superior growth potential on Europe-Latin America flights compared to other routes such as the North Atlantic or Europe-Asia.

 

"If you consider the growth potential of its Latin American business and the multiples in similar transactions like Air France-KLM, I think you can justify a price of up to 4.5 euros," he said.

 

"As a financial buyer, not an airline, and therefore with less synergies, it would be worth less to TPG but still above 3.6 euros," said Yu.

 

Iberia is a digestible size for Europe's big airlines, and despite stiff competition in its short-haul business, its financial position is improving and it has an attractive profile as market leader on Latin America-Europe routes.

 

TPG is no stranger to the airline business. It turned around Continental Airlines in the 1990s, is looking over the books of troubled Italian airline Alitalia, and is part of a group closing in on Australia's Qantas Airways with a USD$8.7 billion bid.

 

(Reuters)

 

 

[Pieter C. 5]

"BA CEO Willie Walsh conceded he might be prepared to launch a £2.4 billion ($4.71 billion) bid for Iberia"

 

BA Approaches Private Equity Firms On Iberia

 

April 23, 2007

British Airways has approached a number of private equity companies about making a consortium takeover bid for Spanish airline Iberia, BA said on Monday.

 

However, the airline said it had ruled out making an independent bid for the airline.

 

"Any consortium bid would not involve further capital investment by British Airways," Europe's third-biggest airline said in a statement.

 

"As well as a private equity partner, this consortium is likely to include one or more Spanish partners," BA added.

 

Private equity firm Texas Pacific Group (TPG) has already offered an indicative price of 3.60 euros a share for Iberia, valuing the Spanish carrier at around 3.4 billion euros (USD$4.6 billion).

 

European rules limit a US firm like TPG from owning more than 49 percent of an EU airline. Under a new "open skies" pact between Washington and Brussels, the European Union would potentially have the power to cut that limit to 25 percent.

 

Germany's Lufthansa and BA -- which owns 10 percent of Iberia and has first refusal to buy another 32 percent -- have been named as possible rivals or partners for TPG.

 

Earlier this month, Iberia said it required more information from TPG. Iberia had said it wanted to know whether any Spanish companies were partnering TPG in its bid for the airline.

 

The head of Lufthansa in Spain told El Economista on Monday that if it did acquire Iberia, it would keep the flag carrier's Spanish identity.

 

BA said on Monday it had not made any final decision about its stake in Iberia and continued to examine numerous options, including a full disposal.

 

(Reuters)

 

 

[Pieter C. 5]

British Airways Pushes Buyout Cos. To Bid On Iberia

 

May 14, 2007

British Airways is trying to push two buyout firms to join together in a common bid for Spanish carrier Iberia, which it would back, sources familiar with the matter said on Monday.

 

Rival buyout firms Apax partners and Texas Pacific Group are both trying to bid for Iberia and each is trying to woo British Airways, which has a stake in Iberia, into their respective bidding groups.

 

The UK carrier is, however, trying to convince Texas Pacific to allow Apax to join its bid grouping. This would boost the UK carrier's chances of backing a successful bid, the sources added.

 

However, other options also remain open to the British carrier, they added, without giving additional detail.

 

British Airways and Texas Pacific declined to comment.

 

(Reuters)

 

[Pieter C. 5]

Bmi's Bishop: 'No point' in selling Heathrow slots

 

Wednesday May 16, 2007

Bmi Group Chairman Michael Bishop confirmed the March transfer of 51 slots at London Heathrow to British Airways for £30 million ($59.4 million) but said the transaction was not a sale, as reported in the mainstream press, but a condition of bmi's acquisition of BMED.

 

"They weren't our slots," Bishop explained. "The deal was that BA had a right to cancel their franchise with British Mediterranean and operate the routes themselves in the case of financial default, which is what happened, and they also had a preemptive right on the slots."

 

He added that the company did not see any benefit in parting with any of its own LHR slots despite a flurry of interest from competing carriers in advance of open skies. Speaking during this week's Star Alliance anniversary celebration in Copenhagen, Bishop said airlines ask about bmi's slot holding "all the time" and "we tell them they're more expensive now than they used to be."

 

Although the proceeds would be significant, slot sales or lease-outs are not in bmi's long-term interest, Bishop explained. "We make enough money using what we've got," he boasted. The company nearly tripled its full-year pre-tax profit to £29.7 million in 2006.

 

"If you sell a slot, you also have to restructure your business," he said. "If you don't have a slot you don't need the airplane and you don't need the staff. There's no point in selling a slot for a certain amount of money, then you have to pay so much to reduce the size of your business. . .The only point in having a slot is to maximize the value you get from it."

 

To that end, bmi augmented its domestic and "near European" network with the February purchase of BMED. Bishop said its LHR-Moscow service now is augmented by 16 additional medium-haul routes that will feed its growing long-haul operation.

 

He said bmi has identified potential markets for new transatlantic services and that the company is preparing an announcement in the third quarter. The number of destinations depends on "how we can stretch the aircraft," he said, adding, "we'll be able to acquire the aircraft whenever we need. There are enough aircraft in float at the moment."

 

 

[Pieter C. 5]

British Airways Backing TPG Bid For Iberia - Report

 

May 21, 2007

British Airways has decided to support a bid for Spanish airline Iberia led by private equity firm Texas Pacific Group, Europa Press news agency reported on Monday.

 

Quoting sources close to the deal, Europa Press reported that the consortium would include Spanish funds Vista Capital -- controlled by banks Santander and Royal Bank of Scotland -- Inversiones Ibersuizas and Quercus Equity.

 

BA, which owns 10 percent of Iberia, declined to comment on the report. TPG was not immediately reachable.

 

BA CEO Willie Walsh said an announcement of a deal could come as soon as Tuesday, but gave no further details.

 

"We are in the final stages of discussions with some private equity interests," Walsh told investors and reporters at a meeting in New York on Monday, on the subject of Iberia.

 

"I expect to be in a position to announce a formal decision in relation to our participation in a consortium at some stage this week, possibly as early as tomorrow," he added.

 

TPG and its partners have already made an indicative bid worth EUR3.4 billion euros (USD$4.6 billion) for Iberia, or 3.60 euros per share. Iberia stock closed up 0.5 percent at 3.92 euros.

 

The Europa Press report said BA had opened the door to Apax Partners to join the TPG-led group but it was not clear whether the second private equity firm had decided to come on board.

 

Spanish investors will own at least 51 percent of Iberia's capital, with Vista Capital holding "significant weight," Europa Press quoted sources as saying.

 

(Reuters)

 

TPG surely has loads of money to 'spend' given their bid for Alitalia as well

 

[Pieter C. 5]

British Airways To Be Patient On Iberia

 

June 28, 2007

British Airways will be patient in its effort to acquire Spanish carrier Iberia but does not expect to raise the EUR3.4 billion euro (USD$4.57 billion) offer, its chief executive said on Thursday.

 

British Airways is part of a consortium led by private equity firm Texas Pacific Group that has bid 3.60 euros a share for Iberia.

 

Iberia did not discuss the offer at its monthly board meeting on Thursday, a spokeswoman for the Spanish airline said, despite a previous commitment to do so.

 

Iberia's board had been expected to reject the offer in the hopes of receiving a higher bid, a source familiar with the situation said on Wednesday.

 

British Airways CEO Willie Walsh said he did not know which way the board was leaning but said British Airways was not going to be easily brushed aside.

 

"We're going to be patient here," said Walsh. "We would encourage the board to respond one way or another."

 

He said the group does not intend to raise its bid, which he says represents "fair value" for Iberia.

 

Iberia's share price rose as high as 4.16 euros following the March approach from the Texas Pacific group. It has since fallen back as interest from other bidders has failed to materialize, but it remains above the offer price.

 

The shares were unchanged at 3.75 euros on the Spanish stock market on Thursday.

 

British Airways' expansion plan, however, has its limits. Walsh said the airline is not interested in acquiring a 20 percent stake in UK rival bmi, because it would have few prospects to control the airline.

 

"What British Airways is not particularly interested in is buying a minority stake in an airline in which we would have no control," he said.

 

Earlier this month, Scandinavian airline SAS said it planned to sell the bmi stake as part of a plan aimed at trimming costs and focusing on core markets amid fierce competition.

 

(Reuters)

 

[Pieter C. 5]

Bmi Buying 10 Airbus Planes Worth USD$750 Mln

 

July 10, 2007

British airline bmi said on Tuesday it was buying 10 new Airbus aircraft worth around USD$750 million to expand its medium-haul and long-haul routes from London's Heathrow Airport.

 

Five additional Airbus A330s worth about USD$500 million will join the three it already has, with the first new aircraft expected to be delivered early in 2008.

 

Bmi will also take delivery of five new Airbus A321s valued at USD$250 million to help expand its medium haul network.

 

(Reuters)

 

[Pieter C. 5]

Iberia Sets Conditions On Opening Books To TPG

 

July 12, 2007

The board of directors of Iberia said on Thursday it will open its books to private equity firm TPG, which is bidding for the airline, but only if TPG agrees to confidentiality.

 

Iberia said it would give the TPG consortium additional information but only if it receives a binding offer and if the board feels it is in the best interests of the company.

 

So far, the consortium has only indicated it will make a EUR3.4 billion euro (USD$4.7 billion) offer. The consortium includes British Airways which owns 10 percent of Iberia.

 

Iberia said on Thursday its decision to give information to TPG did not denote its approval of the indicated offer but added it was positive for Iberia that TPG should continue studying its offer until reaching a conclusion.

 

Sources close to the situation said last week TPG had given Iberia until the end of July to open its books or it would withdraw its interest.

 

TPG's offer values Iberia shares at 3.60 euros each, a level reported to be unacceptable to the airline. Spanish media had reported Iberia will not open its books to any bidder offering less than 4.00 euros per share.

 

Separately on Thursday, TPG told the Italian government it remains interested in buying Alitalia, but only if the auction rules are changed, people familiar with the situation said.

 

(Reuters)