bmi

bmi’s exit from Star Alliance has a minor effect but potential departure by TAP will be more felt

Bmi’s exit from Star Alliance has only a minor effect on the group’s global footprint, but a potential departure from TAP Portugal would leave a much larger mark on Star’s connectivity especially in the Iberian peninsula, where it already lost Spanair in Jan-2012. TAP, which has an extensive network in South America and Africa that would appeal to any global alliance, is slated to be sold off by the Portuguese government later this year. If TAP were to be sold to a non-Star affiliate, such as International Airlines Group (IAG), it stands to lose three European members in 2012.

Bmi formally exited the Star Alliance network on 20-Apr-2012 following the conclusion of the sale of the UK-based carrier to IAG. Star carriers are in the process of ending their codeshare agreements with bmi as principally Star Alliance does not allow a member airline to codeshare with a member of another alliance although some exceptions are permitted with Star Alliance authorisation.

IAG first quarter operating loss doubles on shabby Iberia performance and pilot strikes

International Airlines Group (IAG) has joined the ranks of its full service peers, Lufthansa Group and Air France-KLM Group, in reporting a deepening of its first quarter operating loss with higher fuel costs nullifying the rise in passenger traffic growth and unit revenues. IAG’s deteriorating results, however, also depict a two-tier performance within the Group giving little reason to rejoice the one-year old merger with an “ole”.  

Iberia contributed to the bulk of the operating loss whereas it accounts for approximately a third of the group capacity (in terms of ASKs) and group revenue. This highlights the urgent need to proceed with the restructuring of Iberia and resolve the dispute with its pilots. The 10 days Iberia’s pilots were on strike in 1Q2012 cost EUR25 million, according to IAG.

IAG’s Spanish unit incurred a EUR170 million loss from operating activities in the first three months of 2012, compared to a EUR100 million loss in the year-ago period. British Airways (BA) posted an operating loss before exceptional items of GBP62 million (EUR77 million) in 1Q2012.

British Airways/IAG with bmi looks to re-establish world leadership – and long term survival

It can be a fine line between survival and success, just as the blowtorch of a threatened existence provides a powerful motive to pursue ambitious goals.

Last month’s International Airlines Group (IAG)/British Airways move on bmi is only one more piece in the strategic kaleidoscope opening out in front of the Group Chairman, Willie Walsh. The world is his oyster at present. Answering a question following the bmi purchase announcement, Mr Walsh said that despite the uncertain economic environment that Europe’s politicians have created, this was a time of opportunity. His airline is well placed now to capitalise and, as bad news for others spells bargains in the marketplace, the time could well be ripe. In the process, London Heathrow Airport is firmly in the spotlight as Virgin Atlantic also remains a sale possibility. Yet for BA and all of its major rivals, the elephant in the room remains how to service shorthaul network connections profitably.

IAG acquisition of British Midland would give British Airways 20-40% capacity increase at Heathrow

The in principle agreement between British Airways and Iberia owner International Airlines Group (IAG) to acquire British Midland from Lufthansa would allow British Airways to increase its number of seats out of prized and slot-restricted London Heathrow airport by 20% to 40% under a range of scenarios. Oneworld's share of traffic at London Heathrow could potentially increase from 47% to 60%.

With such dominating control of capacity from British Airways and oneworld, it is little wonder Virgin Atlantic is trying to secure a deal with Lufthansa for British Midland and its valuable 9% share of Heathrow slots. A Virgin Atlantic acquisition of British Midland, even if British Airways is close to signing the deal, would add to Virgin's bargaining power as it seeks to form or join an alliance to remain competitive.

A short statement from IAG on 4-Nov-2011 about the in principle agreement it hopes to finalise in coming weeks ends Lufthansa's long quest to shed itself of under-performing acquisition British Midland.

Virgin Atlantic alliance decision likely to reset 'balance of power'

In a recent interview with Forbes, Virgin Atlantic's flamboyant chairman, Richard Branson revealed the carrier is near a decision on joining one of the three global alliances. Virgin is one of the largest airlines still unaligned and its home base at London’s crowded Heathrow Airport makes it an especially important addition to one of the groups.

UK Government publishes call for evidence about its stake in NATS

The UK Government is taking another look at its ownership in UK air navigation services provider (ANSP) NATS, announcing a "call for evidence" over its stake. The ANSP, partially privatised in 2000, has been the subject of much debate over the past six months, concerning the ownership levels of the government and other partnersft6.