Wed, May 28, 2003
Strange Times Make For Strange Bedfellows
British Airways, the official carrier of the United Kingdom, is
trying to figure a way to scuttle talks between British Midlands
Express and Virgin-Atlantic. Virgin-Atlantic is looking for a
struggling airline to take over so it can better compete with BA,
Europe's largest carrier.
Don't Count Your Chickens Just Yet, Sir Richard
BMI and Virgin-Atlantic have held several
negotiations over the past couple of weeks, but the talks now
appear stalled. The two airlines can't agree on a price for the
takeover, but a Virgin spokesman said the talks would resume soon.
Putting BMI under Virgin's wing would allow the new entity to
compete with British Airways across the board - on short-haul
domestic flights as well as long-haul international routes. As long
as those talks are ongoing, BA executives are nervous.
BA was "not ruling anything in, not ruling
anything out," but did call its executives from the world over back
to London for emergency talks. Does that mean BA might want to
takeover the new Virgin-BMI operation? At Virgin, they call that
the "flying pig" scenario, but a BA spokesman insisted it could
happen. "BA is a public company. We can make a hostile bid for them
and there is nothing at all they can do about it. But Virgin is 51
percent owned by Sir Richard [Branson, above]. He has no plans to
sell, only plans to expand."
The Naked Truth
But one London newspaper, The Observer, indicated both Virgin
and BMI are too debt-ridden to be very appealing to British
Airways. In an analysis article, the Observer wrote, "The
competition issues arising from a merger of bmi and Virgin are
relatively limited. Between them they have 16 percent to 19 percent
of landing slots at Heathrow - still only half what BA has."
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