India to allow foreign investment in airlines

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This topic contains 9 replies, has 7 voices, and was last updated by  ChrisBuda82 18 Jan 2012
at 23:23
.

Viewing 10 posts - 1 through 10 (of 10 total)

  • Anonymous

    IanFromHKG
    Participant

    I wonder how long it will be before IAG makes a bid to invest in Kingfisher?

    http://www.bbc.co.uk/news/world-asia-india-16606558

    It would certainly make sense – they must have a lot of knowledge about the airline since British Airways acted as the sponsor for Kingfisher to join oneworld


    BeckyBoop
    Participant

    BA already code share. I hope they dont buy the airline because they will probably lay of thousands of people in the UK and Spain and shift all the work to India to cut cost ;( xx


    Tete_de_cuvee
    Participant

    If it hastens the departure of Walsh then IAG should go for it. The industry is full of the detritus of airlines who grew too quickly and well beyond their capability and capacity.

    The only airline to have posted 30 consecutive years of profit and share value growth (beating both Microsoft and Intel over the same period), even post 9/11, is Southwest Airlines. Southwest grew and continues to grow within its capabilities.

    IAG will borrow more money and when interest rates rise will blame the markets for its own lack of foresight. The leadership haven’t delivered on a single thing, it has significant continuing long term internal issues, it is trying to get a loco division in the air in Spain, it has the BMI buyout to manage, planning for the likelihood of losing its most critical alliance American Airways, delivering on the synergies with Iberia, managing a debt mountain, and yet it can’t even handle such minor tasks as its shareholder discount strategy after a year trying.

    The only thing significant things Walsh has delivered is a significant increase to his pay package and a significant decrease in shareholder value.

    So if getting into bed with Kingfisher is the bridge to far, then hopefully Walsh will do it and it will be goodbye Walsh.


    MarkCymru
    Participant

    Doing due diligence on Kingfisher would take years. It’s an integrated part of a very secretive and convoluted business empire — the main line of business is beer and spirits, a trade that is heavily regulated at state level in India. Since Kingfisher Airlines is teetering on the edge of bankruptcy, I agree that IAG will want to do something but I cannot imagine a quick, direct foreign investment. Maybe they have something pre-baked and ready to go?

    Jet, Air India and several of the low-cost carriers are a different story. Jet looks the most attractive, probably to Lufthansa (remember the overlapping hubs at BRU). Jet is a well-established, standalone business with existing foreign investors (not airlines).

    That would leave AI without Star and without its LH codeshares. The government hasn’t yet said that it is willing to sell part of AI (it’s a 100% state-owned corporation), the unions will go nuts but it is probably somewhere in this new plan. Has anyone got the money and the political nerve?

    The big winners will probably be carriers such as IndiGo which are making money and launching international operations.


    BeckyBoop
    Participant

    Tête_de_cuvée why do you hate Willie Walsh so much? also how are you related to BA/IAG? xx


    greyhawkgeoff
    Participant

    Tete -choose your accolades with care – FYI Southwest who report Q4 tomorrow 19 January, reported a Q3 loss of substantial size on October 20 last when they admitted they had screwed up their fuel hedging. Yes still profitable at an operating level but a foul up that they are not unique in having, but still a major plot on their impressive record.


    Hippocampus
    Participant

    A few points:

    – I think the chances of IAG acquiring a stake in Kingfisher are very low. Kingfisher is in a parlous financial state and the aviation industry in India is too volatile. History has shown acquiring minority interests in other airlines without management control is not the way to pursue consolidation.

    – IAG has the lowest net debt of any of the three European majors. The acquisition of bmi is being funded entirely from IAG’s own cash resources, something BA would not have been able to do before the Iberia merger.

    – Synergies between BA and Iberia in the first year are ahead of budget and the overall five year target has been increased by £100m.

    – It you want an example of what happens when airlines avoid structural reform to remain competitive (however painful it may be in the process) take a look at Air France KLM.


    Tete_de_cuvee
    Participant

    For accuracy Hippo:

    Market analysts do not view IAG as delivering on BA-IB synergies it committed to.

    http://www.investorschronicle.co.uk/2011/11/30/tips-and-ideas/share-tips/tips-of-the-week/iag-braced-for-hard-landing-2NbvDMnAb1EZvc6I5hQcsN/article.html;jsessionid=B93BA2F3B18304B71AE68D11E8B212FF.mps-apr-01-8104

    As to the BMI purchase. It is a bit rich to affirm it was “IAG’s own resources” when BA/IAG are using a line of credit previously secured and is currently in debt to around half a billion. “IAG’s loaned resources” would be more appropriate.

    As to structural reform – it was certainly needed, however the method and execution was absolutely appalling. The debilitating division, poor morale and fear Walsh has inculcated will take years to address even after he has gone.

    BB – I do not hate Walsh, how can you hate someone you don’t even know. It just grieves me that such a great British Company is led by such an incompetent. Someone who is clueless in motivating and inspiring people should not be at the helm of a people centric business.

    Contrast Walsh’s bullying, controlling, divisive, burn and churn approach with that of a proven, long term, highly successful airline ….
    “Our people are our single greatest strength and most enduring longterm competitive advantage.” Gary Kelly, CEO Southwest Airlines

    Walsh is an egotistical bloviating baffoon who has taken the worlds favourite airline down from 5 stars to a third division outfit. Unfortunately as the board hired him, ejecting the guy would be an admission of their failure. Meanwhile, shareholders, employees and to some extent customers are suffering the consequences.


    ChrisBuda82
    Participant

    I would not put any investment in India due to TAX the western companies to hell when they buy in to companies India Vodaphone plc has got busted on this and others.

    If I was at IAG I would go after Aer Lingus, Dublin would make a good extra hub for the USA-EU routes

    Think IAG played a good card with BMI take over BA get backs a lost routes that where BA then BA dropped the routes due to deal with there franchise partner.

    IAG should take a 25% in AA to keep at bay any takers of that airline.

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