[Anonymous]

[LeTigre]

Hi All,

Just thought I’d mention recent events that have surely made BA very happy and financially well off.

The events are the following:

-Today the OFT more than halved the fine to BA for price-fixing from years ago, meaning BA, who had set aside £150m+, makes a huge saving. (Shares up 1% cause of this)

-Lufthansa takes on more liabilities for BMI pensions.

-The price for purchase of BMI is to be cut by at least £80m because of the other units not being sold off.

-Tomorrow the sale completes!

-Fleet renewal plan kicks off in less than a year.

-Recent investment in catering and overseas lounges has caused greater customer satisfaction.

-WW won the argument with SRB.

[SimonS1]

Maybe you or VK could have a word with the Stock Exchange. Try and scatter some of this good news on the share price.

[LeTigre]

If only, but don’t worry, I’m not a BA affiliate, but rather jealous of their cost savings. To me I don’t care about an airline’s profitability but only the product, that is why I love Oman Air.

[LuganoPirate]

It was a great deal for BA and I’m glad the fine was reduced. While what BA did was wrong, VS was equally guilty but got away scot free because they spilt the beans.

As for SRB, it’s not hard to win an argument with him. He is all beard and no substance and I cannot believe, with his supposed billions, he could not have afforded BMI. It was a dream deal for VS, a knock down price, feeder traffic into his long haul flights from all over Europe and slots a plenty.

My betting is within years VS will be bust or owned by IAG!

[VintageKrug]

I for one hope Virgin Atlantic can make a go of it. However, without a supportive strategic partner (and I think SIngapore Airlines, the major shareholder isn’t that supportive any longer) the story of second tier airlines is not a positive one, and I would concur with your assessment, though I don’t think IAG would be permitted to purchase VA in its current form.

Seems that Willie’s strategies are now bearing fruit…you heard it here first 😉

[Tete_de_cuvee]

Share price yesterday 175.4p Share price now 170.9p –
yes pretty rotten fruit.

Given BA have had to refund all passengers impacted by the price fixing plus pay a UK fine of £58 million plus fine to US of $300 million (already paid) it looks as though it has been very expensive for Walsh’s leadership – this debacle alone has cost BA nearly a third of a billion – impressive leadership.

BA paying off 13 cabin crew an undisclosed amount for mis-management during the dispute.

BA left with toxic liabilities which Lufthansa could not sell. Impressive.

[Hippocampus]

IAG is now reaping the rewards of the structural change at BA of the past few years.

As for Virgin, well ironically its future could be best secured by joining IAG and being retained as a separate “cool” sub brand focused on the leisure/hipster market using the savings from merging back office functions to invest in the innovations/extras that used to make it so different.

However, hell will probably freeze over first!

[Tete_de_cuvee]

Yes Hippo, when Walsh’s actions should start to bear fruit the share price was just under £6.00, it is now around £1.70.

Prior to Walsh there was a highly motivated and inspired workforce. Walsh is now leading a workforce who are demoralised, fractured and at each others throats.

Walsh has not demonstrated he can run one airline effectively yet now he is trying to run three.

Walsh took over a 5*, worlds favourite airline.. and now….

Yes BA is truely reaping the rewards of Walsh.

[LeTigre]

VS now needs as much help as it can get, and a 60 year old man with a beard that criticises the competition incessantly isn’t helping.

The following are needed:
-An equity partner/two (perhaps an Air France + Etihad combo would work?)
-An alliance (Star seems better, especially from T3 but all that changes in 2014 so Skyteam would work too)
-Aircraft refurbishment (they need to put the refreshed upper class on all aircraft from LHR minimum and should at least refresh Y as well)
-A marketing strategy free of competition criticism (VS has kept BA on its toes but without substance that will be increasingly hard)

In respect to equity, Etihad and Qatar are quite active these days, and with 3/5 daily flights to their hubs respectively they could provide some feeder traffic. They are both really strong at LHR so I am sure VS would get on well, and since VS haven’t really commented on Gulf carriers being a problem like other carriers, they would get away with a partnership easily. I suggest a European equity partner as well so that European feed could be provided at LHR, which ideally would mean Air France/KLM or maybe Turkish as well?

[VintageKrug]

I think Etihad already looked at Virgin and walked away?

As you well know, Tete, the IAG share price has broadly tracked equivalent airline stocks, and in large part any underperformance in this comparison can be squarely laid on the shoulders of a certain union which hit profits of the firm during 2010/11.

Thankfully that chapter is now firmly closed and the airline is set fair for growth and success in the future.

[Tete_de_cuvee]

Strange how some airlines when well led perform well, others such as BA/ IAG, with poor leadership deliver poor results and blame others for their medicocrity and below par performance.

Take a look at SouthWest airlines – that is how a good airline is run – 30 years of continued profitable growth beating Microsoft and Intel for shareholder return. Even during deep recession, 9/11 and they avoided strikes as being good leaders they won the hearts and minds of their people.

Good leadership understands the importance of workforce buy-in when undergoing structural change. Those with poor leadership skills fail – and how BA/IAG has failed, the toxic legacy of their approach to structural change will last and cost BA dear for years.

Somebody please get rid of Walsh and replace him with some who understands there is a correlation between high performing companies and the morale & a high degree of motivation of their employees.

[VintageKrug]

Southwest – completely different geography, completely different sector, completely different in almost every respect from the global full service airlines against which it should be judged.

As ever, grasping at straws.

[Tete_de_cuvee]

And the IAG/BA share price drops to 1.68, looks as though the city doesn’t have the same take on today’s “good” news – queue more blame and excuses from the BA apologists. Virtual Krug – go for a real trip down the river in Egypt – de nial.

[VintageKrug]

Sadly for you, Willie is being awarded with honours, not being retired:

http://www.businesstraveller.com/news/willie-walsh-awarded-spanish-royal-honour

Long may that continue!

[Author]

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