[LuganoPirate]

Well I guess we’ve had our knuckles rapped Becky though my post was being written as Martyn sent his. But he does have a point so why not start a new thread – or give up while we’re ahead?

[BeckyBoop]

Martyn & LP,

Give up now hell no! 🙂

This is relevant as it a “what-if” senario depicting BT forum members breaking off BA and shows how it would be rebranded.. xx

[lloydah]

Right then, before we go I’d like to be Designer in Chief – all logo/colour schemes/fuselage designs.

[LuganoPirate]

I just looked at BA’s balance sheet on Bloomberg. I wish I could cut and paste but it becomes illegible, so here’s a link for anyone interested.

http://www.bloomberg.com/quote/IAG:LN/balance-sheet

If I read it correctly, it has net equity of € 5.67 bn against a market cap. of € 2.65 bn so on the face of it, it could be seriously undervalued?

[Tete_de_cuvee]

Unlike yourself LP when it hit 140 I went long big time though would have gone with a 3 month call option if fairly priced.

As to the job -Strategic Execution/Implementation/Delivery and Soft Change.

[SimonS1]

LuganoPirate’s mistaken assertion that Comair is 100% owned by BA shows how challenging brand management is these days.

Not long ago BA also had that franchise in Kenya with its rag bag of tatty 737s and no quality control. No win situation really.

Trouble is airlines generally over promise and under deliver. Quick to talk up thinks like New Club and First which then take ages to deliver (how many threads have there been in here about has New First been introduced at Gatwick/xxx route etc).

When the airline delivers people feel that they have got what they paid for, when it doesn’t they feel short changed. Even if it’s a franchise where there is no real shareholder value.

[LuganoPirate]

I closed my short this afternoon Tete. I was short at 178 and today’s jump and continual weakness in oil prompted me to take my profit. Why not take advantage of the rich premium and sell some calls against your holding?

There was a big trade today in the Sep 190 calls, 650 contracts sold for 1 and also in the Dec 170 calls, a single trade of 740 calls bought at 10.75 Someone must be very bullish on IAG!

[LuganoPirate]

Just noticed, Beckys original post was at 1535 BST. The above was done at 15:36:26 Did someone think BT posters were making a takeover bid, or is Becky working for JP Morgan? Spooky!

[IanFromHKG]

Not that I am being possessive or anything, but I am going to try to drag this thread back to the original issue!

AB123456 said “Unfortunately the airline industry has to compete everytime for a customer and hence price competitively to ensure that they snare the customer to come with them” – true (up to a point), and the same point was made earlier. However, another of the reasons that prompted me to start the thread is the fact that it appears that on their main competitive route (London/HKG) CX is – not universally, but much of the time – able to charge a significant premium over BA (and, indeeed, all the other carriers on the route), and this is due in no small part to its brand reputation for superior service and a good hard product (even though, as we all well know, there are many who hate the “coffin” seats). By way of example I just made a search using HKG-London-HKG from 5-8 June:
CX $58,767
VS $56,487
HX $52,169
NZ $39,219
BA $36,497

Interesting, no?

I don’t think the fact that BA is cheapest on this route is in and of itself a bad thing for us, the passengers, but it does demonstrate that much higher returns can be commanded – but at the moment, it would appear that the brand does not support it.

The flight dates, incidentally, were chosen almost completely at random – I was going to choose 4-7 June (Monday to Thursday, which seemed a reasonable flight for a business flight) but had to delay one day because ANZ flights were not available on those days

One other thought to add – American Airlines have American Eagle, which helps them provide a different level of service without diluting the AA brand. In areas where BA is struggling to compete with LCCs, would a similar approach make sense? BA could restructure the product to compete more effectively on cost where it still makes sense, offering differentiators including connectivity, but keep the longer-haul market more of a pure full-service offering.

[LuganoPirate]

Thanks Ian for putting us back on topic, but didn’t BA have a LCC some years ago, “Go” which never made any money and was eventually taken over and folded into Easyjet?

I think it’s very hard for a legacy airline to turn part of its model into an LCC and still make money from it. Easyjet and Ryanair have been successful as they had none of the overheads built up over many years that BA had, nor were they burdened with the sort of pay structures BA is faced with.

The different fares ex HK are interesting and I can’t give a reason for that, but I have noticed it elsewhere. For example Lufthansa charges a premium over Swiss when flying ex Malpensa via FRA or ZRH. The only time I paid the extra was to try the A380 on the JNB – FRA route!

[Tim2soza]

Re-branding – No.

Developing a consistent hard and soft product across Oneworld yes. The cost savings of developing one long haul Biz class seat would be immense.

I flew BA (LHR to LAX) on a AA code share. If you do this you are left in the twilight zone if you want to do anything online. Book internal US flights on the BA site (flying AA) – cant do it. Complain to BA about a code share flight… Passed to AA and ignored for 6 weeks and counting.

[MartynSinclair]

Airlines are unique in that they can introduce and market a new product and still supply the old.

I was speaking with VS reservations yesterday, who confirmed that only 2 aircraft out of 44 aircraft benefit for the “new” upper suites (incidentaly, I was assured it is a NEW seat, not a revamped old seat).

Look att he continual questions on this forum, “will I wont I have NF?”

From this pro BA flyer, I think BA is becoming stale in terms of offering and when ever a new seat in business is launched, I hope it doesnt take 3 years to roll it across the fleet otherwise we will need a website just to keep pax informed, “will I wont I”.

Rebranding or at least a makeover, will be needed, if or when BA decide on a major upgrade to business class, simply to ensure the “consisitency” element of their brand has the words “working towards” or “eventually consisistent” attached to it!

Ian mentions price in his discussion. This is such a complex area that I dont personally think it matters due to the range of fares available. The flights are full regardless.

[Tete_de_cuvee]

LP – well done on the trade & thanks for the tip wrt selling a call. Something I would not have thought of previously but as you indicate as I am covered my risk would be capped. Time to scrub up on B-S and the greeks.

Interestingly Go or Go Fly was a profitable venture for BA and a good initiative from Bob Ayling – it was just ahead of its time. It was strangled by internal politics within BA (not the cabin crew 😉 its board and strategic partners who bought pressure to bear resulting in it being sold.

BA was the first mainline/national to try running a LCC. It was seriously frowned upon as other mainline carrier’s strategy was to try to kill off the down market upstarts.

http://www.amazon.co.uk/Go-Airline-Adventure-Barbara-Cassani/dp/0751535605/ref=sr_1_1?s=books&ie=UTF8&qid=1338363474&sr=1-1

Barbara Cassani’s book makes an interesting read.

It was sold (MBO) for political reasons to 3i for an ok profit. 3i then sold it on for a great return to EasyJet who paid a significant premium (an ROI of 2.2 I recall) to strengthen its market share and prevent a new entrant on its own doorstep.

Having inside contacts, I chose it for a Corp Fin case study.

[IanFromHKG]

Tim2sms, it is an interesting idea, but I don’t see oneworld carriers wanting to become that uniform. RichHT1 sometimes makes noises about a move to standardisation in oneworld, but I have not seen much evidence of it nor any indication from any of the members that that is the way they want to go.

[AnthonyDunn]

Having spoken to the senior management team (aka wife) who is a branding professional, she flies at the front end whereas I follow up behind (so to speak…). She thinks that brand multiplicity in a service context leads to confusion about just who is doing the providing and what to expect. The rational, all that time ago, about merging BEA and BOAC was to provide improved efficiency and cost savings, included in which was branding costs.

Any idea just how much it costs to develop, promote and “lodge” in the consumer mind a new brand? It’s humungously expensive! Volkswagen Audi Group have spent gazilliions over the past couple of decades (yes, not one or two years but approaching 20) in rehabilitating its Skoda brand from “how do you tell the difference between a wheelbarrow and a Skoda?” type jokes to today’s recognition that they are now very well designed, manufactured and reasonably priced products.

The issue is that UK domestic and intra-European services are massively impacted by the competition from LCCs and we have friends (inter alia senior ex-IBM Europe execs) who have slated BA for their slow/poor response to the advent of hte likes of S****air (prop: M O’Bleary). In contrast, in long/longer haul, BA are competing with the likes of CX and the Gulf airlines where relatively cheap and pliant cabin crew from Asia make for a level of customer service that can verge on the fawning on occasions. How to square that particular circle?

Well, before beating up on BA, can anyone point out to a shining example of a major network carrier who has managed it? Does LH or LX manage this better? What of AF/KL? Do the likes of CX/KA (with, I would imagine, very different labour laws/employment rights’ regimes) have anything to teach? There is the regrettable tendency on the part of many Brits to go in for a sad and sour dose of self-loathing and BA is a regular contender for victim status in this context.

At the risk of stating the blindingly obvious, being a network carrier providing a predictable and (relatively) uniform product/standard of service across a range of markets and pricing levels is not that easy. And a final comment: having experienced Thomas Cook Airlines, Monarch, EZY and the absolute rock bottom pits of S****air, to describe BA as Vauxhall/Opel is as inaccurate as it is to verge on the offensive. Tsk, tsk!

I would have loved to have done BA product differentiation as a case study when on the Sloan Programme at London Business School…

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