David Robertson, Business Correspondent
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Sir Richard Branson, chairman of Virgin Atlantic, is planning to thwart any British Airways bid for bmi, The Times has learnt.
Virgin is understood to have approached Sir Michael Bishop, the chairman and controlling shareholder of bmi, and expressed an interest, should he sell his stake.
Sir Richard tried to buy bmi four years ago and continues to believe that bmi would be a good fit with his own airline.
The Times reported yesterday that BA is considering buying bmi should Sir Michael decide to sell up.
Bmi insisted yesterday that the airline was not for sale, but industry sources have confirmed that he has spoken to several companies about a possible takeover.
Sir Richard said yesterday that a BA bid for bmi would be bad for passengers and lead to higher ticket prices.
He urged competition authorities to block such a bid, if it were to materialise. It is also understood that Virgin would seek to block BA by offering Sir Michael a more attractive deal.
Sir Richard said: “This combination of BA and bmi would damage the aviation industry, make BA even more dominant than it is and lead to higher fares for travellers. Virgin Atlantic has taken on issues like this before in order to protect consumers from high fares and lack of choice and we will not hesitate to fight such an anticompetitive merger in future.”
The deal to liberalise air travel between Europe and the US has put bmi in an attractive position. “Open skies” will allow any airline to operate from Heathrow to New York rather than the current four — Virgin, BA, American and United.
Bmi owns 13 per cent of Heathrow’s take-off and landing slots, which will become increasingly valuable as other airlines try to launch transatlantic routes from London. These slots will appeal to bidders such as private equity groups and Middle Eastern airlines.
However, Sir Michael has been with bmi since 1964 and is unlikely to sell his stake if he thinks the airline will be broken-up. He is thought to be sounding out interested parties to determine who would offer the best all-round deal. Analysts believe that bmi could fetch more than £1 billion.
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How worse could it get? Why give all that variation to one provider....I think it would be a sensible merger, providing the consumer interests were considered....
John, Manchester, United Kingdom
Heathrow slots.
I thank you.
That is all.
Slot Spotter, Burmingum,
I think the fist thing Virgin would do if they took control of BMI is to chop all the regional routes and use the slots for more lucrative long haul routes from london.
Champion of the consumer? PLEASE!! Apart from one or two routes from Manchester, Virgin are just as london-centric as BA are.
james Puppie, london,
I would like to see BA's position at Heathrow strengthened. Other european carriers hold a much higher percentage of slots at their home base than BA does at Heathrow.
Jason Little, london,
The competition authorities (UK and EU) should block any possible purchase by BA of BMI on grounds of combined dominance of Heathrow slots. The same argument would not apply to a Virgin/Bmi merger. BA give appalling (or no)service to UK persons outside London. They should be renamed 'London Airways'. Also the EU should tackle the over-dominance by such as Air France and Lufthansa at their capital cities airports.
R.A.Scholefield, St Helens, Lancashire
Go for it Sir Richard
Stewart Setter, Basildon, UK
BA has the lowest slot share of any major carrier at it's base. The Star Alliance hold over 75% of Frankfurt slots.
Mark, London, UK
Virgin has never positioned itself as a cheap no frills airline. Generally, its a case of you get what you pay for. Yes, you do pay more to fly on Virgin but as a rule, you get better service.
If BA do manage to swallow up bmi, then there will be less competition on short-haul from the UK so there will be less pressure on BA to remain competitive.
S.Hon, London, UK
A BA takeover of BMI will not get the green light from the EU because of competition issues, but Lufthansa will continue to have its 63% share of slots at Frankfurt, Air France will continue with its 54% share at Paris Charles de Gaulle and KLM will continue with its 57% share at Amsterdam!
I take the view that gaining too much market power should be curbed, but this rule should apply to all! It is really annoying to see the nakedness of unfairness and the lack of a level playing field in the EU!
G.Singh, London, Britain
A BA takeover of BMI will not get the green light from the EU because of competition issues, but Lufthansa will continue to have its 63% share of slots at Frankfurt, Air France wil continue with its 54% share at Paris Charles de Gaulle and KLM will continue with its 57% share at Amsterdam!
I take the view that gaining too much market power should be curbed, but this rule should apply to all! It is really annoying to see the nakedness of unfairness and the lack of a level playing field in the EU!
Anon, London,
Why oh why are we so keen to bash BA ? Yes they have a lot of flights from Heathrow but most airlines do have a lot of flights from their home base. If the US routes are so lucrative, why don't AA and United put on more flights rather than sell their slots and stop flying, as United did from JFK to LHR ?
Economy flights are dirt cheap regardless of carrier, Premium Economy, well the Americans don't offer it, in business Virgin and BA charge, similar prices. Both have good cabins, to my mind Virgin probably beats BA and certainly it's beds are bigger and spa in a different league, but you are paying a for it. And in First, well I'm sure the few who are flying there, will continue to do so. AA and United both have dreadful offerings up front, ancient chairs and rude staff. If it weren't for vast US goverment subsidies and nationalistic travel policies, they'd have been wiped out years ago - if anyone is abusing the North Atlantic it is them, and what is being done about this ? 0
Alex, London, UK
I agree with Peter. I regulalry fly abroad and Virgin is not the cheapest. I usually end up with KLM, Air France, Lufhansa or BA - but never Virgin.
The flights might be quality, but they are not the guardian of consumer interests.
Richard, Blackburn, UK
Nice move by BA. For years they supported US protectionism because it gave them a place on the cartel of airlines controlling the North Atlantic routes. Now we get some competition what may they do - buy an airline that holds 13% of takoff/landing slots at Heathrow so they can maintain a cartel position on the North Atlantic with over 50% of slots at Heathrow. They will also maintain that cartel position by axing all the regional servcies BMI runs from Heathrow so they can reuse those slots for US flights. The UK Government should block this on competition grounds but dont hold your breath. The bearded one is right.
George, London, UK
I used to work for Sir Michael. He's been in the business longer than any of his potential suitors and is at the top of his game. I doubt very much if he will sell to anyone but he will certainly enjoy teasing the market!
Charlie, Isle of Man,
Virgin to offer a better deal in the price war???? Maybe Sir hasn't noticed that his airline is anything but cheap!
He helped kill the cheap flights to US and only travel's to where the money is!
In fact BA and Virgin should get into bed together, They have been acting like lovers for years.
Peter, Na ngou. Munag Phetchabun, Thailand
I think we should ask Tesco to launch a new airline , and have them fly to every country they have stores in! I think they would be able to offer good prices in their 'rollback' offers!
Peter, Na ngou. Munag Phetchabun, Thailand
How noble of Sir Richard to offer to buy bmi to protect the British consumer. I suspect Sir Richard doesn't do anything unless it's good for Sir Richard's bottomline.
David Andersen, Sydney, Australia