donttouchthebeauty
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- Jan 11, 2006
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Exactly, sorry i should have clarified myself more, UAL wouldnt have a hard time integrating the work groups, since they are non union...
LH buying 25% stake in B6
- Thread starter LGA Fleet Service
- Start date
Exactly, sorry i should have clarified myself more, UAL wouldnt have a hard time integrating the work groups, since they are non union...
Dave
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- Apr 26, 2003
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You make it sound like having a foreign carrier come in and buy a chunk of you for a bargain basement price and gain a seat on your board of directors is a good thing. Trust me, no company wants that. They do it when they have to. Like when they need cash.
The Luftwaffe didn't write the check because they think Jetblue is a great company to invest in, they did it because they want first dibs on JFK when it becomes slot restricted and Jetblue heads south.
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Dave,..........you are "correcto-mundo".
I've been saying it FOR YEARS................JFK IS America's AIRPORT !
Not ORD/ATL/DFW/LAX/MIA....................But,........ "John Fitzgerald KENNEDY International Airport" !!
whatkindoffreshhell
Veteran
Riiiiiiight. Certainly the Germans would gain 'first dibs' (???) on 'America's airport' when B6 crumbles.
How delusional are you?
Lufty approached Neeleman back in October and they quickly came to terms on a new arrangement.
Compare that to your tired old domestic legacy airlines like UA-Tilton, who have been lifting their skirt for years and not even get a free grope. Laughable.
According to the US-EU open skies agreement, they are supposed to continue talks on further opening the domestic market to further competition. I think this is a low cost, low risk way for LH to get its big toe wedged in the door in case it actualy happens. Worse case, they have a carrier to provide feed for their JFK flights.
And now that I think about it, if the domestic market was opened up, running a point-to-point carrier is exactly what foreign carriers would want to do anyway, cherry picking the best routes. For all other routes, they would rely on their US partners.
And now that I think about it, if the domestic market was opened up, running a point-to-point carrier is exactly what foreign carriers would want to do anyway, cherry picking the best routes. For all other routes, they would rely on their US partners.
Dave
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- Apr 26, 2003
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Now let me see if I can get your story straight. Neeleman, who resigned in May, quickly cut a deal with LH in October. Hmmmm.. Ok.
From what I've gathered, it was Barger who started talks this summer because JB has a $433 million payment coming due, and they're heading for a cash crunch.
FWIW, I see JFK being modeled after Heathrow, which mean slots will soon be assigned, and then subsequently bought and sold. This is what LH has their eye on.
What ever happened to the catchy phrase you used to sign off with? Something about a fat lady and the rocky mountains?
Coffee_Tea_Or_Me
Senior
Why bother with stapling when 90% of the entire B6 workforce is junior to people already at UAL?
I believe that LH has bought into B6 to better compete in its own home markets with the advent of Open Skies next year.
Right now Air Berlin is on a major acquisition effort to become a viable international LCC and is rebranding former LTU A330s for service between Dusseldorf and NYC. Open Skies will only create an expansion of this type of EU LCC activity. The best way for LH to compete against Air Berlin is to make an investment in a complementary US LCC (B6), which is firmly anchored in the most important US gateway, as far as Open Skies is concerned (See attached link).
Since B6 isn't making enough revenue from its domestic route system and because international markets represent the best place to fix that problem, I wouldn't be surprised that at some point in the future B6 will begin limited transatlantic services (with LH's backing) to counter Air Berlin and other EU LCC carriers that will enter the transatlantic market. Despite the rhetoric about the high cost of US labor in the global marketplace, B6 would be the cheaper cost alternative to just any other EU LCC counterpart as a result of the dollar-euro exchange rate spread.
This is also why I believe that UAL will not have a role in acquiring any part of B6 going forward either. To do so would only screw up the unique LCC brand and service offerings that B6 has developed and which LH would want to leave in place.
Bottomline IMO, LH's investment in B6 has less to do with future opportunities for cherry picking US point-to-point routes (cabotage) and more to do with protecting its flanks back in Germany from a very capable LCC competitor and obtaining a greater stake in JFK as it relates to new EU market growth (e.g. converting existing poor performing B6 domestic flights into new transatlantic services) once actual or de facto airport slots are established at JFK.
Everyone knows there is no money to be made in the US domestic market and therefore negates serious consideration as to why LH has invested in B6 for that purpose. Instead the main reason for LH's investment has much more to do with future transatlantic service opportunities from JFK...Heathrow's US counterpart, in terms of its significance to Open Skies and slot utilization and re-allocation. To underscore the point, the following quote comes from an ATW article just out today concerning JFK flight cap constraints and its impact on EU carriers:
"Meanwhile, European Commission VP-Transport Jacques Barrot sent a letter last week to (Mary) Peters (SecDOT) "to draw your attention to the potential impact of congestion measures at New York airports, which I understand are about to be adopted, on air services between the US and the EU."
He warned that the EC has "strong concerns about the potential implications for EU air carriers, particularly in view of" the transatlantic open skies agreement set to take effect March 31. He added that it was "of utmost importance" that potential new restrictions at JFK and EWR don't lessen "the benefits expected to both sides" from open skies."
http://www.dw-world.de/dw/article/0,1431,2792178,00.html
Why the assumtion the UA would be the controlling interest? Trend is for the smaller outfit to buy the larger. Does JB have a larger market cap than UA. UA could possibly be stapled to JB
Interesting take, but I find it hard to believe that LH would invest in B6 for the purpose of outsourcing its international flying to compete against Air Berlin. Especially since they can only have, at most, a 25% stake in the carrier with no controlling interest.
However, I feel you are correct in that it could help it compete with Air Berlin. It effectively gives LH a mini-hub at JFK. It is much easier for a legacy carrier to compete against a low cost carrier when it is hub-to-hub competition rather than hub-to-spoke.
Only time will tell, but I stick by my guesstimate that it's a low cost, low risk way for LH to lay the ground work for LH America.
signals
Veteran
Funny, but I heard that Lufhansa has only bought 19% of trashBlue! It is the first foreign Domestic airline it has invested in. Foreigners are allowed to buy up to 25%. Reason? They say because trashBlue has a stronghold on the NYC assports!
Nothing personal, but that's business and it is how the world does business.
Nothing personal, but that's business and it is how the world does business.
Anyone still think that LH will actually pay $7.27/sh this quarter (when the deal is supposed to close) now that the market price has sunk to $5.60 or so? I doubt it, and predict that B6 files a Ch 11 petition before April 1.
