TANSTAAFL

Might be good for DAL Inc, but I don't see this being good for DAL pilots

Virgin Atlantic Acknowledges Deal Interest After Report of Delta Approach - Bloomberg

Richard Branson’s Virgin Atlantic Airways Ltd., which signaled interest in a merger six months ago, said it has attracted approaches from several parties.
“We’ve received a number of lines of enquiry,” Virgin spokesman Greg Dawson said in a statement late yesterday, adding that adviser Deutsche Bank AG’s work on the plan will take a number of months and that it’s “far too early” to give details.

Closely held Virgin confirmed the contacts after Sky News said Delta Air Lines Inc. was among carriers exploring a tie-up. The Crawley, England-based company, in which Branson has a 51 percent stake, hired Deutsche Bank after competitors used mergers to bulk up and trans-Atlantic rivals British Airways Plc and AMR Corp.’s American Airlines won approval to deepen ties.

“Virgin Atlantic has got to be in some sort of alliance to get critical marketing mass,” said Andrew Miller, chief executive officer of CAPA Consulting LLC, which advises airlines. “In the new world where airlines are struggling to survive, doing it alone is going to be difficult”
Airline earnings may drop 40 percent next year on slower economic growth, higher fuel costs and state austerity measures, the International Air Transport Association said yesterday.

Virgin, part-owned by Singapore Airlines Ltd., isn’t in one of the three big global alliances that help carriers cooperate through code-share deals and marketing pacts. The company flies to 30 cities, 10 of them in the U.S., according to its website.

Gulf Interest

In addition to Atlanta-based Delta, other interest has come from Gulf carriers, Sky News said in its report, without identifying specific airlines. Like Virgin, Middle Eastern operators such as Dubai-based Emirates aren’t in alliances.

John Strickland, director of the JLS aviation consultancy, said such a tie-up was less likely than one in the U.S.

“I’m skeptical that a Middle Eastern company would be interested,” Strickland said. “They tend to plow their own furrow, and they don’t gain further access to the world because they already have that.”

A deal with Virgin would help Delta’s SkyTeam alliance bolster operations at London’s Heathrow airport, the busiest in Europe. The group doesn’t have a U.K. member, whereas British Airways is in Oneworld and the Star Alliance includes Deutsche Lufthansa AG unit BMI, the second-largest carrier at Heathrow.

“As a matter of policy, we don’t comment on industry rumor or speculation about potential partnerships,” said Betsy Talton, a spokeswoman for Delta.
Complicating Factors

Virgin might be open to consolidation, CEO Steve Ridgway said in a June interview with Bloomberg Television. There is potential for Virgin to “grow to become part of a bigger group,” he said.

Talks on a merger could be complicated by Singapore Airlines’ 49 percent stake in Virgin, which Branson sold for 600 million pounds ($946 million) in 1999, and by regulations hindering cross-continental ownership, CAPA’s Miller said.

“If you don’t have effective control, what can you get out of it?” he said. “Until laws on ownership change, airlines will continue to use alliances and cooperative agreements to expand.”

Ridgway said in June that Singapore Air’s holding could be offered for sale as the Asian carrier modifies its strategy to reflect the expansion of the Indian and Chinese markets. The world’s second-largest carrier by market value has repeatedly said it’s exploring options regarding the stake. Spokesman Nicholas Ionides today referred all questions to Virgin.

BA Threat

British Airways, American and Iberia Lineas Aereas de Espana SA in October began a trans-Atlantic alliance by sharing booking codes on more than 2,700 services. Virgin had campaigned against regulatory approval for the tie-up. BA and Madrid-based Iberia are also set to complete a merger next month.

Virgin Atlantic operates 35 twin-aisle planes, according to data provided by London-based Ascend Worldwide Ltd. Ten Airbus SAS A330s will join the fleet from early next year, according to the airline’s website. Virgin has also ordered six Airbus A380 superjumbos for delivery from 2015 and 15 Boeing Co. 787 Dreamliners that will start operations beginning in 2014.

alfaromeo

Why would this be bad for Delta pilots? Not disagreeing, just wondering.

Justdoinmyjob

In an alliance tie-up, (Skyteam,) who do you think would continue to operate out of LHR and get the new US-LHR flights transferred to them? No need to pull the remaining ERs out of the desert with the resultant pilot hiring to go with it.

satchip

That is why this new contract is so important. With all the emphasis on "Restoration" I'm afraid we will miss the opportunity to shore up our job protection in all areas. All new JVs should be flown at least 50/50 and we should get a percentage of the REVENUE of any new JV. That is worth way more than any ephemeral pay raise.

TANSTAAFL

If it's a JV and we strictly maintain ratio's of lift/seats they could still reduce DAL's share while maintaining ratio's and overall capacity. Our flying gets watered down. Or does a JV account for ratio's with no reduction in current partner capacity?

If it's a cross border merger there is a veritable minefield of new outsourcing/labor issues and loopholes to navigate. Not sure if these have changed, but VA pay rates are substantially lower than DAL

(euros)
Capt top 105098 3/Apr/08 Capt base 78051 FO top 68311 3/Apr/08 FO base 46883

@current exchange that's $139 for a 744 Captain- don't know if that's hourly, salaried or what? Branson is also notoriously anti-labor.

Bucking Bar

TANSTAAFL, thanks.

Have you seen their flight attendants?



OK seriously:

satchip

They don't have flight attendants. They have models who do double duty as crew members. If "ifs and buts" were candy and nuts, we would all have a Merry Christmas!

Sink r8

For starters, it makes us less relevant, a) because as each member is added to Skyteam we become a smaller proportion of labor, and b) because it offers management yet another alternative for moving passengers to Europe and Africa in case of a job action.

Second, they have proportionately larger aircraft, which need to be filled to make money, and they have a hub in LHR. Beyond LHR, they have several duplicate destinations. Seems to me there would be a financial incentive to further reduce point-to point flying under those circumstances.

I'm willing to be open-minded about this, but I think we're getting to the point where alliances are so prevalent that adding members does nothing for labor, and everything to marketing in terms of adding flying without deploying assets. The idea of a powerful Skyteam growing aggressively at the expenses of non-affiliated airlines is great, but now that most everyone is slowly orienting themselves to one of the three alliances, there is noone "outside" to poach from.

We often make the mistake of referring to scope only in terms of RJ's, but the large-gauge aircraft and alliances offer the greater threat. To the extent that our approval would be required for a JV or other arrangement, the terms would have to be very favorable to the Delta pilots before we open Pandora's yet a little more.

WorldDC10

Not sure when they started using Euros in the UK!! Its in British pounds. So the 2008 salary would be a base of $166,380 per year plus $45.46 per hour for Top Captains. So roughly $200,000 per year.

That with 5 weeks vacation for a new hire going up to 6 weeks and 15% to a B plan.

Imapilot2

if that doesnt come in a size 26 our new fa's will sue!!!