Virgin Atlantic eyeing to combine with BMI
As reported by Businessweek earlier, Virgin Atlantic CEO, Steve Ridgway said that the airline is actively looking to combine with bmi British Midland International, this news comes in the wake of bmi slot sale to British Airways and Lufthansa CEO Christoph Franz indicating that the ailing airline maybe on the block.
Should this combine become a reality, it would provide Virgin Atlantic with a much needed domestic reach in the European markets which would help it feed its International operations which would be much a needed booster shot for the airline that is also reviewing its plans to look for potential investors after the 49% stake holder Singapore Airlines sending feelers in the market about its stake sale in Virgin Atlantic itself. In the past Virgin Atlantic has tried twice to acquire bmi stake once in 1999 when Lufthansa acquired bmi and then again in December 2008 and November 2009 but the talks never seem to have materialised.
Also this deal would result in strengthening Virgin Atlantic’s position at Heathrow airport and step up competition for British Airways which itself maybe interested in bmi but knows that regulatory approvals for the same may be hard to come by. Given Virgin Atlantic’s history in terms of takeover and mergers i highly doubt that this deal may even happen, but tough times call for some tough actions and if they do not act fast they lose big time to the stepped up competitions from other airlines and alliances.
Strategically, I would imagine this would work best for Virgin if it also joins either Star Alliance or Sky Team. They would then be able to align BMI’s network so as to complement that of their alliance partners. Of course, BMI is already doing that to some extent with Star but this could be extended very effectively.
Yep very true, bmi and Virgin Atlantic would compliment each other in terms of operation plus it will help Virgin Atlantic get an entry into Star Alliance which will help uplift its sagging fortunes.