Recent problems with the new T5 Terminal at Heathrow have resulted in more problems for BA when will they recover their No1 position.

BRITISH AIRWAYS AND IBERIA AGREE MOU FOR PROPOSED MERGER OF EQUALS

British Airways' and Iberia's boards have today agreed a binding memorandum of understanding (MoU) setting out the basis for a proposed merger of the two companies to create a new, leading European airline group that recognises the principle of parity at board and management level.

The new airline group would have 419 aircraft and fly to 205 destinations. In 2008, British Airways and Iberia carried 62 million passengers and, in their last financial years, their joint revenues are approximately 15 billion.

The airlines believe there is a compelling strategic rationale for the transaction, which is expected to generate annual synergies of approximately 400 million, and benefit both companies' shareholders, customers and employees. The new group will combine the two companies' leading positions in the UK and Spain and enhance their strong presence in the international longhaul markets, while retaining the individual brands and current operations of each airline.

The merger is expected to be completed in late 2010.

the piss or the drinks?
just sold 50% at 225 which will do very nicely

reckon friend halifax should volunteer for the stocks, though i am sure we would all treat him kindly

BA merger faces failure over 2.6bn pensions debt

Iberia, the Spanish airline, could still walk away from a merger deal with British Airways (BA) to create Europes largest airline if the British flag carrier is unable to agree a deal with its pension trustees over how to fund its massive 2.6 billion pension deficit.

I'm short from 225

i think it's a very brave short indeed, unless you are going to be happy with just 5/10p ..... i would be quite surprised if this pension problem was not resolved in some way as it is surely cannot be in the trustees interests to scupper the deal.

that does not mean that BAY is now a BUY either!

now completely out ..... a useful profit overall, so no complaints

BA cabin crew begin vote on Christmas strike

British Airways' (BA) cabin crew will today begin a vote to decide whether to strike over Christmas as new working practices come into force.

The ballot closes on December 14 and, if staff vote in favour of industrial action, the first strike could start a week later on December 21, affecting vital Christmas traffic.

the strike will be but a short term nuisance even if it goes ahead.
technically more important would be if the pension fund blocked the merger deal, but there is no chance they will do it - it would be turkeys voting for christmas

with luck, the ballot will recommend strike action which should result in sp being whacked, and at that point i'll probably buy again

Just closed half my short @209 for +16.

quite right too, as i think it was pretty dangerous position ...... if sp comes back to 200 or a bit lower, i shall probably buy back in

CORRECT:Virgin:Requiring BA To Give Up Heathrow Slots Not Enough





("Virgin Atlantic: BA's Surrender Of Heathrow Slots Not Enough," published at 1237 GMT, incorrectly suggested that BA had offered to surrender takeoff and landing slots at London's Heathrow Airport. The correct version follows:)

LONDON -(Dow Jones)- Virgin Atlantic Wednesday called on the European Commission and U.S. Department of Transportation to reject British Airways PLC's (BAY.LN) planned transatlantic alliance with AMR Corp.'s (AMR) American Airlines, saying any calls for BA to surrender slots at London's Heathrow Airport won't be enough to guarantee competition.

British Airways and American Airlines last year applied for antitrust immunity that would allow the two carriers to work more closely on scheduling and setting fares.

"Slot remedies alone could not reinstate an effective level of competition nor address the substantial negative effects which would arise from the proposed alliance," long-haul carrier Virgin Atlantic said in a submission opposing the immunity application. Requiring BA to relinquish takeoff and land slots is a measure that the commission could seek.

"We urge the European Commission to recognize that even extensive slot remedies on their own would not make this a suitable case for an individual exemption," it added.

I've just closed the rest of my "dangerous position" @205 +20 lol.

well done son!

Christmas strikes loom as BA hits new union turbulence

Two years after airline boss Willie Walsh agreed a deal with unions, winter disruption looks ever more likely.

This is a bit long, but well worth a read for investing in BAY med term:
Tim Marshall at Redburn, research note:

There is a clear road map for BA. We expect approval of anti-trust immunity with American Airlines and Iberia to be taken well, for investors to become more comfortable with Iberia merger synergies and for underlying improvement in fundamentals to lead to revenue recovery.

British Airways is seeing signs of improving trends in two key areas: premium traffic and the north Atlantic. The discipline of the US airlines on the Atlantic should continue with the schedules showing capacity down 14% in Q409. We assume the recovery in corporate travel spending continues into next year and against easy comparisons, revenues will look good. We forecast an operating profit in FY11.
Anti-trust immunity (ATI) would allow BA to co-ordinate transatlantic schedules and pricing with American Airlines and Iberia. Air France-KLM believes its ATI with Delta enhances revenue by 5%, so with 5bn in combined revenue with American Airlines alone, this could add 150m in revenue, or 47p per share, to BA. This implies no slots are divested, so we assume the value uplift is a more conservative 30p per share.

Our analysis of BA back to 1974 shows its ability to reach a 10% margin after each sharp downturn. Cost cutting has been key but this management is tackling some of the more fundamental barriers to a higher profitability. Our 250p price target assumes an underlying value for BA of 180p to which we have added 40p from Iberia and 30p from ATI with American Airlines. The underlying business trades on 13x our FY12 EPS estimate.

The bull case for British Airways is straightforward:

Costs: British Airways has shown itself very capable of cutting costs in the past, particularly through the Future Size and Shape programme post 9/11. This year, the initial target of 220m in non-fuel cost savings was surpassed at the H1 results with 275m savings already made. This is before further staff cost savings the company hopes will come from cabin crew and the other groups following the new terms and conditions in effect from November this year.

Revenue: we are currently at a low ebb in the cycle, which should be followed by increasing yields over the coming quarters. The aftermath of 9/11 and the Gulf War at the start of the century was followed by strong revenue growth, particularly driven by a strong UK economy and growth on the Transatlantic.
Merger with Iberia: the merger with Iberia was eventually agreed in November. The initial announcement suggested up to 400m in annual synergies, a third coming from revenue and the remainder from cost savings. Assuming a rather conservative 5x multiple on these synergies adds 40p+ in value to British Airways fair value.

Anti-trust immunity with American Airlines: the application to discuss pricing and scheduling of Transatlantic business is awaiting clearance by the various regulatory bodies. Attempts in 1998 and 2002 failed as the airlines were asked to give up slots at Heathrow deemed to be more valuable than the benefits from ATI. However, since then, Open Skies has opened access to Heathrow and offered hope that ATI will be allowed, as the SkyTeam and STAR Alliance members have. Combined BA/AA Transatlantic revenue is around 5bn. Assuming synergies are similar to the 5% of revenue AFKL suggested for its ATI with Delta, then BA could yield a 150m profit uplift; using the same multiple as Iberia, this would add another 47p in value to the shares.
Even without Iberia and ATI, history suggests BA can return to the 10% operating margin often visited but rarely surpassed. We think BA standalone could reach 10bn in revenue within five years. A 10% margin would yield 1bn in operating profit, c40p EPS. At 10x P/E (the markets preferred valuation method when earnings are positive) and adding the Iberia/ATI value results in a 510p or 150% upside.

sounds like more "pie in the sky"

Possibly. I can't temper it with a 'bear' note, as I haven't found one yet, so only one side of the story being aired.

Well I've taken another "dangerous" short this morning :-))

Closed +7

British Airways Agrees Pension Scheme Deficits With Trustees





LONDON -(Dow Jones)- British Airways PLC (BAY.LN), the U.K. airline, said Monday it has reached provisional agreement on the actuarial basis to calculate pension deficits with the Airways Pension Scheme, or APS, and the New Airways Pension Scheme, or NAPS, and on the basis of this agreement, the deficit in APS would be GBP1.0 billion and the deficit in NAPS would be GBP2.7 billion as at March 31, 2009.

MAIN FACTS:

-Airline and trustees will work together to develop a recovery plan, a process which will involve the company consulting with employees and their trade unions.

-Regulatory deadline for the valuation process, including agreement on future contributions required and the recovery plan, is June 30, 2010.

-Both the valuation and the recovery plan are subject to review and approval by the Pensions Regulator.

-Regulator's provisional view is that the technical provisions may be materially below a level it feels appropriate.

-British Airways has asked Roger Maynard to step down as the chairman of trustees of the boards of APS and NAPS to focus on his Iberia role.

-A replacement will be appointed shortly.

BA faces increase on 3.7bn pension deficit

British Airways (BA), which will today learn if cabin crew will strike over Christmas, may be forced to fund a larger pension deficit than the 3.7 billion shortfall it revealed this morning in a development which could scupper its merger with Spain's Iberia.

The airline detailed a 3.7 billion deficit, comprising a 1 billion and 2.7 billion shortfall in its two main pension schemes, which is an increase from the 2.1 billion deficit revealed in the airline's last review of its retirement funds and more than the value of the entire company which has a market capitalisation of 2.3 billion.