Wednesday, July 2, 2008

OpenSkies Absorbs L'Avion

The big news of the morning is British Airways' purchase of L'Avion. BA shelled out a strikingly low 33 million Euro for the airline (68 million - 35 million in cash reserves) and will absorb L'Avion into OpenSkies. I discussed the impending possibility of this purchase in my podcast last week. Marc Rochet is an ex-BA guy and it is likely that relationship played a part in this move.

I had always heard that L'Avion was profitable, but with the entrance of OpenSkies and rising fuel costs I'm not sure they had any chance but to take the 33 million Euro and walk away. As for OpenSkies, they quickly gain a small customer base and, perhaps, more importantly, additional slots at Orly.

I had the pleasure of flying L'Avion once back from Paris. My assessment was that it delivered on its promise of Low Fare, Business Class French Style. It was not in the class of more upscale products like Eos or BA Club World. But, it never intended to be either.

Update: Others have pointed to the 757s as the key addition in this purchase. And that makes sense. According to all-knowing Wikipedia, BA has 13 757s. A note on the page indicates that BA plans to transfer 6 to OpenSkies. I'm not sure how this move fits in, but it seems to me that if OpenSkies wanted to launch other cities immediately they could do so without L'Avion's planes. But, given fuel, the more 757s the better.

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