tag:blogger.com,1999:blog-34367341.post7396138605156690659..comments2023-10-26T01:26:46.721-07:00Comments on Professor Sabena's Blog: BAAABI's argument for immunity at LHR - not so fast boysProfessor Sabenahttp://www.blogger.com/profile/13836115173131048934noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-34367341.post-59141418175967080402008-08-16T07:47:00.000-07:002008-08-16T07:47:00.000-07:00Thanks Rory,The issue I was making is not the pric...Thanks Rory,<BR/><BR/>The issue I was making is not the price paid nor the process of how it is managed. It is rather the share of the pie at LHR. The funky deal with BMI/BMED/BA which has to be the most bizarre situation (where BMI picked up BMED and a net number of slots for effectively nothing after reselling BA's own slots back to BA) has to be one of the classic blunders of the Walsh era. <BR/><BR/>Since you raised the issue of the economic value, all eyes are now on BA. BMI's decision to monetize the slots on their balance sheet means that all other public companies will have to either acknowledge this by doing it themselves or provide an extensive justification for why they don't. there is some slack time until BA decides but it is out there. <BR/><BR/>Using a screwy sort of calculation here BMI values its slots at GBP770 million that values each slot pair at GBP 10 million on its balance sheet. <BR/><BR/>Current market values of a slot pair are at LEAST $50 million (judging from the last frenzy before the march schedule change there is a sense that in excess of $70 million was paid for one prime pair). So this should put some perspective on the value that BA and others have. This will dramatically alter BA's balance sheet... as it has already BMIs.<BR/><BR/>CheersProfessor Sabenahttps://www.blogger.com/profile/13836115173131048934noreply@blogger.comtag:blogger.com,1999:blog-34367341.post-59440508540057151532008-08-16T00:05:00.000-07:002008-08-16T00:05:00.000-07:00True, but BA didn't increase it's share by trading...True, but BA didn't increase it's share by trading in magic beans. They've been, fairly openly, buying slots from small airlines that are happy to move to LCY or LGW - a strategy copied by CO (and others) and which VS could have employed.<BR/><BR/>Similarly, much of the decrease in BMI slots, despite the purchase of BMed, must be accounted for by the chunk of slots BMI sold to BA (in a bizarre transaction).<BR/><BR/>Again, I'm sure VS, or EK for that matter, could have jumped into that deal.<BR/><BR/>BA/CO/EK are happy to pay for slots because thy have an idea of their economic value; they're pretty sure they can turn a profit on the investment.<BR/><BR/>VS knows that the meagre returns made by its poorly run airline don't justify the investment in purchasing slots - they want to be handed them. Like a charity case.Rory Maxwellhttps://www.blogger.com/profile/14411673931757713864noreply@blogger.com