Virgin Express is set to merge
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Virgin Express is set to merge
http://www.thisislondon.com/news/bus...d75785?source=
SIR Richard Branson's loss-making Virgin Express is set to merge with its Belgium-based arch-rival SN Brussels Airlines to create a £200m European carrier.
The deal, however, is understood to be structured in such a way that it will allow Branson to take back control of the Virgin brand, a move that will lead to speculation he is readying himself for a much larger international merger with bmi British Midland.
Branson's Virgin Group today said it has signed letters of intent to merge its Brussels-based budget carrier with SN Airholding, set up by the Belgian government to take control of the assets of former flag-carrier Sabena. That airline went bust soon after 9/11.
Virgin Express will be given a 29.9% stake in the enlarged company while SN Airholding gets the rest. Put and call options on any future change of control of Virgin's stake value it at between e64m (£44m) and e100m.
The plan is for the airlines to be run as two entities with SN Brussels taking charge of the European business routes and flights into Africa while Virgin Express continues to service the low-cost European leisure market
It is understood that the deal will also enable Branson to take back control of the Virgin brand in the European aviation market within two years, allowing SN Airholding to rebrand the low-cost operation.
Well-placed industry sources believe that will leave Branson free to start again in Europe with the Virgin brand.
Branson has admitted he missed the boat with Virgin Express by running it as a Brussels-based business airline, allowing Stelios Haji-Iaonnou at easyJet and Michael O'Leary at Ryanair free rein to carve up the European low fares market.
It could also be important leverage in Branson's desire to merge with bmi. If Virgin were to merge with Sir Michael Bishop's predominantly-European airline, Branson would at present be barred from using the Virgin brand on shorthaul services while Virgin Express continues to exist.
Talks between Virgin and bmi petered out last year but executives from both camps recently reiterated that a deal still makes commercial sense.
A spokesman for Virgin declined to comment.
Virgin Express made losses of e9.6m in the first nine months of 2003 when it was refinanced by a e35m rights issue, giving Branson 89% control of the airline. SN Brussels Airlines is expected to make break-even for 2003 after big losses the previous year.
SIR Richard Branson's loss-making Virgin Express is set to merge with its Belgium-based arch-rival SN Brussels Airlines to create a £200m European carrier.
The deal, however, is understood to be structured in such a way that it will allow Branson to take back control of the Virgin brand, a move that will lead to speculation he is readying himself for a much larger international merger with bmi British Midland.
Branson's Virgin Group today said it has signed letters of intent to merge its Brussels-based budget carrier with SN Airholding, set up by the Belgian government to take control of the assets of former flag-carrier Sabena. That airline went bust soon after 9/11.
Virgin Express will be given a 29.9% stake in the enlarged company while SN Airholding gets the rest. Put and call options on any future change of control of Virgin's stake value it at between e64m (£44m) and e100m.
The plan is for the airlines to be run as two entities with SN Brussels taking charge of the European business routes and flights into Africa while Virgin Express continues to service the low-cost European leisure market
It is understood that the deal will also enable Branson to take back control of the Virgin brand in the European aviation market within two years, allowing SN Airholding to rebrand the low-cost operation.
Well-placed industry sources believe that will leave Branson free to start again in Europe with the Virgin brand.
Branson has admitted he missed the boat with Virgin Express by running it as a Brussels-based business airline, allowing Stelios Haji-Iaonnou at easyJet and Michael O'Leary at Ryanair free rein to carve up the European low fares market.
It could also be important leverage in Branson's desire to merge with bmi. If Virgin were to merge with Sir Michael Bishop's predominantly-European airline, Branson would at present be barred from using the Virgin brand on shorthaul services while Virgin Express continues to exist.
Talks between Virgin and bmi petered out last year but executives from both camps recently reiterated that a deal still makes commercial sense.
A spokesman for Virgin declined to comment.
Virgin Express made losses of e9.6m in the first nine months of 2003 when it was refinanced by a e35m rights issue, giving Branson 89% control of the airline. SN Brussels Airlines is expected to make break-even for 2003 after big losses the previous year.
