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British Airways $1 Billion Corporate Bond Issue

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http://www.bloomberg.com/apps/news?pid=206...id=a0B1AsT3gZQA

:o

A safe bet? Or as they say in the city, BA is "a pension fund that owns a few planes."

And they are reporting a £401,000,000 loss this past year. Great investment.

I agree with Branson: Let BA go bust

Richard Branson has rubbed salt in British Airways' wounds by declaring BA practically worthless, and urging the government to resist any attempts to bail it out, the Sunday Times reported.

Branson's comments will incense BA management, which this week will hold vital talks with cabin crew and ground staff over pay cuts, layoffs and changes to working conditions.

Willie Walsh, chief executive, who is trying to stem big losses and has warned that BA faces a "fight for survival", wants a deal by June 30.

Branson, who founded Virgin Atlantic, BA's biggest commercial rival, said ministers should not be tempted to step in. "It would not be in Britain's interest," he said.

"We and others are standing by ready to take on their routes and runway slots at Heathrow if they get into serious trouble. I thought the US government's bail-out of the car companies was a bad idea and it's the same for BA."

Virgin had looked at a bid for BA, Branson said, but concluded that the company's liabilities — in particular its pension deficit — were too great.

A BA spokesman said: "This is fantasy. There are no talks with government, and there will be no talks. We have opposed state aid and our position has not changed."

The fraught relationship between the airlines has worsened. Keith Williams, BA's finance director, recently questioned Virgin's claims of a record profit, saying its figures went into "Virgin accounting territory".

It emerged this weekend that Walsh has snubbed a request to give evidence to the House of Commons transport committee on July 1 — the day after the deadline for the union talks. MPs are preparing a report on the future of aviation.

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See sig.

OK, BA ain't a bank, but the same applies.

Edited by Timm

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when will the unions admit their pensions are an unaffordable joke. This is almost guaranteed to end in a corporate insolvency and the pension obligations will end up on the public purse.

And I'd love to know what price they've fixed their fuel futures at - because the price of oil is dropping, so is the cost of aircraft fuel - so how badly have they called that one ?

Don't the unions get it - if they stick out for these pensions, then their members will have no jobs and many of them will see their pension benefits severely curtailed anyway. Don't they care ?

You can't run these companies with a final salary scheme - it's insane.

Oh and I don't think the management's up to much either. I am amazed the pension trustees don't drop in s75 at every single meeting - plus I'd love to know how they resolved that releasing a pensions guarantee was in the beneficiaries' best interests....

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I get the impression that this is basically a cash pile arms race. All the legacy airlines are losing money, but Walsh is trying to ensure that BA's competitors run out before he does.

What will get interesting is if a major European legacy airlines goes under and is then bailed out by its state, and how that will play with EU rules. Surprise surprise, Labour didn't make a fuss when it came to Alitalia (OK, arguably not quite a bailout according to the letter of the law, but certainly a bailout in terms of its practical effect); but if the next major bankruptcy happens after the Tories take office, will they start playing hardball if any attempt is made to illegally rescue one of BA's competitors (denying them landing rights in the UK, that sort of thing)? Or will we simply rescue BA if necessary? I damn well hope not - on the few occasions I've used them, I've received Ryanair service at legacy prices.

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