The SN / VEX merger is becoming effective

Post by **sn26567** » 16 Mar 2004, 10:14

The "Luchtzak latest news" publishes this important news item:

Virgin Express NV/SA has been informed by its majority shareholder, VEX PLC and by VSIL, majority shareholder of VEX PLC that a non-binding letter of intent (“LOI”) has been signed on 15 March 2004 by VSIL and SN Airholding, the majority shareholder of SN Brussels Airlines, which contemplates placing their respective operational airlines, Virgin Express NV/SA and SN Brussels Airlines, under common ownership.

The parties have not as yet determined a detailed plan of how the Virgin Express NV/SA and SN Brussels Airlines business would be jointly managed. However, it is foreseen that both operational companies will remain separate legal entities. VEX PLC will remain a publicly quoted company on both the Euronext and Nasdaq (OTC Bulletin Board).

The Board of VEX PLC and the Board of SN Airholding believe that the non-binding LOI and the transactions which it contemplates are in the best interests of all concerned parties, their employees, shareholders and customers.

Both companies expect significant mutual benefits through network optimisations.

If the common ownership of the two airlines is realised, SN Airholding will offer the market two airlines with different brands and products to satisfy the growing needs of the competitive market in Belgium: a flexible full service airline and a low fare airline. SN Airholding will ensure that there will be no product confusion for the customer.

That leaves a lot of questions open:

"non-binding" LOI could mean nothing is done yet

how both businesses will be jointly managed is not yet decided

an agreement between shareholders might be easy to reach, but merging two different cultures will be more difficult

how will the shares be divided between SN Air Holding and VSIL (in other words, who will be the dominant partner) ?

With time, I certainly will have more questions, but a little bit more clarity about the deal could be useful.

Post by **sn26567** » 16 Mar 2004, 11:23

Associated Press gives a little bit more details:

SN Brussels, Virgin Express airlines sign non-binding letter of intent to merge
Tuesday March 16, 4:40 am ET
By Paul Geitner, AP Business Writer

BRUSSELS, Belgium (AP) -- After years of flirtation, SN Brussels and Virgin Express said Tuesday that they had signed a non-binding letter of intent to merge ownership of the two Brussels-based airlines through a stock swap.

SN Brussels -- the successor to Belgium's bankrupt flag carrier Sabena and the larger of the two airlines -- would remain the dominant player with 70.1 percent of a joint holding company, the airlines said in a joint statement.

VEX PLC, part of British entrepreneur Richard Branson's Virgin business empire, would contribute its shares to SN Airholding, the majority owner of SN Brussels, in exchange for a 29.9 percent stake.

The two airlines would remain separate entities and fly under their own brands, the statement said, adding details of how they would be managed had yet to be worked out.

SN Brussels would remain a "a flexible full service airline" and Virgin Express would remain a budget carrier, they said.

"Both companies expect significant mutual benefits through network optimizations," the statement said.

Virgin Express serves 16 European cities from Brussels with a fleet of 12 Boeing 737s and 780 employees. It also flies from Amsterdam to Rome and Milan.

SN Brussels Airlines employs more than 1.950 people and has a fleet of 38 aircraft. It has more than 285 flights a day to 54 European and 14 African cities, as well as one daily flight between Brussels and Chicago. Starting in April, it will fly from Brussels to New York.

The two tried to merge once before, but talks in 2001 collapsed over issues of control. They settled on a partnership that expired in March 2003 and have been competing ever since.

Analysts had said a merger would make sense for both, with Brussels too small for two airlines to flourish.

"Usually when you put two airlines where you have competing routes together you get a better solution," said Nick van den Brul, airline analyst with BNP Paribas in London.

SN Brussels lost euro36.8 million (US$47 million) in 2002, but is expected to show a slight profit for 2003 when it release figures later Tuesday. It has been adding routes through partnerships with British Airways and American Airlines.

Virgin Express also has been struggling but eked out a profit of euro2.6 million (US$3.2 million) in 2002.

Both are expected to benefit from cutbacks by no-frills carrier Ryanair at nearby Charleroi airport following last month's European Commission decision outlawing some of the subsidies Ryanair enjoyed.

But Van den Brul noted Brussels is still a "niche market" and Virgin Express a "minor investment" for Branson, who also owns Virgin Atlantic Airways and is forming a new budget carrier in the United States, Virgin USA.

"I can see he's just rationalizing it," van den Brul.

Vonsmalhausen · Post by **Vonsmalhausen** » 16 Mar 2004, 17:10

verry good news, i specially like the fact that they remain 2 seperate entities ; i would hate to see one off the livery's dissapeer and this way whe will get maybe some "specials"
keep the good work going on SNBA

Jense · Post by **Jense** » 16 Mar 2004, 18:07

I just saw it on the VRT-news, there will be probably more info in the 19.00hrs journal...

greettzzz

SN30952 · Post by **SN30952** » 16 Mar 2004, 18:22

sn26567 wrote: a lot of open questions :
1 "non-binding" LOI could mean nothing is done yet
2 how both businesses will be jointly managed is not yet decided
3 an agreement between shareholders might be easy to reach, but merging two different cultures will be more difficult
4 how will the shares be divided between SN Air Holding and VSIL (in other words, who will be the dominant partner) ?
With time, I certainly will have more questions, but a little bit more clarity about the deal could be useful.

1

LOI would say here a non-binding intention....
What is an intention?
A. An anticipated outcome that is intended or that guides your planned actions;
"his intent was to provide a new translation"; "good intentions are not enough"; "it was created with the conscious aim of answering immediate needs"; "they made no secret of his designs".
B. (usually plural) the goal with respect to a marriage proposal;
"their intentions are entirely honorable".
C. An act of intending; a volition that you intend to carry out;
"my intention changed once I saw her".
I suppose they signed for option C. (never mind my example!!!

)
2

in a merger there is only ONE business, not two jointly, its a merger not a federation...
3

Lets hope SNBA did NOT inherit the SN culture. In that case the VEX has shown a longer life and it would be easier for SNBA to adapt.
4

Need there be a dominant? Lets say 50/50.

blackhawk · Post by **blackhawk** » 16 Mar 2004, 19:22

More information: Virgin Express will also be renamed (SN Express ?

). We may expect the real agreement with all the details in September. Virgin will be a real LCC again. They will have a look at a lot of flights (keeping 2 flights with only 10 minutes time difference is ridiculous).

Avro · Post by **Avro** » 16 Mar 2004, 21:05

That's some great news to see that there will strill be 2 carriers at BRU one aiming at low cost customers and another one aiming at business pax and tourist who want some service for a very good price.

In my opinion, SNBA will stay like there are right now, and VEX will finally become a really LCC with fares around 20-30 €.

More information: Virgin Express will also be renamed

Is that a joke or will VEX really be renamed ????

Greetz
Chris
8)

blackhawk · Post by **blackhawk** » 16 Mar 2004, 21:18

Nope, no joke Avro :p I think they need to get rid of the name "Virgin".

PS: nice to follow http://www.airliners.net/discussions/ge ... n/1459844/ and to read the possitive remark about SN!

flyinglsd · Post by **flyinglsd** » 16 Mar 2004, 21:22

somebody have a idea how they will manage the problem on flights to Rome, Barcelona and Madrid .
SNBA code-share with IB and AZ but i don't see IB and AZ code-share withnvex ( difference on service-LCC-)
then Vex will leave Rome, Madrid and barcelone and maybe focus on leisure routes where Snab don't fly and where snba don't have a code -share with another carrier.
Good luck first Snba code-share with everybody, for passengers , i see a problem no choice they must fly with snba , no more vex ( I must say snba and vex have often the same rate!)
With 12 737, we 'll see a lot of new destinations, if because no concurence.

If you want my idea, this "merge " thru a holding is a step , to only one brnad : snba.

because snba and vex will fly to different cities , well ok but which cities?

I don't see snba stop to fly to certain cities.

well well well ....

Vonsmalhausen · Post by **Vonsmalhausen** » 16 Mar 2004, 21:27

the more i reed about it, the more i think history is repeting himself; first SABENA/Sobelair, now SNBA/VEX.
let's hope the outcome wil be more possitive this time

Avro · Post by **Avro** » 16 Mar 2004, 21:28

VEX will certainly focus on other destinations than SNBA, otherwise it won't make any sence. SN has very attractive fares in economy and VEX wasn't able to compete angainst that (in my opinion). It's nice to see that VEX will become probably a real LCC. VEX will probably fly to very popular sunny destinations where many tourists would like to go...

As for the name change, it would make sence to rebrand Virgin into SN Express or so, since VEX will become the LCC of SNBA.

I just wish them good luck and hope that they will succeed

Chris
8)

Avro · Post by **Avro** » 16 Mar 2004, 21:31

Vonsmalhausen wrote:the more i reed about it, the more i think history is repeting himself; first SABENA/Sobelair, now SNBA/VEX.

Maybe, but this time the managment is much better than the one before

Chris
8)

x-wing · Post by **x-wing** » 16 Mar 2004, 21:32

You can watch 2 movies about this subject on www.vrtnieuws.net (In dutch)

Vonsmalhausen · Post by **Vonsmalhausen** » 16 Mar 2004, 21:35

Avro wrote:Maybe, but this time the managment is much better than the one before

Chris
8)

that's a FACT, and i am pretty confident that the SNBA story is one for long years to come

ATC · Post by **ATC** » 16 Mar 2004, 23:05

Ok, this is good news...

But I wouldn't become to optimistic... everything is still in the beginning fase... This is only the first step... their are many, many steps still to go...

For the moment...

The only fact that has released is that the SN holding excists for 29,9% VEX and for 70,1% SNBA.

Nevertheless I'm sure that a futher cooperation will follow in the near future...

and we'll hear more about this item very soon...

greatings,
ATC

TWA · Post by **TWA** » 17 Mar 2004, 00:15

It doesn't make any sence to me , two companies who will remain independent: I can hardly call this a merger.
I thought the purpose of a merger was saving costs and become profitable again by merging eg. all the ground staff,and cut the management positions by 50%. (= 50% less company cars and other benefits)
Both companies could also downsize their fleet as same destinations are served.

I believe SN and Vex are both way too small to operate independently and to compete with other European carriers. It's better to fight back with one strong brand than with two products who don't know how to position themselves on the market and keep changing their inflightservice, etc.....

And what about British Airways, by the way Virgin's arch-enemy, and the other one-world members who share a lot of flights with SNBA on most of VEX routes??? Is it still possible for SN to join one of the alliances????

TWA

B737229 · Post by **B737229** » 17 Mar 2004, 01:02

I think this would be good, instead of competing on the same routes, just complementing each others routes. This will also give a wider range of destinations for the 'new SN'

SNBA will be the business company , VEX the leisure company. Each with their own company policy.

There are even some rumours the Virgin Express brand name would be changed ..

Maybe SN Express

.... Sounds good!

TWA · Post by **TWA** » 17 Mar 2004, 01:09

So.....Vex could be to SNBA like BasiqAir/Transavia is to KLM!!!!!!!!!!

TWA

BTW cool pics from Schiphol B737229 :dance:

Freiheit · Post by **Freiheit** » 17 Mar 2004, 10:58

A good move to reduce to capacity. What is maturity of the codeshare contracts with partners which compete with virgin (I think of Lisboa, Madrid, Barcelona, Rome). I do not believe in SN express, I just believe in the reduction of overcapacity. A LCC "hub" on BRU is not really viable, I think Virgin has proven this the last few years. I think that not many people of Virgin will remain on BRU, I am afraid we can say byebye to the majority of Belgian based 737s. Maybe they see Virgin as the charter carrier of the group.

blackhawk · Post by **blackhawk** » 17 Mar 2004, 11:05

CNN news:

One source close to the talks predicted that even the proposed Virgin Express-SN Brussels entity would eventually be swallowed up by a larger airline. British Airways has a code sharing agreement with SN Brussels and has said in the past it might be interested in buying a stake. :pang:

Snba forecasts a 2.5 million euro profit for 2004. Virgin expects a loss in 2003.

http://www.cnn.com/2004/TRAVEL/03/16/bt ... index.html

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The SN / VEX merger is becoming effective

The SN / VEX merger is becoming effective

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