British Regional Airlines (BRAL) is gearing up for a stock market listing by the end of June, in a move which managing director Terry Liddiard says will help it make a final break from its former sister airline British Midland as it develops its role as the largest British Airways franchise partner.
Until a year ago BRAL, together with British Midland, had been held within Airlines of Britain, a holding company owned by three investors led by Sir Michael Bishop - chairman of both carriers. The two were split up to avoid a conflict of interest as BRAL concentrated on its lucrative franchise business, while British Midland stepped up competition with BA, including links with the rival Lufthansa/SAS partnership.
Some 60% of BRAL is now on course to be floated, and is expected to be acquired by institutional investors. Bishop will retain 35%and "gift" another 5%to the BRAL staff. A price has not been set, but the company is expected to be valued at around £100 million ($170 million). Liddiard rules out the possibility of BA taking a stake, because of competition issues within the UK market.
"We were really anxious to complete the break away from British Midland entirely," says Liddiard. He adds that the cash raised will be used to pay off leftover debts owed to British Midland, as well as funding stage payments for the Embraer RJ-145 regional jets now entering the fleet. Five of the aircraft are already in service, with deliveries of the first of the remaining 10 on order due to start in October.
Liddiard points out that the flotation announcement follows a strong set of 1997 results. Sales again grew by over 20%,to reach £165 million, while pre-tax profits more than doubled, to £3.8 million. He expects growth to remain strong, helped by the base at Manchester, where BRAL holds more than 10% of slots and is sitting alongside BA in the new terminal.
Source: Flight International
