Selling Cargolux for a Song

My Orchids. Cattleya Hwa Yuan Bay "She Shu". Photo ET

Selling Cargolux for a Song

In the No-man's-land between the former leaving government and the new government in the making, Luxembourg is about to make a strategic decision about the future of one of its jewels, Cargolux. Press reports indicate that a deal is on the table, and should be accepted this week.

Whereas all shareholders of the company are government controlled, no one seems to bother that the outgoing government is a caretaker government, and should not rush ahead with last minute strategic decisions. And technically, the incoming government doesn't yet exist until December 4th, and has no power whatsoever to make any decisions yet.

Both, old and new governments should explain that rush to an agreement. 

Ready, Fire, Aim

The old government went through a crisis last year because of its ill-conceived sale of 35% of CV to Qatar Airways. What seems to be the new deal with the Chinese Province of Henan is basically similar, in its rough outline, except that HNCA flies no planes (yet). According to Albert Einstein, doing the same thing over and over again, expecting better results, is the definition of insanity. The new government in formation had its Einstein moment, and wanted to understand what is going on. An "informateur" has been hauled, who, according to sources, seemed to be at first against the HNCA solution , before being in favor.

I haven't really seen what difference several days make. But for the decision making process, Luxembourg gets the "Ready, Fire, Aim Award". A very touchy national decision is taken in the political No-man's-land between an outgoing and an incoming government. No one will be really responsible, if the affair becomes another fiasco in the future. It is a good strategy though for the Luxembourg soccer team: sneak in during half-time, and score several goals while the other team relaxes in the locker room.

Selling for a song

Pun intended. Robert Song has a good deal, whatever the details are. For barely the cost of a new aircraft, he gets what he wants from a company that operates the newest fleet in the world and has 40 years of experience, and is a recognized leader in know-how. How does this improve CV's capitalization? I'm sure in the days to come we'll learn why this is such a good solution.

Do we solve a problem by simply adding a second problem?

There is no urgency. CV's profit and loss situation might even be far better than expected by the end of the year. The European pressure on Luxembourg can be answered with benign neglect.  Luxembourg has shown enough of goodwill to comply, with its QR partnership that failed.

What is interesting is the vision of solving CV's capital problem by adding another problem and obligations on the to do list with a vast startup problem in a Chinese economic development bet. Those have to be analyzed really carefully, well understood and explained. And please, show me the exits of the deal before takeoff. I already know how to fasten my seatbelt.