What happens if A3 goes bankrupt?
 

I recently moved all my *A mileage collection from SQ to A3, basically because of the no-hassle *G status with redemption levels that are similar to SQ.

But with Greece about to go belly-up and having just read about A3's financial troubles, I was wondering: what would happen to our miles and status if A3 ceased to operate?

Any views?

That's a really good question. I've had the same thought for a while now. About to get Blue status from a flight this weekend, but who knows if they'll still be around in a year.

Assuming they assign card numbers in normal progression, A3 seem to have signed up something like 15000 new members this past week alone. Maybe they feel they can overcome their troubles by coaxing huge numbers of *A flyers into collecting miles in the A3 programme. But I can't really say how that might work since I do not know about the internal arrangements between *A partners.

A3 assigns numbers by 11 - so if I get assigned 100000000, the next person will get 100000011. And the person after that 100000022. etc.

I'm not a professional, but it doesn't appear that A3 is likely to go bankrupt.
Even if A3 did go bankrupt, like JK's bankruptcy, we'd probably get Star Alliance status matches.

Indeed A3 are a long way from that I'd be more worried about other airlines to be honest.

I've recently joined A3 from BMI as BMI have now been bought by BA and have left *A. This is where all the new members have come from as A3 very kindly status matched me.

same as any other * airline going bust. Status members would likely get a match elsewhere

In general, airline alliances don't rescue troubled members. The latest examples of alliance members which went bankcrupt include JK (*A) and MA (OW) - but more prominent examples include the former Brazil flag carrier and founding member Varig (*A). So don't expect them to get rescued.

The FFP usually goes down in case of bankcruptcy. Exceptions are possible where it is outside the corporate structure - but the only notable example I'm aware of is Aeroplan. All others, including A3, are within corporate structure and would go down in a bankcruptcy.

As others mentioned, there are usually some status match offers by other alliance members - but clearly not by all of them. So your choice in respect of status match may be fairly limited.

The risk in the case of A3 is quite hard to assess. It is owned by Greek family corporations, who don't disclose any financials. Also A3 itself doesn't provide full financial statements. Unless you are an insider, you'll never know ... until it's too late.

What would you need in addition to their IFRS financial results? As the company is listed on a public stock exchange, I am pretty sure they're providing enough financial informations to determine whether they're on the brinck of bankrupcy or not. Their full audited results certainly do that. Even if the float is really tiny, you could become an insider for the bargain price of 1.25€ :D

Not true! Last quarter's results were made public two days ago. See here for a summary, but in the web you can find much more details (mind you, in Greek). A3 is a public corporation quoted in the Athens stock market.

Who did you status match from and could you share who at A3 did you send your details to? Cheers

I got my BMI Diamond club *A Silver matched to Aegean Blue which is *A Silver.

I sent an email to [email protected]
with a scan of my card and a PDF print out of my Account mileage statement from the BMI website.

Check out the BMI Diamond club forum for other *A status matches.

Aegean's financial position
 

A3 does provide financial data. Here is Aegean's FY2011 basic income statement and balance sheet:
http://i.imgur.com/2xUrP.png

On the quality of the report itself:
I am not familiar with the auditors (Enel SA), as they are a small and unaffiliated local firm. (The same firm is used for Autohellas, i.e. Hertz in Greece, a firm that shares multiple members and a chairman with Aegean.)

Greece transitioned to IFRS in 2005 along with the rest of the European Union. The quality of accounting information pre-transition was said to be poor, and the quality afterwards is said to be poor as well, with one former member of Greece's accounting board stating that "a systematic audit of financial statements, by experienced and specialised auditors, would reveal many and significant problems in relation to IFRS’ implementation."

Luckily, that expert was Panagiotis Vroustouris, who also happens to be the head auditor of Aegean's financial statements. Mr Vroustouris is a CPA who has represented ELTE, Greece's Accounting and Auditing Oversight Board, at the United Nations Conference on Trade and Development, and has served on the European Commission's Accounting Regulatory Committee.

There is no reason to doubt the quality of Aegean's financial figures. They were audited and given a clean opinion by a accredited professional who appears to be a well-respected expert on IFRS and Greek accounting practice.

On the figures presented:

Aegean is not a profitable airline, but this is almost redundant, as it is an airline.
However, the airline's revenues have continued to grow and the airline has expanded through the downturn, despite weakness in the Greek economy. Aegean did not hit as low a point in unprofitability as other large European carriers such as LH, AF and FR, and its profit margin is still healthier than either LH or AF.

Compared to many of its peers, Aegean is not heavily indebted. Airline's usually finance their large equipment costs with debt; Aegean has a relatively low debt burden compared to its peers, which is especially important for reasons that will soon become clear.

My quick take

In isolation, Aegean as an airline is not especially unhealthy.

The biggest single risk to its operations is if Greece were to leave the Eurozone. Aegean's debts are denominated in Euros and it's likely that if the Greek government were to redenominate them, foreign creditors would not accept this redenomination. The airline would almost certainly be tied up in years of litigation, and most especially, its supply of new aircraft and parts from EADS would be disrupted; however, this type of dispute can take years and would not necessarily lead to a sudden crisis.

In the event of a Greek exit of the Eurozone, Aegean's prospects would depend on two factors:
1) how many Euros it would have readily available to meet current obligations and costs. Aegean's treasurer may have already moved its money to a foreign bank; even if this is so, it's unclear if the Greek government might take extraordinary steps against Greek companies whose cash evaded redenomination.
2) how well and how quickly Aegean could leverage the increase in foreign tourism that would result from Greece leaving the Eurozone. Intra-Greece travel would likely continue to be weak for some time; however, the weakness of a new Greek currency would make the country very attractive to foreign tourists, as Greek prices would become substantially cheaper. Additionally, the more non-Greek passengers Aegean attracts, the more "hard" currency it would bring in, which would greatly increase the ease with which the company could pay external debts; meanwhile, that "hard" currency would go much further in paying for items now denominated in the new "soft" currency (primarily labour and internal debt).

If a situation arose where Greece had to choose whether to nationalize Aegean, Olympic or both, the Government's priority would be preventing the failure of Olympic, due to its broader domestic network.

To be clear, if Greece left the Eurozone, Aegean's viability would depend on its continued access to Euros, which is very uncertain. But even if Greece were to remain in the Eurozone, the increasing deterioration of the Greek economy would likely weaken the business rapidly over the next few years, as internal demand would collapse without a fall in the price level that would attract foreign visitors.

In the very near future, I don't see Aegean failing unless there were a Greek exit from the Eurozone; but over the next five years, a Greece in the Eurozone would like be just as bad if not worse for the airline's prospects. Either way, the Aegean's continued existence is very unclear—and unfortunately the airline has very little choice in the matter.

Don't count on it, particularly if you don't have a Greek mailing address. The other STAR programs are wise to the STARGold scam you guys are pulling, so don't expect much sympathy from the big players particularly if you have a US, UK or similar address and no A3 flight activity in your account.

:eek: I really don't understand why this particular forum invites opinions that are, mildly put, offending!