BMI at risk of going under?
 

Article in the Times today that BMI is one of 50 airlines that are thought to be at risk of bankruptcy:

http://business.timesonline.co.uk/to...cle4446390.ece

While it's a rough time for all airlines, BD has a couple of advantages. So far this year it's benefited from extremely well-hedged fuel prices, and the marginal but relatively lucrative mid-haul routes from BMED look set to be fairly stable providers of business.

The next year or two will not be easy, but remember that BD is one of the wealthiest airlines on paper because of its slots at LHR. LH have been circling for a long time, and there are all kinds of rumours relating to their investment in BD and the deal they're going to make with SMB (or that they already have). So if BD does "go under", I reckon LH will step in, and BD will survive as a much closer member of the LH family. Look at LX - its own identity but shared infrastructures and, of course, eventual FF programme merger with LH's Miles&More.

Meanwhile, rather the mainline BD, I'd be much more concerned about the 'baby. WW's future is the least secure in the group, and as a loco it doesn't contribute any passengers to the wider network. I reckon that BD would be wealthier without WW, but then I also reckon that BE and BD should merge, so don't give my opinion too much credence :D

since when is Lufthansa at risk of bankruptcy?? :confused: :p

Not sure from reading the article whether bmi actually is one of the 50 airlines thought to be at risk. They reference a report and specifically mention airlines covered in it. The article then mentions that that some British airlines may be at risk, but it doesn't appear to be linked to the report.

Seems like the case of a bit of a story supported by PR spin (for an investment company and some other airlines) and turned into fact.

It's not as clear from the online article, but in the paper there was a graphic of planes representing different airlines, and BMI was definitely one of the ones marked in the "at risk" colours.

At risk of going bankrupt? No! As others have mentioned, BMI's ownership of LHR slots makes them valuable. At risk of being taken over by LH? Yes; market conditions make that more of a possibility today, given the recession we seem to be heading into.

These are hard times for all airlines. Fuel shows no signs of decreasing in cost terms so more consolidation, higher fares and less for loyalty seems to be very much the order of the century. It is up to BMI to maximise its LHR slots to please its shareholders (even if that means selling the company).

I love DC for the cash & miles option, like most of you do. If BD gets taken over by LH, which is, quite a possibility, do you guys think you can still use the C&M option for x months or will DC be integrated in LH's M&M instantly?

seems like a topic for it's own thread ;) :D

Hasn't it been discussed ad nauseam in this thread? ;)

Most companies go bankrupt due to cash issues and the LHR slots sit on the balance sheet and don't contribute to cash flow.

They would be helpful if bmi did need some cash when the could either use the slots as collateral for a loan or sell a few off to raise cash.

However if (and it is a big if), bmi started hemorrhaging cash, they could still go under despite the LHR slots. What the slots would do is increase the sale value of what was left.

Bmi will not "go under". It might be forced into a fire sale of slots or business units to raise quick cash but it's financial position is very secure even in the current disastrous circumstances, especially given that is is currently 'for sale'.

If airlines are "going under" it would likely be a result of reduced passenger numbers, due to the price of flying being to high (as a function of increased fuel prices).

Less passengers means less flights, and so a lowered demand for take off and landings (which need slots).

Not to up on the subject, but I recall that airlines have to hold pairs with flights, like the Jersey one BMI had? This could be expensive in itself. If lots of airlines are going under could there not be lots of slots coming on to the market...

Could the value of slots not decrease as well with a real reduction in demand.... meaning this asset is worth less than it was...

tht

The assets are worth hundreds of millions so it would have to be one hell of a decrease!

Bmi will not go under for the same reason it still exists in its current form - its 'virtual' value thanks for LHR. If it weren't for its strategic importance bmi would have been gobbled up by a larger carier or shut down a long time ago.

Contrary to reports in the press, things are not going completely to pot and this is not the great depression where most the workforce was unemployed. With that in mind, I can't see BMI's slots being valued much less than they are now as people still need to travel and at least for the time being London is still probably the most single important city on the planet. :)

To be gobbled up, it would need to be for sale.. it was my understanding that BMI is a private company with a majority shareholder, meaning it could not be sold unless that shareholder decided to sell / and or wrote some sort of an option on their holdings to someone else...