[Anonymous]

[VintageKrug]

A rather sensationalist article in the Times yesterday speculating on the future of bmi.

A £95m hole in the accounts is apparent, for which the airline’s owners, Lufthansa, have not made provision. What was not mentioned was that this is easily covered by a short term loan against the slots, however.

Ultimately, the value of this airline remains with the slots it occupies at LHR, which are valued at between £0.5bn and £1bn.

There is little value in the currently unprofitable shorthaul network or potentially modestly profitable mediumhaul network. This once great airline unfortunately lacks critical mass to make a go of it as a broad based airline offering a wide range of connections. It is very valuable to Star Alliance, however.

There have also been accounting irregularities which have resulted in revision of losses, adding an extra 50% (£56m) to last year’s publicly stated loss.

I doubt that is the last of accounting fudges, myself. The accounts of Diamond Club, its Frequent Flyer scheme, are bound to hold plenty of skeletons. The accountant Nigel Turner was appointed to make the airline “look good” financially to satisfy Sir Michael Bishop’s decision to force Lufthansa to purchase his remaining share, per the clever agreement he had negotiated a decade previously.

http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article6911708.ece

Very unlikely bmi will go to the wall, in my opinion.

No doubt one or two here will be rubbing hands with glee over the potential bankruptcy of an airline and the many job losses which would result…..

[Hess963]

Hi everyone !!

VK –what a typical insensible last sentence of yours !! What a nonsense–which reasonable person would wish a company which employs a lot of workforce the bankcruptcy ?
We comment sarcastically and often frankly–but never write or say such stupid sentences like “..rubbing hands with glee..” in such context.

Beside–if BMI is really valuable to Star Alliance–why sell it as whole or in parts? Why did Sir Michael Bishop sold his shares in the first place ? There are issues that the public will never hear or read–but for us normal travellers–it is obvious that BMI is not that valuable to LH and its future plans in Europe ( well beside the slots and a good price for the company )–that is the picture in a free market economy.

[Senator]

Dear Hess,

I tend to agree with you in most cases, but I interpreted VK’s last sentence a bit different than perhaps you did. I think what VK referred to is that some contributors seem to have such a gripe with certain airlines that they would rather see them disappear altogether with no regard to impact of job losses etc.

VK suggested or invited (perhaps ironically) that some contributors would rather see BMI go under. As I posted last week in a different thread; “be careful what you wish for”.

[Travellator]

BMi provides and has done for many years a top class service from Belfast CITY to LHR.

Most long haul flights still originate at LHR so the BHD connection is invaluable.

There is an Aer Lingus flight from Belfast International but this airport is not as convenient for people in the East or centre of Belfast and North Down.

I for one would not wish to see their demise – the crew especially the Belfast Bunch are always cheery and up for a bit of craic. They always relate well to frequent travellers and know most of them by name.

[Hebamme]

I completely agree with you. I have been using BMI LHR to TXL many times and I think the customer service is oustanding. I would even say it is the best airline I have ever travelled with.

[Freedom1]

I have no idea why people seem to love to slate bmi and want to see them disappear. I have travelled with them countless times and have never had a bad experience. Yes they have made some dodgy decisions over recent years and never stuck to one ‘model’ but that is to do with bad management (who said nigel turner). Long live bmi is what i say!!!

[BABenji]

it would be a shame if they went to the wall. while i freely admit i fly with them quite infrequently, when i have they have been really good. as mentioned, they have made some dodgy decisions…not least the codeshare with Transaero to Moscow! a truely awful experience.

as with all service industry businesses…it’s the details that matter…and frustrating things like having to chase up mileage credit for alliance member flights etc is ultimately what keeps me from flying with them more often.

[FaroFlyer]

Hess, I think that you will find that LH purchased BMI as a result of an agreement reached 10 years ago whereby Sir Michael Bishop had the right to buy back the shares he sold 10 years ago, and LH had the right to buy Sir Michael’s 50% +1 share on a basis agreed 10 years ago. Sir Michael excersised his right to force LH to buy.

The qualification to the accounts appears to have been brought about by LH imposing conservative accounting standards. 1) no longer valuing the LHR slots as an asset and 2) pessimistic / realistic trading forecasts. If what one reads is correct then BMI lost £100 million on sales £1,000 million (10%) and are forecast to lose £190 M on reduced sales, say £950M a 20% loss. The forecast left a cash shortage of £190M for the next 12 months and LH are making a £95M loan with the balance to come from asset disposals or improved trading. One wonders whether LH itself might be a buyer of BMI’s LHR slots, as might other Star Alliance members?

As for the BMI airlines: BMI is fine, on the odd occasion I fly them, similar to BA quality; bmiBaby is a disgrace, ancient aircraft, with Spanish signs everywhere, and gin sold in ketchup sachets à la Ryanair, not a pleasant or comfortable experience.

[Author]

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