LUFTHANSA & Bmi

Newly-filed accounts from UK operator BMI have revealed the airline's dire financial performance, and an admission that the carrier needs £190 million in additional funding by the end of October

British Midland (bmi) has admitted that it may not be able to continue as a going concern beyond next year in the face of an acute funding crisis at the airline.
The full extent of bmi’s difficulties are revealed in previously unpublished financial accounts seen by The Times. The document reveals that bmi, which employs 4,800 people, needs £190 million of additional funding by the end of next October.
Lufthansa, the German flag carrier that took control of bmi this year, has pledged £95 million to that target. The Derby-based airline hopes to make up the rest by selling its lucrative slots at Heathrow.
The airline’s funding situation is sufficiently precarious for Deloitte, its accountant, to warn that there is uncertainty about whether the airline can carry on. The accounts were signed off on October 23 and Deloitte made it clear that there was no guarantee Lufthansa would stand behind its British subsidiary or give it further financial support.
In addition, bmi has revealed that its pre-tax losses last year were £155.6 million, compared with a profit of £15.5 million the year before. That loss is more than 50 per cent higher than the £99.7 million that bmi had previously claimed it lost in 2008. The lower figure was still being used on the company’s website last night.
The airline said that the discrepancy was caused by late audit adjustments. It also said in its accounts that it was in “significantly advanced” talks with several airlines to sell Heathrow slots.
Because of the uncertainty over how much that sale could raise and whether Lufthansa was willing to provide more cash, the directors of bmi were forced to give a grim assessment of its prospects.
They said: “The achievability of the forecast, the ultimate level of group funding and timing and value of slot sales indicate the existence of material uncertainties, which may cast significant doubt about the group and company’s ability to continue as a going concern and, therefore, the group and the company may be unable to realise their assets and discharge their liabilities in the normal course of business.”
Much of bmi’s value lies in its ownership of 11 per cent of the landing slots at Heathrow. Slot pairs have traded for tens of millions of pounds in the past but their value has fallen in the recession. The airline has cut the value of its slots by 20 per cent from £770 million to £616 million.
Lufthansa has also forced the airline to stop listing the slots as assets in its balance sheet. This accounting change resulted in bmi reporting a total loss of £930.6 million since its previous annual report.
Lufthansa took control of bmi when Sir Michael Bishop, the former chairman, exercised an option to sell his 50 per cent stake to the Germans for about £220 million. The deal was completed in June. Lufthansa then put bmi up for sale and had discussions with British Airways and Virgin Atlantic but decided that the offers were too low. The German carrier brought in Wolfgang Prock-Schauer as chief executive and restructuring began last week when bmibaby, the low-cost operation, said that it would cut 25 per cent of its workforce and reduce its fleet from 17 aircraft to 12.

Jeannot a écrit:Lufthansa veut vendre BMI

Lufthansa Wants To Sell BMI

Lufthansa is officially putting its loss-making subsidiary BMI on the market.

The company has formally started a sales process for BMI, and executive board member Stefan Lauer says in addition to an outright sale a partnership “could be a viable option.” In parallel, Lufthansa continues in its efforts to reduce losses at the unit.

BMI has been particularly hard hit by the political unrest in North Africa. The airline launched its first flight from London to Libyan capital Tripoli on the day the violence started and immediately withdrew from the route. The airline made a €120 million ($171.4 million) operating loss on €396 million in sales in the first half of 2011.

Lauer says Lufthansa has already received serious expressions of interest, but he declines to identify the potential buyers. International Airlines Group (IAG) unit British Airways has made clear in the past that it would be interested in taking over the airline, but regulatory hurdles and anti-competition aspects are a concern. Virgin Atlantic founder Sir Richard Branson also brought up the idea of merging Virgin Atlantic with BMI to be able to create a London-Heathrow based hub.

Lufthansa was forced to take full control of the airline in 2009 as a result of a 1999 agreement with then-owner Sir Michael Bishop.

[Vous devez être inscrit et connecté pour voir ce lien] Wants To Sell BMI&channel=comm

Lufthansa (LH) Group is considering selling subsidiary British Midland (bmi), LH executive board member and Group Airline chief officer Stefan Lauer told ATW in Vienna Monday ([Vous devez être inscrit et connecté pour voir ce lien]). Lauer said LH’s options include either selling the loss-making airline or creating a new partnership.

Bmi reported a €63 million ($91 million) first-quarter operating loss, which followed a €145 million operating loss in 2010, owing to the crises in North Africa and the Middle East, as well as the weak UK market.

Despite the losses, Lauer said he didn’t think it was a mistake to buy bmi. “The aviation scenario today has changed dramatically compared to 10 years ago,” he said, noting that LH wants to find a solution quickly.

A strategic pawn has been placed in the middle of the Heathrow airport power struggle by [Vous devez être inscrit et connecté pour voir ce lien], as it investigates the possibility of selling British Midland International.

By appointing investment bank Morgan Stanley to look into the potential sale of the loss-making subsidiary, the German carrier is finally addressing a long-standing problem. Meanwhile, other airlines will consider the prudence of a takeover move.

On offer is the second-largest number of slots at Heathrow - an invaluable commodity at one of the world's busiest international airports which is bursting at the seams.

Airport Coordination Limited reported BMI's share of Heathrow's slots as being roughly 8.4% of the total capacity, in its Heathrow summer 2011 start of season report.
Willie Walsh, chief executive of [Vous devez être inscrit et connecté pour voir ce lien] parent International Airlines Group has been open about his interest in BMI, telling Airline Business earlier this year: "It's no secret that we've been interested in BMI, but largely because of its slot ­position at Heathrow, rather than the brand."

Andrew Lobbenberg, European airline research analyst at RBS, feels that a purchase of BMI by IAG would be the most natural fit. With British Airways owning approximately 40% of the Heathrow slots, such a move would give it control of around half the airport's total.

He is less convinced by the viability of [Vous devez être inscrit et connecté pour voir ce lien] Airways' assertion that it continues "to have a close interest in a combination with BMI".

He explains that it is not obvious how a combination of BMI and Virgin could be a successful or profitable enough business to compete against BA.

Lobbenberg also questions whether Virgin could indeed afford such a purchase.

Citi Investment Research's (CIR) break-up analysis values BMI's equity at £106-248 million ($168-392 million). "Though, if it could find a new backer with deep pockets and the appetite, of course its ability to buy BMI could be transformed," he adds.

Lobbenberg says he is "very unsure about what the industrial logic would be of any combination of BMI with a Gulf carrier".

CIR questions whether any buyer would be interested in purchasing BMI in its entirety, because the carrier's three distinct divisions - BMI, BMI Regional and BMIbaby - do not match with most other airline groups, and that Lufthansa must therefore consider each separately.

The final intriguing development of the saga is that the news came at the same time as the announcement that Lufthansa's Stefan Lauer, chief officer of Lufthansa's subsidiary airlines, will be stepping down from the role of chairman of BMI.

In his place, BMI appointed Vagn Ove Sørensen, the former deputy chief executive of [Vous devez être inscrit et connecté pour voir ce lien].

Virgin Atlantic Airways refuses to rule out a possible bid for British Midland International, should Lufthansa decide to sell its loss-making subsidiary.

In September, Lufthansa announced it had appointed global financial services company Morgan Stanley to look into a potential sale of BMI.

Edmond Rose, director commercial and revenue planning at Virgin Atlantic, told Flightglobal's Airline Business Daily at the World Route Development Forum in Berlin that the carrier has "a close interest in the future of BMI", a phrase he repeated when pressed on whether this could extend to a potential bid.

International Airlines Group, the parent company of Virgin's arch rival British Airways, has also reiterated its interest in BMI.

IAG has made no secret of its desire to obtain BMI's more than 10% share of London Heathrow's highly sought-after slots.

Virgin Atlantic is still keen on buying smaller UK rival bmi despite waning growth across the aviation industry, Virgin Atlantic's chief executive Steve Ridgway said.

"The bmi sale process is ongoing and we're still involved in that," Ridgway said on Tuesday.

Lufthansa, which owns bmi, has said that it is considering finding a partner for loss-making bmi, and has mandated bankers to sound out a potential sale.

Airlines are keen to get hold of bmi's coveted takeoff and landing slots at London's Heathrow airport.

Bmi controls about 10 percent of the take-off and landing slots at Heathrow, Europe's busiest airport, making it second there only to IAG-owned British Airways, which now has around 45 percent of the slots.

Last month BA acquired six daily takeoff and landing slots at London's Heathrow airport from bmi for an undisclosed sum.

"Bmi is an important UK asset and I think it needs to be dealt with wisely," said Ridgway, when asked if Virgin would look at acquiring bmi's slots instead of the airline itself.

Virgin Atlantic, majority-owned by billionaire Richard Branson's Virgin Group, swung to a full-year profit in the year to March but expects higher fuel prices, weakening consumer confidence and tough economic conditions to impact the business in its current fiscal year.

"Growth rates are low and it's very challenging for airlines at the moment and will probably continue to be like that in the months ahead," said Ridgway.

Industry body IATA last month said it expected airlines to suffer a weak end to the year due to waning consumer confidence, sluggish international trade and high fuel prices.

It said a weak global economy would prompt a sharp fall in airline profits in 2012 and cut the industry's profit margins to 0.8 percent from 1.2 percent this year. IATA forecasts industry profits in 2012 will fall 29 percent to USD$4.9 billion from USD$6.9 billion this year.

Ridgway also poured cold water on a plan to link London's Heathrow and Gatwick airports by high-speed train.

The British government last week said it was considering connecting the airports -- creating a virtual hub dubbed Heathwick -- to increase capacity in the London aviation market

"Building this link between airports is not really practical especially given the constraints placed on runway capacity in the UK," he said.

(Reuters)

British Airways parent International Airlines Group is holding early-stage talks with Lufthansa over bmi, the loss-making unit of the German airline, two people familiar with the situation said.

"IAG has not been shy about its interest in bmi, and the two sides have been in contact, discussing options, but I'm not sure it has got to the offer stage yet," said one of the sources on Friday.

Another source said Lufthansa was also in talks with other suitors, but did not give any names.

Virgin Atlantic is one of those involved in the bmi sale process, chief executive Steve Ridgway said on Tuesday.

Lufthansa has said finding a partner for bmi is one of the options it is exploring as it tries to turn around the airline, and has mandated bankers to sound out a potential sale.

Bmi's biggest assets are its slots at London Heathrow. Citigroup analyst Andrew Light last month estimated these to be worth around EUR€460 million (USD$630 million).

IAG boss Willie Walsh has made no secret of his interest in bmi, and BA last month acquired six daily take-off and landing slots at London's Heathrow airport from bmi for an undisclosed sum.

The sources said it was unclear whether the talks between IAG and Lufthansa would be successful.

"Virgin Atlantic could yet throw a spanner in the works," one of the people said.

Lufthansa and IAG declined to comment.

(Reuters)

Oui ! Le "no comment" ! Normal ; le silence est d'or ! Laissons le bla-bla aux media !

UK-based investors are near to an agreement to acquire UK carrier BMI Regional, a division of the mainline airline owned by Lufthansa Group.

If a deal is closed it would mark the first move in the break-up of BMI which has burdened Lufthansa since it took over the loss-making operation in 2009.

BMI Regional operates a fleet of Embraer jets and is based in the Scottish city of Aberdeen.

The mainline carrier said it "envisaged" that a transaction document for the sale "will be signed shortly" with a view to completing the divestment by the end of the year.

It said the sale would be in the form of shares of BMI Regional, the airline's fleet and route network, and the continued employment of personnel.

While the proposed buyer has not been identified, BMI said it was an investor group "previously associated with the regional business" and that discussions were "advanced".

BMI Regional would continue to fly, for a period, under its current brand and IATA designator code and the current winter 2011-12 schedule "will continue as planned" with "no major network changes" expected for summer 2012.

"The intended sale of BMI Regional is part of the strategic review of BMI," said BMI chief Wolfgang Prock-Schauer.

"It is our goal to find sustainable solutions for all parts of the BMI business and we, as well as the shareholder, continue to assess options."

No financial details have been disclosed. BMI said the potential investor is "keen to consult with staff" and that this would begin soon, in order to complete the transaction as soon as possible.

"The new owner plans to continue the airline as an independent entity based in Aberdeen and to further develop the regional network in both the UK and Europe," it added.

"Employment prospects will be enhanced through a planned growth strategy."

Lufthansa is reportedly finalising the sale of British Midland International (BMI) to British Airways parent International Airlines Group (IAG).

Quoting unnamed sources close to the negotiations, a number of media reported today that the German carrier has finally decided to sell its UK subsidiary to the Anglo-Spanish airline consortium.

Lufthansa had negotiated with a number of bidders over the past weeks, including Virgin Atlantic Airways.

A potential deal with IAG could be announced as early as tomorrow when the group presents its financial results for the first nine months of 2011.

With the acquisition, IAG would command 60-70% of the slots at London Heathrow. With around 8.5% of slots, BMI is the second largest slot holder at the hub after BA.

Given that Heathrow's capacity has been virtually exhausted, Virgin said it is "very concerned about the competition ramifications of an IAG purchase of BMI".

Lufthansa and BA declined to comment on the status of their negotiations.

After International Airlines Group (IAG) announced today that it had agreed in principle with Lufthansa to take over British Midland International (BMI), there is confusion as Virgin Atlantic Airways appears to be still making a rival bid for the UK carrier.

Virgin said in statement today that "we are working with Lufthansa on the next stage of the purchase".

Virgin added that "we remain committed to the acquisition of BMI".

IAG said earlier today that it expected to ink a binding purchase agreement with Lufthansa "in the coming weeks" and that the transaction would be completed "in the first quarter 2012".

Given London Heathrow's exhausted capacity and dependency on the existing slots, Virgin argues that a BMI takeover through British Airways parent IAG would have an adverse effect on competition at the UK hub.

"British Airways' hold over Heathrow is already too dominant and we are very concerned - as the competition authorities should also be - that BA's purchase of BMI would be disastrous for consumer choice and competition," said Virgin.

Virgin Atlantic Airways is adamant that it is still in the race to take over UK carrier BMI after making another offer, which Lufthansa wants to discuss next week.

A source close to the negotiations told Flightglobal that Lufthansa responded on Virgin's latest bid within the last 12 hours and wants to talk about it in the coming week.

This would suggest that the previous offer by the UK airline might have been too low, but a spokeswoman for Virgin dismissed the notion.

British Airways parent International Airlines Group had reached a tentative agreement to acquire BMI.

Virgin, which has frequently touted the potential for a tie-up with BMI, insisted there were significant competition concerns with the IAG bid. The spokeswoman said Virgin was still in serious bidding talks with Lufthansa.

Lufthansa could not immediately be reached for comment about the possible discussion.

The battle for UK airline bmi is not over yet, as Lufthansa confirmed on Monday it was shopping around for the best deal to sell the loss-making carrier, with Virgin Atlantic still in the running.

British Airways owner IAG said in November it had reached an agreement in principle to buy bmi as it seeks to squeeze more growth from its capacity-constrained Heathrow hub, but admitted that the deal was not exclusive.

"We signed an agreement in principle with Virgin at the end of November," a Lufthansa spokeswoman said on Monday.

She added that Germany's biggest carrier hoped to sign a final deal in the next few weeks, with completion seen in the first quarter of 2012.

"We will look at the quality of the offers and which one gives the most attractive prospects for the future of bmi," she said, declining to provide further details of the bids.

The Times newspaper in London earlier cited banking sources as saying the Virgin offer was thought to be in the region of GBP£50 million (USD$78 million), while IAG's was about double that figure, excluding pension and restructuring costs.

Bmi comprises three under-performing businesses: a carrier serving Europe, the Middle East and Africa; bmi regional, serving the UK; and low-cost unit bmibaby.

Its key attraction is that it controls 9 percent of the valuable take-off and landing slots at London Heathrow, Europe's busiest airport, which is operating at full capacity after plans to build a third runway were scrapped.

Virgin has maintained that a sale to IAG would lead to competition issues, as British Airways is already the dominant airline at Heathrow.

"British Airways' hold over Heathrow is already too dominant and we are very concerned, as the competition authorities should also be, that BA's purchase of bmi would be disastrous for consumer choice and competition," a spokeswoman said.

The Times said, without citing a source, that Virgin's bankers were arguing that Lufthansa would be better off doing a quick but lower-priced deal with the airline, as its offer would likely meet with less regulatory scrutiny.

Silvia Quandt analyst Stefan Kick said the Virgin bid was a good fallback for Lufthansa, should competition authorities reject the IAG deal.

He added a sale to Virgin could also be a smart strategic move for Lufthansa, as it would mean keeping bmi out of the hands of its strongest rival -- British Airways.

IAG said it was still negotiating. "Lufthansa has kept us appraised of other parties involved in the process," an IAG spokeswoman said.

PARIS — British Airways and the Spanish carrier Iberia beat out Virgin Atlantic on Thursday in the bidding for British Midland International, the unprofitable airline being sold by Lufthansa of Germany.

The International Airlines Group, the parent company of British Airways and Iberia, will pay £172.5 million (about $270 million) for the airline, known as B.M.I.

That topped a competing bid from Virgin Atlantic Airways.

The purchase would give the group 56 additional daily takeoff and landing slots at Heathrow Airport, Europe’s
busiest, where it already controls 45 percent of the commercial air traffic.

I.A.G. said its full offer was only for B.M.I.’s mainline carrier, which serves Europe, the Middle East and Africa, and was
contingent on Lufthansa finding other buyers for two subsidiaries: BMI Regional, which serves Britain, and Bmibaby, a low-cost carrier.

“Buying B.M.I.’s mainline business gives I.A.G. a unique opportunity to grow at Heathrow, one of our key hub airports,” Willie Walsh, the International Airlines chief executive, said in a statement.

“Using the slot portfolio more efficiently provides the option to launch new long-haul routes to key trading nations.”

Mr. Walsh warned that there was an “urgent need” to restructure B.M.I., which lost £153 million in 2010 before tax and is expected to record another significant loss for 2011.

As a result, this would require the elimination of an unspecified number of jobs in the short term.

Virgin Atlantic, which is owned by Richard Branson’s Virgin Group and Singapore Airlines, had made an 11th-hour bid for B.M.I. last week, arguing that a takeover by International Airlines would be “disastrous for consumer choice.”

Virgin Atlantic controls 3 percent of Heathrow’s slots.

In a statement, Mr. Branson confirmed that Virgin Atlantic had ended its talks with Lufthansa, but said the company would ask British antitrust regulators to block the deal.

“Claiming that this deal is about new markets from Heathrow is a smoke screen,” Mr. Branson said. “We will fight this
monopoly every step of the way.”

Virgin did not disclose the value of its offer, which British media reports last week said was closer to
£50 million.

Virgin said on Thursday that its bid was a “fair one in view of B.M.I.’s financial difficulties.”

International Airlines warned that it would make a “significant” reduction in its £172.5 million offer if Lufthansa did not find other buyers for Bmibaby and BMI Regional before completion of the deal, which is expected in the first quarter of next year.

“BMI Regional and Bmibaby are not part of our plans,” International Airlines said.

B.M.I.said in October that it was in “advanced discussions” to sell BMI Regional by the end of the year to a British investment group, which it did not identify.

Lufthansa declined to comment on the fate of Bmibaby.

But according to one person with knowledge of Lufthansa’s plans, it has held initial discussions with a British-based aviation company about a possible sale.

The German carrier will be selling its B.M.I. investment at a loss.

Lufthansa paid £223 million, including an initial stake purchased from B.M.I.’s founder, Michael Bishop, in 1999.

Lufthansa was then forced to take majority control when Mr. Bishop exercised a put option of his 50 percent plus one share stake in 2008.

Hugot2 a écrit:BA-Iberia semblent avoir remporté la partie pour B.M.I.

Pour BMIbaby et Regional...?

[Vous devez être inscrit et connecté pour voir ce lien]

PARIS — British Airways and the Spanish carrier Iberia beat out Virgin Atlantic on Thursday in the bidding for British Midland International, the unprofitable airline being sold by Lufthansa of Germany.

The International Airlines Group, the parent company of British Airways and Iberia, will pay £172.5 million (about $270 million) for the airline, known as B.M.I.

That topped a competing bid from Virgin Atlantic Airways.

The purchase would give the group 56 additional daily takeoff and landing slots at Heathrow Airport, Europe’s
busiest, where it already controls 45 percent of the commercial air traffic.

International Airlines warned that it would make a “significant” reduction in its £172.5 million offer if Lufthansa did not find other buyers for Bmibaby and BMI Regional before completion of the deal, which is expected in the first quarter of next year.

“BMI Regional and Bmibaby are not part of our plans,” International Airlines said.

B.M.I.said in October that it was in “advanced discussions” to sell BMI Regional by the end of the year to a British investment group, which it did not identify.

But according to one person with knowledge of Lufthansa’s plans, it has held initial discussions with a British-based aviation company about a possible sale.

The German carrier will be selling its B.M.I. investment at a loss.

Lufthansa paid £223 million, including an initial stake purchased from B.M.I.’s founder, Michael Bishop, in 1999.

Lufthansa was then forced to take majority control when Mr. Bishop exercised a put option of his 50 percent plus one share stake in 2008.

Rien n'y fit ! Lufthansa a dû s'exécuter !

• "La gestion du Groupe Lufthansa a été mauvaise", = "La gestion du Groupe Bmi par Groupe Lufthansa a été mauvaise".
  

Lufthansa Group has detailed the harsh conditions under which it will sell BMI to International Airlines Group, including a potential substantial net loss from the deal. Lufthansa faces heavy net loss from BMI sale to IAG.

While the two sides have agreed a binding cash purchase price of £172.5 million ($271 million), this is subject to heavy price reduction if Lufthansa does not choose to sell the budget arm BMIbaby before completion of the sale. Lufthansa also currently has the option to sell BMI Regional.

Lufthansa admitted that, after agreed reductions, the net purchase price is "expected to be significantly negative".

Normal ! Au lieu de créer de la valeur,.... l'apport et la gestion lamentables de Groupe Lufthansa dans l'affaire Bmi, a détruit de la valeur. Si, si, .... il y a eu destruction de la valeur, au lieu de création de la valeur !

Under the agreement with IAG reached today, the German company will also take on BMI's defined pension benefit scheme through a UK holding company.
But Lufthansa said that the decision meant it would be "dissociating from a sustainably loss-making subsidiary".

British Airways parent IAG will gain BMI's slot portfolio at London Heathrow, increasing access by up to 56 daily slot pairs.

The agreement is still subject to regulatory clearance.

Chief executive Willie Walsh said the acquisition would give IAG a "unique opportunity to grow at Heathrow". He added that the company would maintain a "comprehensive domestic schedule" as well as expand its long-haul network.

Both sides are intending to complete the transaction by the end of the first quarter of 2012.

Lufthansa chief Christoph Franz said it was "especially important for us to find the solution that best provides the company and its employees with sustainable prospects for the future".