Growing Evidence That The Upturn Is Upon Us
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From The Times...
Financial crisis could force bmi out of business in under a year
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The full extent of bmi’s difficulties are revealed in previously unpublished financial accounts seen by The Times.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.
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.
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I would also add to the above, I work for a company that made £500 Million Profit!...and i'm working on been made redundant and looking for work by April...along with the potential for 30 to 40 others...
I just don't know what to say to a Wannabe who is still asking about flight schools....!!!!!
I just don't know what to say to a Wannabe who is still asking about flight schools....!!!!!
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Air India losses more than $1bn
Troubled national carrier Air India has reported a net loss of 55.5bn rupees ($1.2bn; £719m) for the full-year to the end of March.
The loss was due largely to a 12% drop in revenue, from 152.5bn rupees to 134.8bn rupees, as a result of falling passenger numbers.
Last month, the Indian government agreed to inject 53bn rupees into the carrier to help keep it in business. Global airlines are struggling with falling traffic during the downturn.
The International Air Transport Association (Iata) has forecast losses of $11bn across the whole industry for 2009.
Air India has been told by the Indian government to cut costs dramatically as a condition of receiving the state aid. This could prove difficult, as hundreds of pilots threatened to strike in September to protest against the airline's plans to cut pay incentives. The strikes were called off after the government intervened.
The loss was due largely to a 12% drop in revenue, from 152.5bn rupees to 134.8bn rupees, as a result of falling passenger numbers.
Last month, the Indian government agreed to inject 53bn rupees into the carrier to help keep it in business. Global airlines are struggling with falling traffic during the downturn.
The International Air Transport Association (Iata) has forecast losses of $11bn across the whole industry for 2009.
Air India has been told by the Indian government to cut costs dramatically as a condition of receiving the state aid. This could prove difficult, as hundreds of pilots threatened to strike in September to protest against the airline's plans to cut pay incentives. The strikes were called off after the government intervened.
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Reading this thread is so extremely depressing for someone who is looking for that first aviation job. I finished my flight training from zero to FAA issued CPL + CFI about a year ago. Now I started thinking about converting it to the fATPL except you guys just bursted my bubble.
I guess airline industry in EU is not doing any better than the one in the US.
Fortunately, I was able to manage to put myself in ONLY $40k debt...
Is there any hope for wannabes like me in the future?
I guess airline industry in EU is not doing any better than the one in the US.
Fortunately, I was able to manage to put myself in ONLY $40k debt...
Is there any hope for wannabes like me in the future?
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To add to spider_man post.
Kingfisher seeking £400 million private equity infusion
India's tough aviation market has been hard on Kingfisher. In the three months ending 30 September, the carrier posted a net loss of 4.19 billion rupees ($89 million) compared to a net loss of 4.83 billion rupees in the corresponding period a year before.
http://www.flightglobal.com/articles...-infusion.html
Kingfisher seeking £400 million private equity infusion
India's tough aviation market has been hard on Kingfisher. In the three months ending 30 September, the carrier posted a net loss of 4.19 billion rupees ($89 million) compared to a net loss of 4.83 billion rupees in the corresponding period a year before.
http://www.flightglobal.com/articles...-infusion.html
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British Air, Iberia Boards Consider $7 Billion Merger
If BA & Iberia get their act together .....
You know what that means for job "synergy" down the road.....
British Air, Iberia Boards Consider $7 Billion Merger (Update2) - Bloomberg.com
You know what that means for job "synergy" down the road.....
Nov. 12 (Bloomberg) -- British Airways Plc and Iberia Lineas Aereas de Espana SA are holding board meetings today to consider a $7 billion merger proposal, the carriers said.
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10 months from now. BoE base rate to be below 4% for at least 3 years.
WWW - as a former market insider I find your investment strategies very interesting to say the least
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Easyjet sees profits drop by 50%
Budget airline Easyjet has reported a big fall in full-year profits to the end of September, after the rising cost of oil pushed up fuel costs.
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Japan's economy slides into deflation
Should we be worried about deflation?
Japan's economy slides into deflation - Times Online
]Japan's economy has officially plunged back into deflation, condemning its struggling companies to a purgatory of falling prices and setting up a potentially explosive collision between the Finance Ministry and the Central Bank.
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Well as a wannabe who hasn't kept an eye on the industry for the past year knowing full well it would be downright depressing, I can't say I'm glad to have popped in for a cuppa today!
This economic depression is certainly not over yet and my sympathy goes out to all those new grads looking for a job, and those who are being laid off. In the mean time, I think I'll just go throw myself off a cliff with a hang glider... at least the oil prices won't have an effect! What do you think people would pay for a flight accross the channel lol. Business opportunity here.. any investors?!
Failing that, if everyone joins the Zeitgiest Movement, we could all be flying space ships before we retire
This economic depression is certainly not over yet and my sympathy goes out to all those new grads looking for a job, and those who are being laid off. In the mean time, I think I'll just go throw myself off a cliff with a hang glider... at least the oil prices won't have an effect! What do you think people would pay for a flight accross the channel lol. Business opportunity here.. any investors?!
Failing that, if everyone joins the Zeitgiest Movement, we could all be flying space ships before we retire
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Bmi...
Announced today: Link to BBC News Website
Quoting K.Whyjelly from another forum -
Quoting K.Whyjelly from another forum -
...in 2010 a total of nine mainline aircraft are surplus to requirements compared to 2009. This includes two of the five Embraers operating on mainline routes that will be returned to bmi regional. Leases will not be extended on aircraft when they expire in the first half of 2010, including two of the three long haul Airbus A330 aircraft.
79 Captains, and 50 F/O's to go. 600 jobs to go in total
I would imagine all the Captains in BMI mainline would each have in excess of 10,000 easily and FO's 6,000. Some would have more than double that.
Wannabes need to calculate the time needed until the industry stops shedding jobs and ADD to that the time until the pool of unemployed experienced pilots dries up. Quite some time I contend.
Its this winter and next which was always going to be the grimmest of times. The 1990 recessionary history showed the major airline failures and mass pilot unemployment came in the years AFTER the recession was over. With 2010 just weeks away I feel my prediction made at the start of the year that it would be 2012 until recovery was wildly optimistic.
We've got the tax rises and the public sector redundancies to get past yet.
2014 it is.
WWW
Wannabes need to calculate the time needed until the industry stops shedding jobs and ADD to that the time until the pool of unemployed experienced pilots dries up. Quite some time I contend.
Its this winter and next which was always going to be the grimmest of times. The 1990 recessionary history showed the major airline failures and mass pilot unemployment came in the years AFTER the recession was over. With 2010 just weeks away I feel my prediction made at the start of the year that it would be 2012 until recovery was wildly optimistic.
We've got the tax rises and the public sector redundancies to get past yet.
2014 it is.
WWW
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Both Dan Air and Air Europe failed sometime after the early 1990's downturn (a downturn that was no where near as bad as the current situation).
At LGW in those days the question was, " what do you say to a 10,000 hour airline captain? Big Mac and fries please"
There were masses of high time pilots out of work.
I have no doubt the same fate awaits this time.
My bet is bmi will shed more jobs, the BA & IB merger will bring some interesting "synergies". The UK Charter market will shed more jobs. Throw in couple of extra failures and bingo, carnage.
It will end in tears.
If you are still daft enough to borrow money to go flying in the current situation you deserve no sympathy, when you end up in mega debt with no ability to repay the funds.
Lets just hope we don't get another 9/11 to add to the situation.
Oh and by the way, I understand Japan Airlines narrowly avoided going bumb the other day.
At LGW in those days the question was, " what do you say to a 10,000 hour airline captain? Big Mac and fries please"
There were masses of high time pilots out of work.
I have no doubt the same fate awaits this time.
My bet is bmi will shed more jobs, the BA & IB merger will bring some interesting "synergies". The UK Charter market will shed more jobs. Throw in couple of extra failures and bingo, carnage.
It will end in tears.
If you are still daft enough to borrow money to go flying in the current situation you deserve no sympathy, when you end up in mega debt with no ability to repay the funds.
Lets just hope we don't get another 9/11 to add to the situation.
Oh and by the way, I understand Japan Airlines narrowly avoided going bumb the other day.
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I feel my prediction made at the start of the year that it would be 2012 until recovery was wildly optimistic.
... but sadly I suspect you are right. Have you noticed that there have been far fewer people disagreeing with you of late?
A Pyrrhic victory in more ways than one.
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Just to bring a point up for discussion, and hating to be one to go against the big guns on here, but how long can the market sustain the hiring that is going on at the higher levels? The number of ads for crews with high time on type, jet time etc has been going ballistic for a while now.
Or is it because of the areas concerned, China/Asia/Middle East that its only a trickle that actually get there to fill those positions?
Or is it because of the areas concerned, China/Asia/Middle East that its only a trickle that actually get there to fill those positions?
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If we include the demise of XL, Silverjet and Zoom in 2008, we must be getting close to 1,000 experienced jet pilot job losses in the UK alone following this announcement
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With events in the Gulf (effectively Dubai government default) it is optimistic to expect that this will not have ramifications for Emirates..... how much money on a merger of Emirates/Ethiad within the next 2 years as Abu Dhabi looks to asset strip Dubai??.... why do you need 2 big airlines with bases 100km apart.... the news just keeps getting worse and worse for the industry. 
