BMI has net liabilities of £362m; to make £145m loss
14.11.11
BMI has net liabilities of £362m and is expected to make a £145m operating loss this year. The scale of the financial problems at the parent of the BMI Mainline, BMI Regional and bmibaby airlines is detailed in an information memorandum circulated to bidders and seen by the Telegraph newspaper.
The document has been prepared by Morgan Stanley, the adviser to BMI parent Lufthansa. The German carrier is said to be 'desperate' to offload a business that is on course for almost £650m operating losses in four years.
IAG, the parent of British Airways and Iberia, is the front-runner to buy BMI, whose main attraction is its ownership of 8.5 percent of the take-off and landing slots at Heathrow. However, the document highlights the complexity of valuing the business, which has haemorrhaged cash ever since Lufthansa was forced to buy the company in 2009 when its former owner Lord Glendonbrook exercised a put option that saw him gain £223m. Since then Lufthansa has been forced to inject a further £151m of capital via a debt for equity swap and provide a £248m intra-group loan.
The prized 65 daily slot pairs are in the BMI balance sheet for £345m – although it has since sold six of them to IAG for a rumoured £50m. The other main assets, alongside what Morgan Stanley calls the airline's ‘highly attractive market positioning in London’, are £140m of ‘aircraft-related assets’ and a stake in the NATS air traffic control operator, valued at £41.7m.
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