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 2010.
BMI burned through more than £90 million in cash during the year, leaving it with £40.7 million, and the company's auditor has expressed reservations about the airline's ability to continue as a going concern, highlighting its heavy losses.
In the year to 31 December 2008 the airline posted an operating loss of £135 million ($225 million) before exceptional items deepened the figure to nearly £160 million.
BMI's pre-tax and post-tax losses amounted to £157.3 million and £148.1 million respectively. The airline's preliminary figures, released in March, put the after-tax loss at £100 million.
The airline says it has developed a recovery plan which aims to return it to profit by the end of 2012, which has been discussed with parent company Lufthansa.
BMI's forecast shows that it needs £190 million in additional funding to 31 October next year. Lufthansa has agreed to provide a secured loan of £95 million.
"The directors are confident that the remaining funding requirement for the next 12 months can be covered by additional funding from Lufthansa," says a directors' statement in the BMI accounts.
But it points out that Lufthansa is under no obligation to supply this funding and, should it decline, BMI would attempt to make up the shortfall by selling slots. It has a portfolio of slots at London Heathrow which it values at £616 million.
"Negotiations are significantly advanced with several airline groups," it says. While the carrier concedes that its financial position is a concern, the directors say that the state of these talks, and Lufthansa's commitment, give a "reasonable expectation" that BMI has "adequate resources to continue in operational existence for the foreseeable future".
A spokesman for BMI says: "The statement in the accounts clearly states that the directors and auditors believe that the company can meet its financial obligations going forward."
BMI's turnover for the year reached £1.04 billion, of which £433 million was derived from UK domestic services. European operations accounted for £307 million, while £231 million came from Middle Eastern, African and Asian flights. Its Americas services contributed £75 million.