While all eyes are on Ferrari and Force India…

There are a couple of other stories that are developing which could have a dramatic effect on Formula 1 teams, and on the sport as a whole, as the western business world continues to be troubled in these difficult economic time. It is no great surprise to see the amount of Kingfisher signage on the Force India much reduced, although Kingfisher as a brand is carefully spread between the troubled airline and the less-troubled beer company, so seeing Kingfisher on the car is not outrageous. What is noticeable is the amount of Sahara branding.

Kingfisher Airlines remains in deep trouble with today’s news being that the International Air Transport Association (IATA) has suspended the airline from its Geneva-based clearing house due to non-payment of dues to airline members. A Kingfisher spokesperson said that there is no problem and that the suspension is due to a computer glitch.

It is also reported that another four banks have decided to classify their exposure to the airline as being “non-performing assets” and cannot therefore provide any further funding until the airline begins to generate cash. There are also reports that a number of banks that are owed money by the airline will meet soon to decide what to do with the airline. The financial institutions own about 25 percent of the company, but there are all manner of guarantees and pledges that tie in more shares. In some cases they have guarantees provided by Kingfisher’s parent company UB Holdings, which could now be cashed in. For the moment, the team seems to be OK, with UB still in a position to provide funding and Sahara apparently funding the rest.

There are, of course, worries over at Enstone as well, as the team’s funding this year is going to come, to a large degree, from Group Lotus, which signed a seven-year sponsorship deal with the team, estimated to be worth $150 million. In those days Group Lotus was being fast and free with its money, which was all borrowed from Asian banks, with guarantees from the Malaysian government, which effectively owned the group through its holding in Proton. In recent days, however, Proton has been sold and rumours have kicked off that Group Lotus will be sold by the new owner DRB-Hicom. There have already been rumours that Dany Bahar is trying to find someone willing to pay $790 million for a share in the business. This is optimistic as Group Lotus has a poor record when it comes to making money and the first priority would have to be sorting out who is going to settle the debt load, as the company’s revenues are not likely to expand sufficiently for some time to rid the company of that burden. It is logical that Bahar would be looking for a buyer because the chances are that anyone else taking over the business would point him to the door marked “Exit” fairly quickly. Thus HE needs a white knight. From what I have been hearing of late Gerard Lopez, the owner of the F1 team, is also keen to buy the business, but has had trouble raising the kind of cash he needs to do that. There are probably other buyers out there, from China or the Middle East, who might like the brand value of the Lotus name. The truth is that the value of the brand really depends on the cars it is selling, although in the case of Lotus there is a large amount of value in its engineering departments, which do work throughout the automotive industry. Whatever the case, Bahar’s supporters in Kuala Lumpur will be thinning out soon as the old Proton management are likely to be moved on, notably Syed Zainal, Bahar’s number one fan. The word is that the man most likely to take over will be Nik Hamdam, DRB-Hicom’s director of automotive.

The other thing that needs to be considered is the fact that Proton currently operates its factory at around 50 percent of their capacity and so it might be a good idea for DRB-Hicom to allow its partners in the automobile world use that extra production capacity to build their cars. In the light of this it is interesting to see the Wall Street Journal reporting that a number of top-level Volkswagen executives have been in Malaysia in recent days, talking about expanding their relationship with DRB-Hicom to build cars for the Asian markets. They could also help Proton produce better vehicles.

Meanwhile in Manana, Bahrain, protesters have been in action again, this time on the streets of the city. Usually the authorities mange to keep the protests confined to outlying areas, but on this occasion the activity was downtown. The usual tear gas was used to disperse them. There are other reports that moderates are beginning to try to get the government and the opposition to start talking. Trouble is increasing at the moment in the run up to the first anniversary of the start of the troubles. The fear is that the Planned Grand Prix in April will become teh focus of more trouble.