Bixi facing financial problems, but will continue

It recently came out that Bixi - the company that manufactures bikes for the bikesharing systems of DC, NYC and Chicago - is having cash flow problems.

Réal Ménard, the executive committee member responsible for the transportation dossier, said that he is concerned about Bixi's current cash flow problems, but that the program is not facing bankruptcy, and added that bikes will be back on the streets next season.

Ménard said these financial difficulties are due to outstanding payments from U.S. cities that use the bike-sharing program. 

Jean-François Lisée, the provincial minister responsible for Montreal, said Bixi was a valuable service and deserved to be helped out. He said the Quebec government is working on a $5-million bridge loan for the program.

"It's a success in Montreal. It's an international success but we seem not to have been able in the last few years to come up with a business plan that makes this a sound and permanent success in Quebec," Lisée said.

Other reports are more dire, but even if Bixi goes bankrupt, that doesn't mean that new bikes or stations will become unavailable. We still have twinkies after all.

Now the company is tens of millions of dollars in the red: $42 million in debt, with an operating deficit of $6.5 million.

"We believe some cities owe money to Bixi and we will receive money coming from the United States soon," Menard said.

Bixi is scheduled to expand into four more cities in 2013 and 2014

Another option being discussed, and preferred by mayoral candidate Marcel Coté, is to transfer Bixi to private investors.

"They'll operate it. It's a great concept, it's a great product, it's undercapitalized and it tells you one thing: cities should not be in commercial business," said Coté.

Comments

[Kolohe]

This seems like pretty gross mismanagement, given the trajectory of demand for their product.

[Mike]

Maybe this will finally be the incentive for cities to seriously consider alternative vendors in a competitive bid process rather than just jumping on the bixi bandwagon when they want bike share. The industry really needs some competition to drive innovation and performance.