[bmibmed]

Update from Wolfgang Prock-Schauer
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Dear Colleagues,



We understand that the future of the company is a concern for all of you. Now that we have filed our annual accounts for 2010 with Companies House, I wanted to provide you with more details about this and also an update on the proposed sale of British Midland Ltd to IAG.



1. Filing of our accounts 2010



The accounts were filed on a going concern basis and the directors have provided a ‘going concern’ statement. This statement confirms that we are satisfied based on a review of all circumstances and a prudent assessment of the financial position of the company, that the company can continue in business for the foreseeable future. The auditors have approved the director’s report.



2. The proposed sale of British Midland Ltd to IAG



Following my previous message to you regarding the signing of the purchase agreement (SPA) for 100% of the shares of British Midland Ltd to IAG, the completion of the transaction is expected by quarter one 2012 and is subject in particular to achieving competition clearances. During this pre-completion phase, bmi has certain obligations. We need to carry on our business in the normal course, consistent with past practice. This means for example that we have the resources available to operate the planned summer 2012 schedule, that we carry on with our sales and marketing activities in the ordinary course and ensure that we continue operating the slots associated with bmi.



For anything that is not of a routine or normal course, we need to comply with an approval process. This refers for example to capital investment, entering into contracts above a certain threshold, changes in industrial agreements and in financial and corporate policies.



These are only a few examples and not the full list. The senior management team have been given the full information and a process has been set up with the legal teams to ensure compliance. Please consult your manager if any decisions need to be taken outside the normal course of business.



For the time until completion of the transaction, we will continue to treat BA / IAG as a competitor of ours.



3. bmi Regional and bmibaby



We are actively pursuing the option to sell bmi Regional and bmibaby before completion.



With bmi Regional we have concluded an agreement with a UK based investor group which is subject to certain pre-conditions which are to be fulfilled.



With respect to bmibaby there are several interested parties and we are in the process of identifying the preferred buyer and aim to conclude a purchase agreement as soon as possible.



4. Conclusion



Taking into account the current economic climate and the difficult market position, the sale of bmi to IAG is the most sustainable solution for our company. It is crucial that we fulfil all our pre-completion obligations, have all the resources available to operate our planned schedule, and continue with our safe and customer focused operation.



We understand that you have many questions and concerns. Please be assured that we are giving you as much information as we can and we will continue to keep you updated.



With best regards,



Wolfgang Prock-Schauer