BD's financial woes; airline/slots for sale; BMI, BMI-R & baby sold?; DC conjecture
 

ATW linky

Lufthansa (LH) Group is working with British Midland (bmi) management to produce a long-term business plan that will return the UK airline to profitability.

LH executive board member and Group Airline chief officer Stefan Lauer told ATW that bmi, which is owned by LH Group, had been affected by the recent North African/Middle East crises as well as the weak UK market. Bmi reported a €63 million ($91 million) first-quarter operating loss, which followed an operating loss of €145 million in 2010, its first full year as a LH Group airline (ATW Daily News, March 21).

“There is no doubt that bmi traffic suffers because the Middle East market has broken down almost completely,” Lauer said. He added that LH Group management was working with bmi to identify a business plan. He pointed out that the carrier’s London Heathrow slots are valuable, but said, “These slots are a real asset, but slots alone don’t make a business plan. There must be a long-term solution.”

bmi is for sale
 

Weird and conflicting news coming out this week from Press listening to Lauer and Franz passing comments. German press usually double checks statements before they publish them...

Franz said that bmi remains a concern and will be tackled soon, looking for a partner to share the task, so no sell off. Lauer is saying new business plan or sell off.

Probably the individual assets are worth more than the going concern?

Ouch...

It would be difficult to know what the BD business model is other than the reduce frequencies on routes that business travellers have wanted to a point where the route is useless and then say it is unprofitable and withdraw.

If there are not enough slots at LHR then some are being used for TXL, now stand alone but initially with LH but also for VIE and GVA and MXP though the latter is about to be withdrawn.

The problems in North Africa affected one route where BD was not established and it was having to go head to head with BA, admittedly the middle east has been more troublesome but you would hope airline chiefs would know the difference.

IMO it's time that BD focussed on providing short haul services to European cities from LHR where there is currently no *A service and they provide a proper interline service for *A long haul rather than tinkering around with bits of routes that are neither one thing nor another. It feels like succeed or die time and if the last ten years are anything to go by it will be the latter. How any airline that used to be good could lose the plot so much is beyond me.

Hopefully when things calm down in the Middle East BMI will start to make a profit again . It certainly has been bad luck after bad luck for them...

It hasn't been "bad luck": it's been bewilderingly bad route selection. This has been airline which seems to have fought tooth and nail to ensure that a core of business travellers would never stick to its network/given route.

Totally agree, when, about 10/12 years ago they advertised the airline as 'The airline for Europe' they had a small but decent European network – Rome, Madrid, Paris, Amsterdam, Milan, Nice etc, with decent frequencies and a good quality product, but they never seemed to give routes a chance to establish, pulling them after a few months rather then giving them a decent time to grow.

Low cost carriers dominate that market now. Theres no way bmi can make this market the core part of their business, it just wouldn't work with the cost structures of flying from Heathrow.

I feel that the only way bmi can survive at heathrow is to introduce a longhaul network large enough to compete with the big boys with the help of a very small shorthaul presence to help feed. It would be a pretty big risk for LH to make such a substantial investment but they are running out of ideas and shorthaul options seems to be at a point of exhaustion now.

What would feed a BD longhaul network at LHR even if they could establish it? They don't have enough slots to create a substantial presence anywhere long haul and they have the wrong fleet to do it. Changes need to happen at BD soon or there will be nothing left. They have never seemed to work as part of the *A and have pursued an almost maveric approach to network development or more often reduction which has been no use to anyone particularly their own business success.

I agree with others, they need to focus on *A activity and connections in to places where *A have no link to LHR as they did once. Places like FCO, LIN, MAD, BCN, AMS & PRG all spring to mind. IIRC FCO lasted about four months and was just establishing nicely when pulled and it was probably the beginning of the mad reductions in frequency on routes which made them unattractive to business travellers. The service to MAD was a good one until it was reduced and reduced to one a day where it was useless to a business traveller or someone looking to connect to long haul at which point it was filled with people who were only willing to pay the cheapest fare and strangely enough they found it didn't make any money so pulled that too.

Create a reasonable C service, like they used to have before Bento boxes, an above average Y service, good interline timings with long haul *A arrivals and departures and decent frequencies throughout the day and they will get business. Four rotations each day per route with an aircraft night stopping in each location so there is an early departure to LHR and they might just be successful. It must be worth a try given the choice is the current downwards spiral. They used to boast about arriving at LHR earlier than the competition from night stops until they pulled them all.

For too long they have seen their competitors as the low costs and in reality they are not, their competitors are other carriers operating at LHR. I would suggest that people who look for an FR flight for next to nothing wouldn't even look at a service from LHR but BD have pursued this model of racing to the bottom in terms of standards and cuts to a point where an airline that was once my first choice would now be my last. They also need to get rid of the stupid BMI brand which is meaningless and identified with nothing.

As the line was at the time of a particularly major enhancement to services 'used to fly bmi' but it's not a joke any more, it's what the vast majority of people would say.

Also in Norwegian newspaper today that LH want to get rid of BD, but gives no further information about sources.

Purely out of interest, what would happen to *A redemptions booked and confirmed through BMI if (a) they were sold off and (b) if they were liquidated?

bmi will hit the buffers long before the Middle East is sorted out so they need to come up with another plan. They need to spread their operations over a wider range of risks. The problem now is that they've cut back so much that any spreading is going to lead to routes that are so thin they become useless. Another partner would certainly be good. Indeed anything that dilutes LH management's involvement would be good. The idea of LH management working with bmi to solve their problems just makes me laugh. LH is the root of the problem.

So you mean to say LH should just send a cheque to Donnington Hall each week and let them do whatever? :confused: