Firstly, let it be known that I am not taking sides in this issue. However, I think there are a few points which need to be made.
Notwithstanding the threat of flight crew legal action, the bmi trading position does not look particularly strong. It is a sad reflection on the level of mis-trust which has built up between the management and front-line teams that efforts cannot be channeled into sorting out these issues. There is a very real risk that people think the worst fate that can befall bmi is that it doesn't make a profit this year. It isn't - and that's pretty much the syndrome which did for Pan Am and numerous other long-established airlines. The worst thing which can happen is that the airline goes bust and everyone is out of a job - and no-one (both flight crew and management) can afford to forget that.
The latest set of July passenger stats for bmi's routes look pretty awful. Domestic traffic on routes like LBA, MAN, MME is well down (20% drop) versus last year despite little capacity change (these routes were A319 last year already). On the long-haul routes, Mumbai had an average of 145 pax per flight. Given the fares war on UK-India routes, this is not a strong position. It is probable that the company's underlying profit & loss performance is poor and this has been an ongoing trend for some time. You can't afford to do this for very long before your cash reserves run low.
The employee groups do, however, have reasonable cause to level issues against the management. It is apparent that the management's strategy is not working and unless the employee groups have some involvement in that strategy, they have every right to claim that management's incompetence is costing them their pay rise. It's not for me to judge whether that pay claim is justified or not.
The business ought to have intrinsic value, with Heathrow slots and a good brand name (before the re-brand!). At the risk of throwing a hand grenade into the discussions, could I make a suggestion? Agree to accept the pay-rise this year in exchange for an equity stake in the respective parts of the business and the appointment an agreeable pilot employee representative to the boards of bmi and bmibaby.
That's certainly the way that things worked in the US market with United etc in the early 1990s. This would be divided by multiplying your salary by length of service, so a senior Captain on 20 years' service at £75k would get a far greater share than an F/O on £40k with 5 years' service. Everyone then has some clear incentive to make the business work and avoid strike action. The employee groups gain some say in how the business should be run, and you can start to move forward again.
In bmi, this could be particularly valuable - SMB owns 50% plus one share and the combined LH + SAS shares are 50% minus one share. If the employee groups had a small holding (5%) then they would effectively become the arbiters between SMB and Lufthansa / SAS in the event of any dispute, and could act in the best interests of the airline and its employee groups.
Just a thought. It might be completely untenable to SMB - but then again, such a proposal might be the lesser of two evils for him when weighing up a proposal like this versus a debilitating period of strike action which the company can ill afford on the basis of its current performance. At present, the airline is probably damned if it agrees to the pay rise - and escalates its costbase way beyond its income levels - and damned if it doesn't, in that strike action will inevitably follow. This might just be a way out for all.