bmi internal memo
Dear Colleague
We have today announced that the bmi group holding company British Midland plc has acquired control of the Heathrow-based airline British Mediterranean (BMED). Our holding company has subscribed to new shares in BMED which will effectively give bmi a 99 percent controlling stake in the airline. In due course we plan to buy out the remaining minority shareholders.
All existing non-executive directors of BMED have today resigned their positions and I have joined their board along with Sir Michael and Tim Bye. David Richardson, chief executive of BMED will retain his position and report directly to me.
We are extremely pleased with the arrangements we have been able to agree with the current board of BMED and the majority shareholders. We have been aware for some time of the opportunity that existed at BMED but have only recently been in a position to enter into a meaningful dialogue with them.
Bringing BMED into the bmi group offers tremendous opportunities for the growth and development of our businesses. It places BMED in our family of airlines where we have a significant presence and standing in a wide range of markets. We will be creating an operation with a turnover in excess of £1 billion a year. It also enables the bmi group to accelerate its strategy of expansion into the medium-haul markets of BMED. They operate to 17 destinations in 16 countries and there is no overlap with any of our own current routes. Many of the BMED destinations have restricted access to the market due to existing bi-lateral agreements that would have taken us a considerable amount of time to gain access to. There are also a number of clear business synergies between our two organisations. Like bmi, BMED is an established Heathrow-based carrier also operating Airbus A320 and A321 aircraft with IAE engines and, like our own medium-haul product, they have a two class cabin. Improved network opportunities will also exist through our respective Heathrow operations.
The opportunity for us to expand the bmi group in this way is yet again a clear vote of confidence by the shareholders and their commitment to grow our business. BMED is a first class airline whose staff have worked hard on developing an extensive route network and a reputation for delivering an excellent product and service. I look forward to working with them to rebuild their business after some difficult times over the past few months. We have already reached an agreement with British Airways that will see the franchise agreement and any other commercial agreements that exist with BMED continuing for a transitionary period until the end of the Summer 2007 timetable.
In the short term we plan for the business to continue to operate as it does today with no immediate changes to network or structure. A comprehensive review of the business will take place over the next 30 days. For those of you not too familiar with BMED here are some interesting facts about them:
• Formally known as British Mediterranean, BMED was established as a limited company in 1994 by a group of private investors
• BMED has operated as an independent franchise partner of British Airways since 1997
• BMED flies under the British Airways brand and utilises British Airways livery and flight codes. BA is the worldwide sales agent for BMED
• BMED has a fleet of three Airbus A320 and five Airbus A321 Aircraft
• The airline flies to 17 destinations in 16 countries throughout Africa, the Middle East and Central Asia and has 770 employees
We start the year off with more exciting news about the bmi group and I am sure you would wish to join me in giving BMED and their staff a warm welcome into the bmi group of airlines.
Kind regards
Nigel