Nigel Turner Announcement
1
6 March 2007
Dear Colleagues
At the time of the announcement of the acquisition of BMED by bmi I made a
commitment that a comprehensive review of the business would take place over a 30
day period. This initial review is now complete and I want to share with everyone at
both BMED and bmi our conclusions and what the plans are for the coming months.
In assessing our investment in BMED before the decision to acquire our 99 per cent
shareholding it was clear that we could only justify such a major investment if we
were able to significantly reduce the cost base. This had to be achieved whilst still
maintaining revenue and developing and enhancing the network from Winter 2007. I
therefore set the review team the task of looking at the possibility of moving towards
a fully integrated operation as soon as practically possible. The team met for a two day
session some ten days ago and have developed an outline plan which will be further
refined over the next few weeks.
The review process has inevitably been mainly staffed so far by bmi senior
management but has involved senior representatives from BMED including chief
executive David Richardson. The key elements of the plan are:
• We will operate as one airline - bmi - from 28 October 2007.
• Until then BMED will continue to operate as a BA franchise with no change to
routes.
• From the second quarter of this year bmi will – subject to regulatory approval
and agreement of a codeshare with BA - be selling BMED services with travel
being available from date of sale.
• By 28 October 2007
o The business will operate on a single bmi AOC (subject to CAA
approval).
o All BA livery and uniforms will be removed and all uniformed staff will
be in bmi uniforms.
o A new mid haul product combining the best of BMED and the best of
bmi will be agreed and will commence roll out across all bmi mid haul
services.
o All services will transfer from T4 at Heathrow to T1.
o The BA franchise will cease, but subject to regulatory approval, BA will
retain a codeshare facility on the former BMED routes.
o Head office functions will be absorbed by bmi and BMED’s head office
at Hetherington House will close.
• From 28 October 2007
o A gradual phased integration of the bmi and BMED flight deck and
cabin staff will commence.
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The immediate implications of the integration are that a substantial portion of the
BMED head office jobs are at risk of redundancy. However, the closure of Hetherington
House will not be immediate and will be spread over the remainder of this calendar
year. Within the rest of the BMED workforce, both in the UK and overseas, there is no
indication that any jobs will be lost with the exception of Heathrow T4. The continuity
of the BMED operation is critical and we will continue to operate all of the BMED
aircraft with BMED dedicated crews until at least 28 October. There will then be a
gradual integration of crews that will take us well into 2008 on current planning.
We will shortly be starting the formal consultation process to address any possible job
losses as a consequence of closing down BMED’s head office at Heathrow. Where job
losses at BMED are unavoidable we will be doing all possible to look at the suitability
of candidates for any vacancies that currently exist within bmi, in order to reduce the
number of compulsory job losses. With immediate effect, external recruitment in bmi
will only occur when every opportunity of redeploying affected BMED staff into
suitable available positions has been exhausted.
Specific details of the areas of BMED that are likely to be affected and the timescales
are as follows. In all cases where there is a threat of redundancy we will of course
commence the necessary period of consultation as soon as possible. This will, where
possible, be started well in advance of any minimum legislative period.
BMED Finance To coincide with the end of the BMED financial year it makes
sense to transfer all finance transactions to the bmi Oracle
financial system from 1 April 2007. Therefore all positions in the
BMED Heathrow-based finance function will end to coincide
with the end of year audit which is expected to be concluded by
May.
Therefore all jobs in the Heathrow finance function are at risk of
redundancy. None of the overseas finance jobs are affected.
We will talk to those affected by the closure of the finance
function in the near future.
BMED Commercial Further work is required on how we will integrate the
commercial activities of the one airline. However, we do not
intend to change any working practices until the Autumn when
we will be actively promoting and advertising the new bmi mid
haul network and product.
bmi does have offices in the Heathrow area. Some roles may be
transferred there and some roles may be transferred to the bmi
head office at Donington Hall.
At this stage, we anticipate retaining the bulk of the BMED
commercial team although there may be some risk of job loss
within the UK. We aim to have a formalised plan by June.
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BMED HR All BMED HR activities will be integrated into bmi and
consequently there is a risk of redundancy.
BMED Engineers Further work is required on how we will integrate the
engineering functions of bmi and BMED to facilitate one AOC for
the two companies.
Although Heathrow based engineering roles may be at risk, bmi
does have an engineering facility at Heathrow and there may be
the opportunity for jobs to be transferred there.
We aim to have a clear way forward by early June.
BMED Flight Deck There is no risk of any jobs being lost as a consequence of the
integration of BMED into bmi. As has already been stated we will
operate up to the end of the Summer timetable all of the BMED
routes and with BMED aircraft and crew.
From that point onwards there will be a gradual integration of
the two flying communities which will run well into 2008.
We plan to commence discussion with BALPA this month about
the impact on terms and conditions, rosters and seniority and
hope to have these concluded by the end of July.
We anticipate the harmonisation of standard operating
procedures to commence Spring/Summer 2007. We will be
looking to tailor the current lifestyle preference schemes to best
meet the needs of the combined community. The latter task will
occur in consultation with BALPA, for introduction as crew
integration proceeds.
BMED Cabin Crew As with the flight deck community there is no risk of any job
losses. We will operate up to the end of the Summer timetable
all of the BMED routes with BMED aircraft and BMED crews.
After that, there will be a gradual integration of the bmi and
BMED cabin staff communities.
We plan to commence discussion with CC89 this month about
the impact on terms and conditions and rosters and hope to
have these concluded by the end of July.
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BMED Management
/ admin
• Senior
management
• Airport service
admin /
management
• Inflight admin /
management
• Operations
admin /
management
• Quality &
Security
Unfortunately all of the BMED management and administration
roles in this section are at risk of redundancy. However, the
closure of Hetherington House will not take place immediately
and the process is expected to be gradual. Some positions may
be required until the end of October and some may even remain
beyond then. All Security, Quality & Safety posts will definitely
be required until 28 October and some may be required
thereafter. The integration planning process has now started and
we hope to be able to give everyone a clearer understanding of
what the integration programme will mean to them as soon as
possible.
BMED IT We anticipate that BMED will be using at least some of its
current range of IT systems until 28 October and BMED IT staff
will be needed to continue to support these systems until then.
After 28 October, we will then begin closing those BMED
systems down to enable a full integration into bmi. It is
envisioned that this process should be complete by the end of
the year.
As a consequence, we expect to retain the staff in those areas
until the end of the year.
We aim to have a clear way forward for the long term by the
middle of June.
BMED Overseas
Airports
There is no risk of any jobs being lost as a consequence of the
integration of BMED into bmi.
BMED LHR At this stage, we anticipate retaining the bulk of the BMED
Heathrow Airport T4 staff, however, there is a risk of redundancy
BMED Catering We already know that that we will not wish to make any
fundamental changes until the Autumn. At this stage we
anticipate some integration of the BMED staff into the bmi
catering team although limited redundancy cannot be ruled out.
Further work is required to decide exactly how we will integrate
the catering functions of BMED and bmi.
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I fully appreciate that this is not an easy issue for BMED staff. I have committed to
David Richardson, and repeat here, that we will deal with all issues associated with this
process in a professional, responsible, sensitive and fair manner. An initial list of
possible “questions and answers” you will have arising out of the announcement is
attached to give you as much information as possible.
We will be putting in place a series of regular communications to keep you fully
updated on what action and progress the major integration workstreams have
achieved and how it will be helping our “one business” going forward. I genuinely
believe that we can create a combined business that is better than the sum of its parts.
It is critical that we do not lose the essence of BMED in the integration process.
I trust that I can count upon your future support in achieving the integration
programme in a timely and professional manner.
Kind regards
Nigel Turner
chief executive officer, bmi