BMI
Join Date: Apr 2004
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given that baby is reported to have the lowest cost per seat kilometre in the group and regional have always made money
Regional has not made any profit in the last two financial years, but has performed by far the best of the group.
I don't think there is a quick fix, it's a case of are LH wiling to play and pay for the long game? I think they will LHR is slot restricted and long term that's where the money is, I think baby will evolve and do more group wise and regional will be merged into mainline,
A more likely scenario is that regional is sold off, baby is closed down, some slots at Heathrow are sold and significant downsizing of mainline. Think about things from a business perspective rather than the glory days of Derby Airways.
Lufthansa's CFO ruled out putting bmi into insolvency proceedings but did say on the conference call earlier today that slot leasing was definitely the type of option which they were considering to mitigate losses at bmi.
Join Date: Feb 2001
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Has anyone actually read what it states in the interim report about BMI...
http://investor-relations.lufthansa....R-2011-2-e.pdf
The crises in North Africa and the Middle East continued to have
a severe impact on the second quarter result posted by British
Midland. At EUR 396m, revenue was down 5.0 per cent on last
year. The operating result came in at EUR – 120m (previous
year: EUR – 93m).
British Midland consistently upheld its strategy of replacing lossmaking
routes on its domestic market with profitable services
to neighbouring countries and medium-haul routes, therefore
closing its base in Glasgow in the second quarter. In addition to
this, the decision was taken to close bmibaby’s bases in Manchester
and Cardiff when the 2011 winter flight timetable comes
into effect. Instead, new services from London Heathrow to
Casablanca,Marrakesh, Bergen, Stavanger and Basel will be
included in the flight plan.
Flights to Tripoli remain suspended throughout the summer flight timetable. It has also been necessary to cancel some flights to Damascus due to the unrest in Syria.
In the UK home market, the new set of fees introduced by
the operator of London Heathrow Airport will further drive up
expenses for flights in the future. British Midland has filed a complaint
against the new regulations with the Civil Aviation Authority.
An additional project has been initiated as part of the strategy process
to achieve the airline’s goal of medium-term profitability. This aims to sharpen the company’s focus and thereby improve its earnings position. A sales and marketing initiative was also launched. However, a negative operating result is still expected for 2011. Alongside negative market conditions, this is due to
high anticipated fuel costs based on forecast price trends and
British Midland’s relatively low level of hedging by Group standards.
In the light of the ongoing difficulties in British Midland’s key
markets, an improvement on last year’s operating result looks
unlikely at present.
Some statistics
Passenger numbers - 6.6%
Employees + 2.1%
Revenue -5%
http://investor-relations.lufthansa....R-2011-2-e.pdf
The crises in North Africa and the Middle East continued to have
a severe impact on the second quarter result posted by British
Midland. At EUR 396m, revenue was down 5.0 per cent on last
year. The operating result came in at EUR – 120m (previous
year: EUR – 93m).
British Midland consistently upheld its strategy of replacing lossmaking
routes on its domestic market with profitable services
to neighbouring countries and medium-haul routes, therefore
closing its base in Glasgow in the second quarter. In addition to
this, the decision was taken to close bmibaby’s bases in Manchester
and Cardiff when the 2011 winter flight timetable comes
into effect. Instead, new services from London Heathrow to
Casablanca,Marrakesh, Bergen, Stavanger and Basel will be
included in the flight plan.
Flights to Tripoli remain suspended throughout the summer flight timetable. It has also been necessary to cancel some flights to Damascus due to the unrest in Syria.
In the UK home market, the new set of fees introduced by
the operator of London Heathrow Airport will further drive up
expenses for flights in the future. British Midland has filed a complaint
against the new regulations with the Civil Aviation Authority.
An additional project has been initiated as part of the strategy process
to achieve the airline’s goal of medium-term profitability. This aims to sharpen the company’s focus and thereby improve its earnings position. A sales and marketing initiative was also launched. However, a negative operating result is still expected for 2011. Alongside negative market conditions, this is due to
high anticipated fuel costs based on forecast price trends and
British Midland’s relatively low level of hedging by Group standards.
In the light of the ongoing difficulties in British Midland’s key
markets, an improvement on last year’s operating result looks
unlikely at present.
Some statistics
Passenger numbers - 6.6%
Employees + 2.1%
Revenue -5%
Join Date: Feb 2001
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The increase in employee's is down to LH & Austrian ground staff at LHR transferring to bmi, who are now handling all three companies movements at LHR.
BHD-STN having moved to twice daily is making money.
bmibaby aircraft are old, but younger than LH own fleet of 737/5 or Jet2 fleet of classic 737, no investment in fleet renewal is required other than the replacement of the oldest with newer leased aircraft. 2015 may raise some issues but even that is far from certain and in any event 4 years away
Dub night stopping is cheaper than a base, no base managers, office cost, less sickness less crews required.
Regional turn away a lot of 3rd party work due to lack of airframes.
If there were quick answers, WPS would have done them by now! oil & the Arab spring lay at the route of both bmi & baby's problems.
BHD-STN having moved to twice daily is making money.
bmibaby aircraft are old, but younger than LH own fleet of 737/5 or Jet2 fleet of classic 737, no investment in fleet renewal is required other than the replacement of the oldest with newer leased aircraft. 2015 may raise some issues but even that is far from certain and in any event 4 years away
Dub night stopping is cheaper than a base, no base managers, office cost, less sickness less crews required.
Regional turn away a lot of 3rd party work due to lack of airframes.
If there were quick answers, WPS would have done them by now! oil & the Arab spring lay at the route of both bmi & baby's problems.
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I think G-AWZK is right in that LH must be pulling their hair out over this dismal set of figures, but I can't see them taking his advice and pulling the plug on all or parts of the group, closing baby for instance would damage the bmi brand, in part because bmibaby is so much better known than bmi or British midland which of it's self is part of the problem, at least when BA went down the low cost route it used another name unconnected with BA in GO
If one looks at the passenger numbers for the group the sector lengths of bmi v baby number of flights and load info from the CAA I would guess that over the year baby must move close to 44% of total passengers in the group, whilst he average fair will of course be far lower with baby so of course will it's non fuel costs. G-AWZK correctly points out that forth coming ageing airframe issues will require massive investment in the 737 fleet if the leases are extended, but unlike Jet2 ( who own most of their classic, but will I guess have done less cycles?) bmi can return them to the lessor without having to fund any investment, it's reported elsewhere that all of the 737 fleet is leased with expiry prior to 2014, so I would suggest that a slow reduction in fleet size is the more likely option rather than out right closure.
I think it's unlikely that we will see any knee jerk reaction from LH over these results, they unlike us have access to all the data and will have known what is coming on a day by day basis more over they will know to the penny what the non fuel costs are and whether the business is trending in the right direction excluding volatile fuel cost. In the meantime 3500 people depend on this business & LH for their income & I doubt that given he scale of LH group profits the largest in Europe the shareholders will worry too much they know a very skilful management team at LH are working on this.
G-AWZK in 3-5 years the world could be a very different place and the UK economy could well be in growth again both LH & British midland have been around a long time, but without doubt the next 18 months is critical Inkjet clearly lives in a Rose tinted world but is harmless if not hapless, whilst you do seem to think that closing baby will make the group profitable which suggest that you see the FD in a different light?
If one looks at the passenger numbers for the group the sector lengths of bmi v baby number of flights and load info from the CAA I would guess that over the year baby must move close to 44% of total passengers in the group, whilst he average fair will of course be far lower with baby so of course will it's non fuel costs. G-AWZK correctly points out that forth coming ageing airframe issues will require massive investment in the 737 fleet if the leases are extended, but unlike Jet2 ( who own most of their classic, but will I guess have done less cycles?) bmi can return them to the lessor without having to fund any investment, it's reported elsewhere that all of the 737 fleet is leased with expiry prior to 2014, so I would suggest that a slow reduction in fleet size is the more likely option rather than out right closure.
I think it's unlikely that we will see any knee jerk reaction from LH over these results, they unlike us have access to all the data and will have known what is coming on a day by day basis more over they will know to the penny what the non fuel costs are and whether the business is trending in the right direction excluding volatile fuel cost. In the meantime 3500 people depend on this business & LH for their income & I doubt that given he scale of LH group profits the largest in Europe the shareholders will worry too much they know a very skilful management team at LH are working on this.
G-AWZK in 3-5 years the world could be a very different place and the UK economy could well be in growth again both LH & British midland have been around a long time, but without doubt the next 18 months is critical Inkjet clearly lives in a Rose tinted world but is harmless if not hapless, whilst you do seem to think that closing baby will make the group profitable which suggest that you see the FD in a different light?
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The maths seems simple. We have 60 aircraft and employ 3851 and carry 2.7 million pax,while German wings have exactly half and employ 1276 but carry 3.4 million.
Our ratio of employees to airframes is 64,while German wings is only 42.5.
Discuss!?
Our ratio of employees to airframes is 64,while German wings is only 42.5.
Discuss!?
Join Date: Apr 2004
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Closing bmiBaby will damage the brand?? Closing the Glasgow route did far more damage, and BA thanked them very much for it. The Baby brand is not so strong that removing it will have any significant impact.
Dont bet on it. A financial calculation can be made and if it works out cheaper to make a clean cut rather than slowly bleed to death, that is what will happen.
It doesnt take a genius to see which way things are trending - and I can guarantee that DLH have a much better idea of that than the management in Donington Hall. DLH don't do knee jerk and I would be willing to bet a beer that they have been planning a strategy for loss mitigation for a few months now. If baby can't make a success of MAN there is something significantly wrong at the core of the organisation.
Just because British Midland has been around for a long time does not give it some sort of magical protection. It has suffered years of lack of investment and poor management, and Lufthansa are now trying to make the best of what they were landed with, don't forget they did everything they could to get out of the deal with Bishop. So you are being very generous to give them 18 months to fix what is very very broken.
I am not saying any of this to be spiteful, but when it comes to running a business, sentimentality plays a very small part in any decision - if at all.
Lungi Man makes my point for me. The numbers don't lie and DLH management are more than sharp enough to make the comparison. There will be strategic changes, and sad to say, they will be painful.
I would suggest that a slow reduction in fleet size is the more likely option rather than out right closure
they unlike us have access to all the data and will have known what is coming on a day by day basis more over they will know to the penny what the non fuel costs are and whether the business is trending in the right direction excluding volatile fuel cost.
Just because British Midland has been around for a long time does not give it some sort of magical protection. It has suffered years of lack of investment and poor management, and Lufthansa are now trying to make the best of what they were landed with, don't forget they did everything they could to get out of the deal with Bishop. So you are being very generous to give them 18 months to fix what is very very broken.
I am not saying any of this to be spiteful, but when it comes to running a business, sentimentality plays a very small part in any decision - if at all.
Lungi Man makes my point for me. The numbers don't lie and DLH management are more than sharp enough to make the comparison. There will be strategic changes, and sad to say, they will be painful.
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G-AWZK
Spiteful?
You clearly have a anti- baby agenda driven in part by MAN closure, of course baby could have made MAN work, but not with two aircraft and capped at 14 there were difficult choices to make, baby base structure was devised when the fleet was growing to 21+, with 14 units having 4 or 5 bases was wrong, its clear that you lay much of the group problems at the door of baby, but having met with WPS within the last 48 hours he or LH do not see it that way.
You clearly have a anti- baby agenda driven in part by MAN closure, of course baby could have made MAN work, but not with two aircraft and capped at 14 there were difficult choices to make, baby base structure was devised when the fleet was growing to 21+, with 14 units having 4 or 5 bases was wrong, its clear that you lay much of the group problems at the door of baby, but having met with WPS within the last 48 hours he or LH do not see it that way.
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Whilst Baby is far from being out of the woods it certainly isn't as gloomy as some would have you believe.
Baby is on target to make a small operating profit this year - which is a much better turn around from loss making than Mainline.
Yes the B737 Classics are old, but the interiors are clean and functional and lease costs are much lower than a NG. Sure there are issues with continuing with the Classic - the Engineering dept is aware, management is aware but as the airframes are leased its not going to be Baby's problem when they are returned at the end of the lease. What huge investment is required from DLH to replace one leased aircraft with another?
Beats me why DLH would be considering closing down a part of the bmi group that's returning to profitability, that produces a significant revenue stream and is showing more potential for growth/profitability than some other group elements.
Or perhaps DLH aren't considering closing Baby as some would have you believe.
Me thinks a change of tippet and a new fly is required
Baby is on target to make a small operating profit this year - which is a much better turn around from loss making than Mainline.
Yes the B737 Classics are old, but the interiors are clean and functional and lease costs are much lower than a NG. Sure there are issues with continuing with the Classic - the Engineering dept is aware, management is aware but as the airframes are leased its not going to be Baby's problem when they are returned at the end of the lease. What huge investment is required from DLH to replace one leased aircraft with another?
Beats me why DLH would be considering closing down a part of the bmi group that's returning to profitability, that produces a significant revenue stream and is showing more potential for growth/profitability than some other group elements.
Or perhaps DLH aren't considering closing Baby as some would have you believe.
Me thinks a change of tippet and a new fly is required
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My dear inkjet,
Do you really think that senior management will take advice on how to run their business from an obscure part of a pilots bulletin board? Deary deary me, I have an agenda do I? Well, sorry to disappoint you but I am simply looking at the business from an outsiders point of view.
I couldn't care less about Manchester other than the management of Baby couldn't make the base a success - that to me is an indication that there is a fundamental problem in the core of the baby organisation.
If you think I am blaming bmi's problems on baby, then you are unable to read what I have written. The bmi group are in the position it is now because of poor management, years of lack of investment and an inability to be flexible enough to adapt to a changing environment.
Do you really think that senior management will take advice on how to run their business from an obscure part of a pilots bulletin board? Deary deary me, I have an agenda do I? Well, sorry to disappoint you but I am simply looking at the business from an outsiders point of view.
I couldn't care less about Manchester other than the management of Baby couldn't make the base a success - that to me is an indication that there is a fundamental problem in the core of the baby organisation.
If you think I am blaming bmi's problems on baby, then you are unable to read what I have written. The bmi group are in the position it is now because of poor management, years of lack of investment and an inability to be flexible enough to adapt to a changing environment.
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The problem baby faced at MAN was that multiple operators with lower costs moved in and stifled many of the opportunities WW would/could/should have been looking at for growth. First FR, then easyJet then FR again, these are hard to compete with, additionally there is a lot of competition from Tomson, Jet2, Monarch, etc.
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Brian, yet all those airlines manage to compete against each other very well.
Your argument supports that WW performed weakly due to poor management. It didn't step up to the table.
Your argument supports that WW performed weakly due to poor management. It didn't step up to the table.
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EMA is British Midland's home base, there is a legacy loyalty inherent there. BD came to MAN quite late, re-using the old LPL-LHR flight numbers for a LHR service that was more of a slot filler at LHR to keep the slots that kept the value of the airline up. There was little market loyalty for a Midland product out of MAN, particularly that when they had built one up with long haul, they managed to shoot themselves in the foot and throw it all away. Babay never had much presence at MAN to challenge their main competitors, so if they can't make a challenge, better to retreat to your core markets. Survival will depend on whether FR make any serious inroads into Baby at EMA, given that easyJet left EMA, I wonder if local loyalty keeps them in the air? We shall see.
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EMA is British Midland's home base
There are nearly as many Ryanair based aircraft at EMA as there is in the entire baby fleet. Jet2 are more likely to present the bigger threat and FR seem to regard WW as dead man walking.
Given that there are no mainline services out of EMA anymore, is there any local loyalty to build upon? If there are significant cost savings in using LH Technics, how long will the engineering base remain at EMA?