BMI
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Interesting figures really, so with losses of £731 million plus an unwilling purchase price of £352 million this means that BMI has cost Lufthansa shareholders over a BILLION quid in 3 years.
That is a staggering performance by any measure. There is very little chance of turning such a performance around, and certainly not in the economic turbulence we are flying through right now. I realise that inkjet thinks I am just some kind of wet blanket who delights in negativity, but nothing could be further from the truth.
I find it desperately sad that a company with such a long history should find itself in today's situation.
That is a staggering performance by any measure. There is very little chance of turning such a performance around, and certainly not in the economic turbulence we are flying through right now. I realise that inkjet thinks I am just some kind of wet blanket who delights in negativity, but nothing could be further from the truth.
I find it desperately sad that a company with such a long history should find itself in today's situation.
Join Date: Oct 2003
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G-AWZK, I agree with you, I hope I'm wrong and that something can be done but I think the downfall of BMI was trying to be all things to all men. You can't be regional, low cost, full service, short haul and long haul all at the same time. In doing so, the brand became confused and diluted to would be passengers, who were seeing strong new brands like Easyjet, Flybe and Jet2 building.
I hate to say it but Air Berlin appear to have fallen into exactly the same hole. Having tried to do long haul, short haul, low cost and regional, they too are now losing bucket loads of cash....the difference is that if they act quickly and decisively they will be able to turn it around. I'm just not sure that BMI can.
I hate to say it but Air Berlin appear to have fallen into exactly the same hole. Having tried to do long haul, short haul, low cost and regional, they too are now losing bucket loads of cash....the difference is that if they act quickly and decisively they will be able to turn it around. I'm just not sure that BMI can.
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JobsaGoodun, Noting all you say I'm sure WW is aware of BMI's financial history. Yet he keeps re-stating his interest to buy. He obviously wants the slots but not the company per se. How he could engineer this I really don't know.
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MrBendip, you're right but WW knows that LH's options to dispose of BMI are very limited. Given how precious LHR slots are, ordinarily BMI should have been a dream ticket for access into the prized LHR and so I would expect BA to be very interested in helping LH offload BMI......however even WW will only do this if the price/deal is right.
WW holds all the cards and knows that when it comes to the slots, he can either pick up BMI for the right price now, or alternatively he can pick up the slots at a later date. WW is in no rush and perhaps he knows that BA is one of the very few, possibly the only option that LH has left.
WW holds all the cards and knows that when it comes to the slots, he can either pick up BMI for the right price now, or alternatively he can pick up the slots at a later date. WW is in no rush and perhaps he knows that BA is one of the very few, possibly the only option that LH has left.
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Jobsagoodun,
The downfall of BMI can be laid squarely at one door; the previous owner.
Lufthansa compounded the situation by not appointing a vicious axeman to sort the organisation out. WPS spiked a previous attempt to sell off Regional at the Eleventh hour a couple of years ago. His personality wasn't forceful enough to push through change, and financial reporting throughout the group remains pitiful (and believe me I am being charitable here).
I won't even go into some of the appalling wastes of money throughout the organisation - which individually don't amount to huge sums, but combined throw away millions each year.
The staff have been the saving grace of the business, but there is only so much that frontline staff can do to coverup management incompetence or lack of action. Management only started a review of the business 6-8 weeks ago. Far too little far far far too late.
Be in no doubt, we are now witnessing the end game for bmi.
The downfall of BMI can be laid squarely at one door; the previous owner.
Lufthansa compounded the situation by not appointing a vicious axeman to sort the organisation out. WPS spiked a previous attempt to sell off Regional at the Eleventh hour a couple of years ago. His personality wasn't forceful enough to push through change, and financial reporting throughout the group remains pitiful (and believe me I am being charitable here).
I won't even go into some of the appalling wastes of money throughout the organisation - which individually don't amount to huge sums, but combined throw away millions each year.
The staff have been the saving grace of the business, but there is only so much that frontline staff can do to coverup management incompetence or lack of action. Management only started a review of the business 6-8 weeks ago. Far too little far far far too late.
Be in no doubt, we are now witnessing the end game for bmi.
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I'm not sure it's the end game as yet. There's a whole lot of shouting to be done!
Nobody outside of the Lufty group board room (and I'll bet most of them don't know yet either) what is going to happen. There are of course plenty of options. Sell, shut down, break up or do nothing.
My own personal opinion (and I stress that this has no fact anywhere near it) is that a break up of the group is most likely, though what will mean I have no idea. A sale of regional would plug the hole for a couple of weeks. A sale of Baby I see as more difficult.
Mainline is where the major losses are coming from, but then again, it's also where the main value is.
So the lesson from this, is that no-one knows. All the rest of us at bmi can do is to keep on doing the best we can and wait for a decision to be made. I don't like it, but what else can you do?
I just hope someone makes a decision soon, because this uncertainty is not helping one little bit. Staff are miserable and it's absolutely paralysing the decision making.
Lufty got sold a pup, but they need to decide whether they want it or not. If not, then get on with it. If they do, then get on with it.
Destroying bmi would be a heinous crime considering the fantastic history that it has and the still loyal (sometimes inexplicably) following from passengers, it would also be massively embarassing for Lufthansa, but at the end of the day money talks.
What will be, will be. Depressing, but ultimately true.
Nobody outside of the Lufty group board room (and I'll bet most of them don't know yet either) what is going to happen. There are of course plenty of options. Sell, shut down, break up or do nothing.
My own personal opinion (and I stress that this has no fact anywhere near it) is that a break up of the group is most likely, though what will mean I have no idea. A sale of regional would plug the hole for a couple of weeks. A sale of Baby I see as more difficult.
Mainline is where the major losses are coming from, but then again, it's also where the main value is.
So the lesson from this, is that no-one knows. All the rest of us at bmi can do is to keep on doing the best we can and wait for a decision to be made. I don't like it, but what else can you do?
I just hope someone makes a decision soon, because this uncertainty is not helping one little bit. Staff are miserable and it's absolutely paralysing the decision making.
Lufty got sold a pup, but they need to decide whether they want it or not. If not, then get on with it. If they do, then get on with it.
Destroying bmi would be a heinous crime considering the fantastic history that it has and the still loyal (sometimes inexplicably) following from passengers, it would also be massively embarassing for Lufthansa, but at the end of the day money talks.
What will be, will be. Depressing, but ultimately true.
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IAG buy bmi slots
Thsi should keep bmi alive longer. Let's guess at £10 million per pair.
News Release
London Heathrow Slot Purchase
RNS Number : 8080O
International Cons Airlines Group
23 September 2011
LONDON HEATHROW SLOT PURCHASE
IAG has approved the acquisition by British Airways of six daily slot pairs at London Heathrow from bmi British Midland International.
The slots will be used by British Airways from late October 2011 with the airline looking to expand both its longhaul and shorthaul network at the airport
News Release
London Heathrow Slot Purchase
RNS Number : 8080O
International Cons Airlines Group
23 September 2011
LONDON HEATHROW SLOT PURCHASE
IAG has approved the acquisition by British Airways of six daily slot pairs at London Heathrow from bmi British Midland International.
The slots will be used by British Airways from late October 2011 with the airline looking to expand both its longhaul and shorthaul network at the airport
e28 driver
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G-AWZK has made the most insightful post here in recent times. There's a lot more that could be said, but at the end of the day the bmi staff are a bit like the people of Greece in that no matter how much they protest they are probably going to pay the price for the actions (and inaction) of others.
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BA buy BMI slots
Well that pretty much sows up BMI's future now doesnt it!
Lufty sells some slots gets some quick cash. BA probably now have what they want or would forget the other slots unless sold dirt cheap.
BMI's value now practically worthless. Smashing...
Lufty sells some slots gets some quick cash. BA probably now have what they want or would forget the other slots unless sold dirt cheap.
BMI's value now practically worthless. Smashing...
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What would BA do with BMI? Certainly they'd buy it for the slots - but slots that aren't used are forfeit fairly quickly, I think, right? So they'd have to buy and absorb bmi, as they wouldn't be in a position to operate those slots immediately. An added impact of this is that I suspect that bmi pilots are still cheaper than ba pilots (cost saving) although bmi cabin crew are almost certainly more expensive than the recent round of ba cabin crew on MF.
It would actually be in the interests of the work force for BA to move quickly to buy the whole lot, as they would almost certainly have to start off by being absorbed in this way - in other words, job security at least in the short term, and probably protected terms and conditions as well. BA would be buying it in the knowledge that it was losing money, but on the basis that within three years, the money they could make by getting another 11% of slots at LHR, with the additional leverage of their position at LHR and their much better brand identity. (Think about easyjet filling up aeroplanes with high density seating on routes that GB was losing money on).
Incidentally, I wouldn't pay too much attention to the losses made prior to Lufthansa. The airline was largely owned by Michael Bishop over that period of time, and he didn't seem to be noticeably sliding down the Rich List. In other words, whilst from a declared accounts point of view, it "wasn't making money", it was actually doing okay. In particular, post Star Alliance, with Lufthansa underwriting losses that mainline made, what was the point in that part of the company declaring a profit? It would just reduce the income to the group.
It would actually be in the interests of the work force for BA to move quickly to buy the whole lot, as they would almost certainly have to start off by being absorbed in this way - in other words, job security at least in the short term, and probably protected terms and conditions as well. BA would be buying it in the knowledge that it was losing money, but on the basis that within three years, the money they could make by getting another 11% of slots at LHR, with the additional leverage of their position at LHR and their much better brand identity. (Think about easyjet filling up aeroplanes with high density seating on routes that GB was losing money on).
Incidentally, I wouldn't pay too much attention to the losses made prior to Lufthansa. The airline was largely owned by Michael Bishop over that period of time, and he didn't seem to be noticeably sliding down the Rich List. In other words, whilst from a declared accounts point of view, it "wasn't making money", it was actually doing okay. In particular, post Star Alliance, with Lufthansa underwriting losses that mainline made, what was the point in that part of the company declaring a profit? It would just reduce the income to the group.
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I have always said WW has only wanted the slots, read his lips. Anyone looking for a quick ticket to BA is in cuckoo land.
It now seems they are exercising the "Break-Up" option as it's the only option left to them, nobody has wanted to buy BMI now or in the past. It's almost unbelievable the blinder SMB pulled on Lufty and they are really hurting and have been for years. The interim investors report gives no clue as to what they are up to; http://investor-relations.lufthansa....R-2011-2-e.pdf
Absolutley WW holds all the cards, he can play the waiting game, he is now getting the wheat without the chaff at a pace he can handle.
How quickly this will progress is anybody's guess - a slow death surely awaits. It will be really interesting to here what any "announcements" have to say, silence is their easy option.
It now seems they are exercising the "Break-Up" option as it's the only option left to them, nobody has wanted to buy BMI now or in the past. It's almost unbelievable the blinder SMB pulled on Lufty and they are really hurting and have been for years. The interim investors report gives no clue as to what they are up to; http://investor-relations.lufthansa....R-2011-2-e.pdf
Absolutley WW holds all the cards, he can play the waiting game, he is now getting the wheat without the chaff at a pace he can handle.
How quickly this will progress is anybody's guess - a slow death surely awaits. It will be really interesting to here what any "announcements" have to say, silence is their easy option.
Last edited by MrBenip; 23rd Sep 2011 at 11:01.
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bmi has been selling slots for years - it once had around 18% of them, I think. With nobody else looking to buy at the moment, you're right - whilst it would be in the employees' interest for BA to move to buy fast, it's partly in BA's interest simply to pick up the slots at a rate they can grow into them, in the knowledge that nobody else is buying at the moment.
On the other hand, if they can pick up say 15 airbuses together with a cheap workforce for them direct from Lufthansa along with all the LHR slots, that may be in their interest as well. It just depends on the price.
On the other hand, if they can pick up say 15 airbuses together with a cheap workforce for them direct from Lufthansa along with all the LHR slots, that may be in their interest as well. It just depends on the price.
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On the other hand, if they can pick up say 15 airbuses together with a cheap workforce for them direct from Lufthansa along with all the LHR slots, that may be in their interest as well. It just depends on the price.
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bmi sell some slots to IAG
on IAG's website today...
London Heathrow Slot Purchase
RNS Number : 8080O
International Cons Airlines Group
23 September 2011
LONDON HEATHROW SLOT PURCHASE
IAG has approved the acquisition by British Airways of six daily slot pairs at London Heathrow from bmi British Midland International.
The slots will be used by British Airways from late October 2011 with the airline looking to expand both its longhaul and shorthaul network at the airport.
ends
London Heathrow Slot Purchase
RNS Number : 8080OInternational Cons Airlines Group
23 September 2011
LONDON HEATHROW SLOT PURCHASE
IAG has approved the acquisition by British Airways of six daily slot pairs at London Heathrow from bmi British Midland International.
The slots will be used by British Airways from late October 2011 with the airline looking to expand both its longhaul and shorthaul network at the airport.
ends
You must understand that "profit" and "loss" are very much a fiction depending on how the accountants choose to do the books. Identifying such opportunities are, I am afraid, part of how I spend my day.
For example, let us say that there are higher taxes on profits in Britain than in Germany. BMI may make a profit, which is then taxed at say 26%, and Lufty get the money left over after this. However if Lufty hit BMI with a "management charge" of £1m a day for the year, BMI make nothing and Lufty make more - which then might only be taxed at 13% in Germany.
This is an (over) simplistic example, but developing it is the sort of thing that an officeful of accountants and tax advisors spend their day working out. Otherwise you don't need them.
How are Lufthansa (Cayman Islands) Ltd, or Lufthansa (Lichtenstein) AG doing ?
Profit is opinion. Cash Flow is fact.
For example, let us say that there are higher taxes on profits in Britain than in Germany. BMI may make a profit, which is then taxed at say 26%, and Lufty get the money left over after this. However if Lufty hit BMI with a "management charge" of £1m a day for the year, BMI make nothing and Lufty make more - which then might only be taxed at 13% in Germany.
This is an (over) simplistic example, but developing it is the sort of thing that an officeful of accountants and tax advisors spend their day working out. Otherwise you don't need them.
How are Lufthansa (Cayman Islands) Ltd, or Lufthansa (Lichtenstein) AG doing ?
Profit is opinion. Cash Flow is fact.
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latest bmi rumour...
latest gossip is that the aircraft (airbus's) free'd up from the slot sale will go to bmi baby to replace some 737's that arent having their leases renewed.
crewed by mainline pilots as retraining baby pilots is too expensive given both company's financial position.
embraers to remain in place at heathrow to help reduce the losses, as opposed to removing them and having airbuses 30% full.
crewed by mainline pilots as retraining baby pilots is too expensive given both company's financial position.
embraers to remain in place at heathrow to help reduce the losses, as opposed to removing them and having airbuses 30% full.