BMI

[mathers_wales_uk]

Well the answer is that they plan do add capacity at EMA allready in the public domain at least 48 hours ago. How this is achieved either by moving aircraft from other bases or by operating using Mainline fleet to add capacity as they did last year.

I doubt they would lease another aircraft

[Count von Altibar]

BA will make every attempt to secure bmi. They've made it known they're at the front of the queue if such a proposition became available & it looks like it will. Lufthansa seem more interested in central Europe and Willie Walsh will want to see off any potential opposition in his backyard. It's unlikely that Virgin will come off the winner in any of this as most of their bluster has just been wishful thinking. They seem to want bmi but only if someone else backs it, not a great deal from Lufthansa's point of view. It's a tough one to predict but I hope the staff at bmi come out with their jobs intact and a decent future.

[Flitefone]

Very Interesting

Excellent piece from yesterday's Times..BMI books open to other airlines for due diligence - see link

Crowded skies as Lufthansa opens bmi books - Times Online

[T5 Mole]

Here's more on the Times article:

Lufthansa allows due diligence on BMI; BA and Virgin sign confidentiality agreements - report

Lufthansa has given rival airlines permission to conduct due diligence on its BMI British Midland business, the online edition of The Times reported. The report did not directly attribute the claim, but cited a person close to Lufthansa, who said there are several options available. It is thought that Lufthansa’s options range from selling the UK-based regional airline outright, or integrating the business fully, the report said.

Virgin Atlantic and British Airways are thought to be among airlines to have inked confidentiality agreements relating to the sale process, the article continued.

Flybe, the regional airline, and international carriers from the US, the Middle East and the Far East are rumoured to have indicated their interest in acquiring certain BMI assets, the article said. BMI’s Heathrow airport slots are of particular interest, the item added.

Lufthansa, the listed German airline, acquired a 50% plus one share stake in BMI a couple of months ago, the article noted. It is thought that Lufthansa paid approximately GBP 230m (EUR 262m) for the stake. Lufthansa holds an 80% stake in BMI, with the remainder held by Scandinavian rival SAS.

Lufthansa refused to comment on BMI, the article said.

Industry insiders have conceded that British Airways would need to relinquish up to 50% of BMI to secure regulatory clearance for a deal, the report continued. BA would be more likely to participate in a break-up of BMI, according to analysts cited by the report. The article estimated the possible price of a full takeover of BMI at up to GBP 500m.

Virgin Atlantic is thought to be planning to merge its own long-haul business with BMI, according to the website. Such a deal would, however, necessitate Virgin founder Richard Branson raising sufficient financing for an outright takeover of BMI, the report said.

People close to Lufthansa have said the airline has no interest in holding a stake in a merged BMI/Virgin, the item added.

[Capvermell]

This was the email sent to BMI Diamond Club members last Friday by Keeley Downing confirming the cancellation of services to Venice and Palma but saying it was only "over the winter months". Now as nobody seems to actually be expecting the services to return next summer I presume that was just done out of ignorance by Ms Downing or in an attempt to soften the blow (there being no alternative now remaining from LHR to PMI and flying there with EZY from LGW or LTN not exactly being great alternatives for anyone living to the west of Heathrow in the Thames Valley area).

-------- Original Message --------
Subject: Important changes to the bmi winter schedule
Date: Fri, 4 Sep 2009 19:46:32 +0200
From: bmi Diamond Club <[email protected]>

Dear ___________

We'd like to let you know that we're making some changes to our winter schedule. Unfortunately, flights between London Heathrow and Venice and Palma will be ending on 15 November and 3 November 2009 respectively. The decision to withdraw these services over the winter months hasn't been easy, as we've operated these routes for a number of years. However, a decline in demand coupled with an increase in costs has made operating these routes unsustainable.

If you have a booking on one of the affected services, our immediate priority is to secure alternatives for you with the minimum of disruption. We will contact you in the next few weeks to discuss your options. We'd like to thank you for your loyalty and support of these services in the past, and apologise for any inconvenience

Regards


Keeley Downing
Diamond Club Manager

© 2009 British Midland Airways. All rights reserved.
British Midland Airways Limited trading as bmi, is registered in England and Wales, with registered number: 464648 and registered office: Donington Hall, Castle Donington, Derby, East Midlands, DE74 2SB.

[MUFC_fan]

Lets face it, the reason BA want to buy BMI is SOLEY for market share, lucrative slots and so they can raise fares on some routes. I must say I can't blame them - business is business!

Virgin are also after the slots but I think they are willing and ready to take on BA on a hub centre at Heathrow.

There were also talks of Etihad being interested in BMI but is it not the case that only 49% of a carrier can be owned by a non-EU registered company or did I dream that?

Thanks!

[Tail-take-off]

Capvermell

The article say bmi will

...withdraw these services over the winter months...

Where does it say anything about resuming them?

[Capvermell]

Capvermell

The article say bmi will
Quote:
...withdraw these services over the winter months...
Where does it say anything about resuming them?

The wording is clearly ambiguous and allows for either interpretation. Namely that the services have only been withdrawn during the winter months and may return in the summer months or that they have been withdrawn permanently starting in the winter season.

I personally don't see any chance of Venice returning (as passengers wanting to go there can simply travel with BA instead) but see some possibility of perhaps another operator running LHR to PMI, even if it turns out to be Iberia or BA rather than BMI. Although BA recently canned their Gatwick service to PMI that was because it was up against Easyjet's four flights a day and numerous other charter flights from Thomson. LHR to PMI is still a route that can command high fares during the peak summer months and on balance perhaps IB would be the most logical operator to restore service on the route.

[EI-BUD]

If BA were asked to surrender slots as part of a condition to take control of bmi, by handing over slots on routes where they currently compete, reducing frequency and increasing the size of aircraft they could maintain the volume of traffic on these routes that currently exists eg LHR to AMS, GLA, EDI, BRU, MAN (thats approx 30 slots per day eg)??

EI-BUD

[darren1]

Iberia care as much about Palma as BA do BHX, MAN, GLA, EDI... can't see them giving up a valuable LHR slot to fly bucket and spaders to Majorca.

[frankdjs]

With a bit of luck Air Europa will relaunch LGW to PMI, as they operated a couple of years ago.

Flew EasyJet PMI to LGW last Sunday, and it left a lot to be desired.

[Capvermell]

Iberia care as much about Palma as BA do BHX, MAN, GLA, EDI... can't see them giving up a valuable LHR slot to fly bucket and spaders to Majorca.

But on the other hand bucket and spaders are still flying in more or less the same numbers as before, especially short haul where increased fuel costs have had no significant impact on ticket price.

Whereas I bet Iberia has an awful lot of empty seats in business class on its services to MAD and BCN from LHR due to the credit crunch and demand for relatively expensive city breaks in economy class has probably gone down more than bucket and spade holidays during current recessionary times.

BEA originally ran LHR to PMI (using Tridents), then the mantle passed to Iberia with 727s for several years on their own before Air Europe joined them running another once a day service and their route then passed to British Midland when Intasun went bust (even though strangely Spanish offshoot Air Europa still survives to to this day). Iberia flew the route under Viva colours for the last couple of years after many previous years of full Iberia service from LHR to PMI before they were compelled to axe it along with many other routes when the EU complained the airline was getting too much state subsidy and hence competing unfairly. This then left BMI running the route on its own for the last 15 years or so on a once day basis (then joined by a second flight a couple of times a week during the summer peak in more recent years).

Mallorca has gone upmarket and not downmarket in terms of its tourism in recent years and a lot of the travellers are now self caterers in villas and apartments instead of package holidaymakers. At the top of this holiday tree are wealthy business executives living in the home counties to the west of London with enormous villas and most of them would rather travel on a recognised schedule operator from Heathrow rather than with no allocated seat and scrum for the plane only to be abused by cheeky cabin staff Easyjet from LGW, LTN or STN. PMI handles over 20 million passengers per annum and is nearly as busy as LHR for 6 weeks in the mid summer so I would submit that it could still sustain one flight per day from the UK's premier airport.

[LD12986]

If an airline was interested solely in slots, would it complete a due dilligence check on BMI?
Reports said some airlines had signed confidentiality agreements. This infers that there is more interest in acquiring a/the company rather than just, as in this case, the slots.

If all you are buying is the slots then, no, a full due diligence is not required. Whilst for BA just acquiring the slots would be preferred, that may not be possible.

It is a once in a lifetime opportunity for BA and Oneworld to expand significantly at LHR. I imagine BA will be assessing all options from acquiring everything to selected assets, so it would want to do a full due diligence.

Richard Branson will no doubt be screaming blue murder if BA made an offer for the company. But for him, it's a case of either stump up the cash to make an offer for BD or shut up. Also, I think integrating BD quickly to stem the losses will be much easier for BA than Virgin (that is not to stay that the acquisition of the whole company doesn't create a big risk for BA).

[Capvermell]

With a bit of luck Air Europa will relaunch LGW to PMI, as they operated a couple of years ago

Air Europa from LGW to PMI was a very nice service indeed, especially on the then newish 737-800s, particularly in comparison to the horrid Easyjet scrum (also because many more of the passengers were Spanish inhabitants on the islands than on any other normal British operator run PMI flight). As a tall passenger (1.90m) I would rather travel charter from Gatwick in terms of the professionalism of the crew compared to EZY and also because as you get an allocated seat I can often talk my way in to frequently unsold extra legroom seats. On the other hand one's fellow passenger on charter airlines usually leave even more to be desired than on EZY. GB Airways flights under BA colours from LGW to PMI were also very nice and often sold cheaply last minute when the plane was underbooked as GB operated a charter flight seat pricing model (where prices on underbooked flights fall sharply in the last few days before travel) rather than the BA model that assumes late bookers are all businessmen who can pay top dollar.

Flew EasyJet PMI to LGW last Sunday, and it left a lot to be desired.

I hate Easyjet with a passion, in particular because on any airline where you have an allocated seat I always board the plane last and avoid the horrid scrum when the flight is called. But on Easyjet that is not possible if you don't wish to be stuck in the back of the plane in the middle seat with no leg room. Having said that since they have gone up to four flights a day from LGW to PMI they have stopped putting prices through the roof in the last few days before the flight, which is inevitably when I always book. However at £85 all in for the cheapest seats on BD in October versus about £65 on EZY I would personally cheerfully pay another £20 to travel from a more convenient airport and avoid travelling with the EZY grockles.

Coming back to Air Europa the obvious opportunity here is for them to start running a PMI to LHR service now that they would face no competitors on the route and especially bearing in mind that PMI is the airline's main operating base. Failing that Air Berlin, who also have a hub at Palma, might also see an opportunity to run a service from PMI to LHR. I will email the CEO of Air Europa and make the suggestion.

[Capvermell]

Also, I think integrating BD quickly to stem the losses will be much easier for BA than Virgin (that is not to stay that the acquisition of the whole company doesn't create a big risk for BA).

But surely BA are making even bigger losses per passenger flown than BMI are?

[MUFC_fan]

Lets not underestimate this deal.

Realistically, it is a two horse race and it is likely LH will sell the company. So what would it mean for aviation, as remember - LHR is pretty much the global hub, not wanting to blow it's trumpet but it is the most lucrative and sort after airport on the planet and the number of slots BMI has in it's possession is ludicrous for, dare I say it, such a small airline compared to the likes of BA etc.

If Virgin were to get a hold of BMI, I think it would be stripped down. The most lucrative feeder services would be kept and the short haul fleet would be slowly fitted with world class interiors. I think for us as the general public and (more importantly) us aviation enthusiasts it would be a fantastic and game changing move at Heathrow that would put much more pressure on BA to reduce fares even further (if that is possible in the current climate!) I'm sure, having seen the interiors of Virgin America, SRB is capable of anything and if he was to fit the fleet with anything near that sort of comfort I would be first on board - and I fly BA! It would be either the making or the fall of Virgin Atlantic as the cost to mould the carrier would be astronomical while the benefits that would be there, if done correctly, would raise Virgin into an even stronger position in the aviation arena.

On the other side of the coin, what would BA do with BMI? The slots are clearly the reason for their interest and they would most likely have to give up a number of them upon gaining the carrier as it would push them well above the 50% barrier. Does LH and AF even have that at their respective bases?! For BA it would be a coup and I would not be able to even make an educated guess on if they would keep the aircraft or not, but - picture this:

BA/BMI/IB/AA at Heathrow? European Commission would have a field day as would SRB.

One thing is for certain, if VS comes out on top - it will mean a wide variety of changes at Heathrow and I can't wait to see what happens!

[LD12986]

MUFC Fan - AF and LH have far more than 50% of the slots at their respective bases.

I would not underestimate how big such an acquisition this would be for Virgin. Aside from whether they could actually afford it, they have no experience of running a hub and spoke operation, nor do they have any integration experience.

[qwertyuiop]

Does BMI not have a huge pension defecit? What are the implications of taking over this defecit and are these debts worth taking on?

[biddedout]

I don't know if there is a deficit, but I hope the Trustees of the scheme are keeping a close eye on developments and insisting that they are involved all the way through any sale. A DB pension scheme and how it is to be dealt with will be the most important factor in any sale, particularly if there is a deficit. It will certainly be the the main focus of attention for any purchaser.

[Capvermell]

MUFC Fan - AF and LH have far more than 50% of the slots at their respective bases.

Anyone who has passed through Madrid or Barcelona airports will also be well aware of the huge percentage of all slots at those two airports controlled by Iberia. Just from a visual point of view and all those numerous MD8x series T tails that you always see I feel sure that this percentage of slots at both airports must be well in excess of 50%.