BMI
Join Date: Jun 2005
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Jobsagoodun, bmibaby left MME because there was no money to be made. They were losing money hand over fist. Flyglobespan thought they could do better and - guess what - it didn't work for them either. The fact that there is only Eastern there speaks voumes and look at the routes that Eastern have tried from MME and dropped - Brussels, Bristol and Southampton readily spring to mind. bmibaby got out because it made good commercial sense. MME is between LBA and NCL and sadly, in this day and age, it does not look as though there is any room for it going forward.
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Jobsagoodun
WW did have MME to it's self, but the company was quite new and not confident of it's product pricing or position, it closed MME because the aircraft were needed at BHX and it was correctly thought that the return would be better. Baby management had been assured each year that funding would be available to grow the fleet, only to be told each year that sorry but yes next year and it is for this reason that CWL & MAN struggled on with a couple of aircraft,at the end of the day it was only this year that the new management team under Julian Carr said enough is enough if we only have 14 aircraft so be it how do we make it work and that resulted in EMA & BHX
As for chopping and changing routes this again is in the past, it has not happened under the new management the last daft route was Bournemouth Jersey every route put on sale in the 12 months has operated, it might have been tweaked but all airlines do that, we started BCN from EMA in the face of FR and we more than hold our own like wise VCE, MLA is year round.
The others such has U2 have no real presence in the Midlands, Jet2 have had a fair start in EMA but mainly on the longer 757 routes and have had a lot of bad press over tech issues across the 757 fleet this summer.
BHD is going to be very interesting Summer sun routes are new from there, so it's unknown territory for us, but the NI Market is close knit and the locals have grown up with flying everywhere, we mustn't do is screw up in the way the pervious management did in canx a BFS flight if the load was low or we needed an aircraft elsewhere, the STN loads are up and down,sometimes full sometimes in the 40's but overall it makes a contribution which is not bad after only 9 months! we start AMS in a few weeks plus the early east bound EMA followed by GVA in December this will give confidence to the market. If you judge baby by what it was like 18 months ago, then you miss judge it! It's a very different company culture now, hopefully in a little over 6 months full 22k 737's will roaring over East Belfast heading down to the Med.
As for chopping and changing routes this again is in the past, it has not happened under the new management the last daft route was Bournemouth Jersey every route put on sale in the 12 months has operated, it might have been tweaked but all airlines do that, we started BCN from EMA in the face of FR and we more than hold our own like wise VCE, MLA is year round.
The others such has U2 have no real presence in the Midlands, Jet2 have had a fair start in EMA but mainly on the longer 757 routes and have had a lot of bad press over tech issues across the 757 fleet this summer.
BHD is going to be very interesting Summer sun routes are new from there, so it's unknown territory for us, but the NI Market is close knit and the locals have grown up with flying everywhere, we mustn't do is screw up in the way the pervious management did in canx a BFS flight if the load was low or we needed an aircraft elsewhere, the STN loads are up and down,sometimes full sometimes in the 40's but overall it makes a contribution which is not bad after only 9 months! we start AMS in a few weeks plus the early east bound EMA followed by GVA in December this will give confidence to the market. If you judge baby by what it was like 18 months ago, then you miss judge it! It's a very different company culture now, hopefully in a little over 6 months full 22k 737's will roaring over East Belfast heading down to the Med.
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The old bmi group management really had a habit of chopping and changing routes. In the time I was there, Warsaw, Budapest, Milan, Rome, Madrid, Nice, Malaga, Zurich, Bergen on shorthaul (not to mention routes operated on behalf of Star Alliance) , Washington, Chicago, India on longhaul - each new route requiring millions of pounds of setup costs, and being abandoned with no real attempt to market it or compete.
I remember at one stage a senior operations manager expressing frustration because (in effect) everything was too profitable for the A330 at the time - in effect, they needed more aeroplanes, but the company had no intention of investing in anything else. The aim never seemed to be to grow, but to finesse what they had to maximise revenue from it.
I remember at one stage a senior operations manager expressing frustration because (in effect) everything was too profitable for the A330 at the time - in effect, they needed more aeroplanes, but the company had no intention of investing in anything else. The aim never seemed to be to grow, but to finesse what they had to maximise revenue from it.
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Inkjet,
You completely missed my point. If there were a trade sale of baby what customers think is irrelevant. If another airline were to show interest what would they be buying? The company has little in the way of assets, taking it out of bmi means the brand has to change (although as you say another airline would not need the brand). The aircraft are leased, so no value there. The office space in HH is leased, so no value. I know from my own experience that it is virtually impossible to find any reliable financial info so it is difficult to say what the revenue of WW is but almost all routes have competition on them so why would a competitor want to buy anything if the perception (rightly or wrongly) is that WW's days are numbered?
You completely missed my point. If there were a trade sale of baby what customers think is irrelevant. If another airline were to show interest what would they be buying? The company has little in the way of assets, taking it out of bmi means the brand has to change (although as you say another airline would not need the brand). The aircraft are leased, so no value there. The office space in HH is leased, so no value. I know from my own experience that it is virtually impossible to find any reliable financial info so it is difficult to say what the revenue of WW is but almost all routes have competition on them so why would a competitor want to buy anything if the perception (rightly or wrongly) is that WW's days are numbered?
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Yes baby has held its own against FR at EMA & BHX so far. But do you really thing Ryanair has even tried to screw Baby out of each yet? Ryanair over the last few years had not really cared too much about UK routes, its main focus has been Italy and Spain.
If and when the time comes to protecting Uk routes, good luck to weak small airlines.
Anyway good luck to all the staff in these difficult times.
fr-
If and when the time comes to protecting Uk routes, good luck to weak small airlines.
Anyway good luck to all the staff in these difficult times.
fr-
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Dont forget SRB could buy BD without the backing of VS and run it as a seperate entity with a close relationship to VS. The would negate the SQ ownership issues in VS.
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Flypuppy
It matters not whether the aircraft or property is leased or owned, in fact in some cases it can be an advantage for it to be leased, who for example would want to to say buy Jet2 and take on an owned fleet of classics ?
I do agree with what you say about someone not wanting the brand if they have a strong brand or presence in the Midlands, but the top two brands in terms of awareness FR & Easyjet aren't likely to be interested, Jet2 could be, but aren't on the short list, for Jet2 it would at a stroke give them a massive presence in the midlands and a customer base of forward bookings well into 2012 that they don't have to sell.
If however you are new to the loco market or have no brand, then the brand has value, but we are going round in circles here! In a few weeks or so you will see what I see.
Worst case they, but who? Will pull the shutters down, or you will see new ownership, or something in between, at this point all options including very little remain on the table,a good few fellow Ppruners have choked on eating their hats in speculation over baby and bmi these past years, as ever expect the unexpected!!
FR
Yes FR could do more damage if they were interested, but many wrote WW of as soon as FR put more aircraft into EMA, what happened is that EMA has more WW aircraft now than 3 years ago and BHX will have more in a few weeks time.
A lot will change this next month, but most of us still expect WW to be around this time next year, but in what form is way above my pay grade...
Have great weekend
Inkjet
I do agree with what you say about someone not wanting the brand if they have a strong brand or presence in the Midlands, but the top two brands in terms of awareness FR & Easyjet aren't likely to be interested, Jet2 could be, but aren't on the short list, for Jet2 it would at a stroke give them a massive presence in the midlands and a customer base of forward bookings well into 2012 that they don't have to sell.
If however you are new to the loco market or have no brand, then the brand has value, but we are going round in circles here! In a few weeks or so you will see what I see.
Worst case they, but who? Will pull the shutters down, or you will see new ownership, or something in between, at this point all options including very little remain on the table,a good few fellow Ppruners have choked on eating their hats in speculation over baby and bmi these past years, as ever expect the unexpected!!
FR
Yes FR could do more damage if they were interested, but many wrote WW of as soon as FR put more aircraft into EMA, what happened is that EMA has more WW aircraft now than 3 years ago and BHX will have more in a few weeks time.
A lot will change this next month, but most of us still expect WW to be around this time next year, but in what form is way above my pay grade...
Have great weekend
Inkjet
Chieftan o'the Pudden Race
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It matters not whether the aircraft or property is leased or owned, in fact in some cases it can be an advantage for it to be leased,
It matters a great deal when buying a business in order to establish a value. I am just asking what value bmiBaby has? Not from a product perspective, but from how attractive a buy it would be for another carrier. It will all come out in the wash, but at the moment I can't see where it would fit in with any DLH plans, nor can I see why another carrier would buy WW.
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The "value" in buying WW is that it gives you instant bases in a couple of places. If you don't have any presence somewhere and you decide that you should, then buying into it could be a lot cheaper than setting up your own operation from scratch: wipe out competition, instant staff and crewrooms, zero relocation costs etc.
In this analysis, Monarch are the party most likely to take it.
In this analysis, Monarch are the party most likely to take it.
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There are so many unanswered questions over the slot sale.
Why sell 6 slots? Probably a double benefit of dropping loss making slots and generating cash. Maybe DLH have slammed the chequebook shut. It is a bit odd though, the only thing of any worth to DLH and they make bmi sell it to stay afloat. What is the German for selling the family silver?
Why sell to IAG? Surely there would have been a STAR carrier interested which in a standalone deal would have made more sense for DLH; so surely there is a wider agenda? Are they reducing the size of an eventual deal with BA to get around regulatory and employment issues? Are they buying BA off to allow a VS tie up with STAR and bmi to progress?
The slot sale was not arranged last week, BA/IAG were aware of it a while back, yet they are still making noises about acquiring bmi, either they have been fibbing for the last few weeks, or they are still looking at it.
What do United/CAL and other STAR partners make of the potential loss of a huge number of connections from LHR? Losing bmi from STAR would generate a load of traffic into FRA that used to go to LHR but would also hand all the traffic that wanted to connect within the UK to One World; traffic from the west anyway. Traffic from the east could still go through LH group European hubs and onto the UK, maybe with bmiRegional or LH partners. Let's face it, LHR is a complete hole and bypassing it would enhance many travellers' experience but it would require quite a lot of marketing.
It's all rather intriguing, the music hasn't stopped yet and there will be other twists for sure. You do wonder if the bmi employees can be entirely focussed on the job in hand though.
Why sell 6 slots? Probably a double benefit of dropping loss making slots and generating cash. Maybe DLH have slammed the chequebook shut. It is a bit odd though, the only thing of any worth to DLH and they make bmi sell it to stay afloat. What is the German for selling the family silver?
Why sell to IAG? Surely there would have been a STAR carrier interested which in a standalone deal would have made more sense for DLH; so surely there is a wider agenda? Are they reducing the size of an eventual deal with BA to get around regulatory and employment issues? Are they buying BA off to allow a VS tie up with STAR and bmi to progress?
The slot sale was not arranged last week, BA/IAG were aware of it a while back, yet they are still making noises about acquiring bmi, either they have been fibbing for the last few weeks, or they are still looking at it.
What do United/CAL and other STAR partners make of the potential loss of a huge number of connections from LHR? Losing bmi from STAR would generate a load of traffic into FRA that used to go to LHR but would also hand all the traffic that wanted to connect within the UK to One World; traffic from the west anyway. Traffic from the east could still go through LH group European hubs and onto the UK, maybe with bmiRegional or LH partners. Let's face it, LHR is a complete hole and bypassing it would enhance many travellers' experience but it would require quite a lot of marketing.
It's all rather intriguing, the music hasn't stopped yet and there will be other twists for sure. You do wonder if the bmi employees can be entirely focussed on the job in hand though.
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Why sell 6 slots? Probably a double benefit of dropping loss making slots and generating cash. Maybe DLH have slammed the chequebook shut. It is a bit odd though, the only thing of any worth to DLH and they make bmi sell it to stay afloat. What is the German for selling the family silver?
Why sell to IAG? Surely there would have been a STAR carrier interested which in a standalone deal would have made more sense for DLH; so surely there is a wider agenda? Are they reducing the size of an eventual deal with BA to get around regulatory and employment issues? Are they buying BA off to allow a VS tie up with STAR and bmi to progress?
The slot sale was not arranged last week, BA/IAG were aware of it a while back, yet they are still making noises about acquiring bmi, either they have been fibbing for the last few weeks, or they are still looking at it.
Why sell to IAG? Surely there would have been a STAR carrier interested which in a standalone deal would have made more sense for DLH; so surely there is a wider agenda? Are they reducing the size of an eventual deal with BA to get around regulatory and employment issues? Are they buying BA off to allow a VS tie up with STAR and bmi to progress?
The slot sale was not arranged last week, BA/IAG were aware of it a while back, yet they are still making noises about acquiring bmi, either they have been fibbing for the last few weeks, or they are still looking at it.
I think it is a misnomer that individual alliance members act altruistically for the benefit of other members. Feed to other *A partners at LHR is of no concern to DLH. As I said they seem to want to focus on their own hubs where they are the number one player.
Again, I think VS is an irrelevance in all this.
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Alliance partners have a financial interest in helping each other, it's not altruistic. A++ means that a loss of trans-atlantic revenue for AC or United means a loss of revenue for DLH too (and bmi!).
As for slots, use/lose them or the third way..lease them again. Surely Swiss, or Austrian or SN could have used them? Why sell to IAG!?
As for slots, use/lose them or the third way..lease them again. Surely Swiss, or Austrian or SN could have used them? Why sell to IAG!?
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look you
I think you'll find that Swiss, Austrian, Brussels Airlines, Lufthansa (and, until recently Blue1) have all purchased or leased slots from BMI...presumably they have all absorbed as much of the BMI LHR slot portfolio that that reasonably can at this stage so BMI has no choice other than to look elsewhere for sales.
I would guess..
(a) these 6 sets are slots for operations BMI really cannot afford to carry this winter on daft extra LHR-MAN operations or whatever
and/or
(b) DLH is getting to the end of its tether in pumping cash into BMI so the BD management are under much more pressure than hitherto to raise cash themselves for the immediate interim until the long-term future is decided
I think you'll find that Swiss, Austrian, Brussels Airlines, Lufthansa (and, until recently Blue1) have all purchased or leased slots from BMI...presumably they have all absorbed as much of the BMI LHR slot portfolio that that reasonably can at this stage so BMI has no choice other than to look elsewhere for sales.
I would guess..
(a) these 6 sets are slots for operations BMI really cannot afford to carry this winter on daft extra LHR-MAN operations or whatever
and/or
(b) DLH is getting to the end of its tether in pumping cash into BMI so the BD management are under much more pressure than hitherto to raise cash themselves for the immediate interim until the long-term future is decided
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LONDON (Dow Jones)--Virgin Atlantic Monday said it is concerned that British Midland International's sale of landing slots to British Airways would lower the value of bmi for a potential buyer, adding it will ask regulators to probe any attempt to carve up bmi.
BA's owner International Consolidated Airlines Group S.A. (IAG.LN) Friday said it had bought six takeoff and landing slots from bmi, the British-based airline bought by Deutsche Lufthansa AG (LHA.XE). It didn't provide financial details of the deal.
Lufthansa has said it plans to sell the loss-making airline. The main attraction of bmi is that it holds 10% of slots at Heathrow airport, making it the second-largest owner of slots after BA which now holds 45%.
Virgin Atlantic said it has expressed interest in bmi.
Virgin Atlantic's President Richard Branson, said: "BA could be attempting to 'salami slice' bmi's key assets, increasing their dominance while leaving just an 'uncompetitive and unattractive rump' for sale."
He said the sale of slots to BA increases that airline's already dominant position at Heathrow, adding "it cannot be beneficial to the consumer in any way if BA continues to disproportionately strengthen its position and it will also undoubtedly concern bmi's staff and pilots."
Virgin Atlantic will this week write to the Office of Fair Trading and the European Commission requesting that all disposals of bmi's assets are looked at as a whole "so that competition is not diminished piecemeal without regulatory scrutiny to protect consumers."
BA's owner International Consolidated Airlines Group S.A. (IAG.LN) Friday said it had bought six takeoff and landing slots from bmi, the British-based airline bought by Deutsche Lufthansa AG (LHA.XE). It didn't provide financial details of the deal.
Lufthansa has said it plans to sell the loss-making airline. The main attraction of bmi is that it holds 10% of slots at Heathrow airport, making it the second-largest owner of slots after BA which now holds 45%.
Virgin Atlantic said it has expressed interest in bmi.
Virgin Atlantic's President Richard Branson, said: "BA could be attempting to 'salami slice' bmi's key assets, increasing their dominance while leaving just an 'uncompetitive and unattractive rump' for sale."
He said the sale of slots to BA increases that airline's already dominant position at Heathrow, adding "it cannot be beneficial to the consumer in any way if BA continues to disproportionately strengthen its position and it will also undoubtedly concern bmi's staff and pilots."
Virgin Atlantic will this week write to the Office of Fair Trading and the European Commission requesting that all disposals of bmi's assets are looked at as a whole "so that competition is not diminished piecemeal without regulatory scrutiny to protect consumers."
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It's gonna take an awful lot of money, time and effort to change that set of figures! Note the last bar is only half way through the financial year!
Do VS have the cash to sort that mess out, to buy an airline that over the last 13 years has made losses totalling £534.8m I don't think so!!
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According to LH the slots were auctioned to the highest bidder, which is the normal way these days to offload slots, so Star carriers (and VS) would have had the abiility to take them if they needed them and were prepared to pay the price. As previous posters have suggested, looks likely that these were slots leased to LH Italia which is closing down, and clearly no way bmi want to have to slot sit an extra 6 pairs starting in the winter, which would almost certainly lead to additional losses.
Interesting listening to the LH analysts webcast of last week when Gemkow, the LH CFO, said that they had received a lot of interest for bmi (didn't specify which bits), and that they had concluded that even if it could be turned around, it would never earn enough to cover the cost of capital invested. LH would of course want to talk up the level of interest as the only way it will get any sort of reasonable price is if they can generate some competitive tension between the prospective bidders. Given EU ownership constraints I can't see any way that the business can go to anyone other than BA or VS (gulf carriers limited to minority stake) and whilst BA may have to give up a few slots on overlap routes like EDI and ABZ, I can't see the EC stopping a BA deal. Like others I don't see VS coming up with any cash, and the notion of LH shelling out more money to get a BD/VS combination together is a non-starter. LH's other investments have been for carriers which are the market leaders in their home territory, and even a combination would still be too small to take on BA.
Piecemeal slot disposal of mainline is highly unlikely....too difficult to manage in a drawn out wind down and would leave LH with significant closure costs which it will not want to take. Better to offload for nothing and stop the constant cash outflow.
WW will be a problem to offload. Don't see why anyone would pay for it when the set up costs at 2 Uk airports would be immaterial even if they had no ops there already. I hope I'm wrong but I think close down is the most likely option here.
Interesting listening to the LH analysts webcast of last week when Gemkow, the LH CFO, said that they had received a lot of interest for bmi (didn't specify which bits), and that they had concluded that even if it could be turned around, it would never earn enough to cover the cost of capital invested. LH would of course want to talk up the level of interest as the only way it will get any sort of reasonable price is if they can generate some competitive tension between the prospective bidders. Given EU ownership constraints I can't see any way that the business can go to anyone other than BA or VS (gulf carriers limited to minority stake) and whilst BA may have to give up a few slots on overlap routes like EDI and ABZ, I can't see the EC stopping a BA deal. Like others I don't see VS coming up with any cash, and the notion of LH shelling out more money to get a BD/VS combination together is a non-starter. LH's other investments have been for carriers which are the market leaders in their home territory, and even a combination would still be too small to take on BA.
Piecemeal slot disposal of mainline is highly unlikely....too difficult to manage in a drawn out wind down and would leave LH with significant closure costs which it will not want to take. Better to offload for nothing and stop the constant cash outflow.
WW will be a problem to offload. Don't see why anyone would pay for it when the set up costs at 2 Uk airports would be immaterial even if they had no ops there already. I hope I'm wrong but I think close down is the most likely option here.
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Branson has lost interest IMHO in aviation as far as Virgin Atlantic is concerned as he knows full well it is a loss leader. Pitiful financial results for many years and if he could offload his 51% he would do so if there were any takers.
He is into banks and other financial services which is where he sees the future and continued subsidies on his railways.
He is into banks and other financial services which is where he sees the future and continued subsidies on his railways.