BMI losses= £650 million over 4 years?

[davidjohnson6]

6chimes - I agree there is more to business than just profit. I also agree that bmi have been very unfortunate with the Arab spring on many of their routes. I also agree that prior to the LH takeover, there was a significant amount of asset stripping going on.

However, profit is the kind of measure that is relatively objective and easy to measure - even if temporary accountancy tricks can be played compared to cashflow.

I'm not sure how else one could objectively and consistently judge bmi's performance each year, without making reference somewhere to profit. Could you perhaps suggest how else one would judge bmi over the last 4 years ?

[G-AWZK]

If you're using these figures to judge bmi, then you are totally naive.

If you're suggesting bmi has been a failure at LHR, you're an idiot

how exactly would you define success?

[LD12986]

If you're using these figures to judge bmi, then you are totally naive.

If you're suggesting bmi has been a failure at LHR, you're an idiot.

6

Well, the only other measure is cashflow and it tells the same story. Without LH recapitalizing BD through debt for equity swaps, slot purchases and intra group loans BD would have become insolvent years ago.

[Spitfire boy]

The harsh commercial reality is bmi as a separate brand/entity probably won't exist after the end of the summer 2012 season. The A319s may move to LGW and the pilots to BA.

[mccdatabase]

[quoteThe harsh commercial reality is bmi as a separate brand/entity probably won't exist after the end of the summer 2012 season. The A319s may move to LGW and the pilots to BA. ][/quote]


I believe Willie Walsh has stated something along the lines of " The bmi of the future will look a lot different to the bmi of today"

The inference being there is some sort of future planned for the bmi brand, perhaps as a lower cost operation than BA.

[TwinAisle]

perhaps as a lower cost operation than BA.

Add to that the £340 million purchase price and Lufthansa has pissed around a billion quid against a wall

And which definition of 'lower cost operation' would you suggest that bmi fits into?

TA

[LD12986]

I believe Willie Walsh has stated something along the lines of " The bmi of the future will look a lot different to the bmi of today"

The inference being there is some sort of future planned for the bmi brand, perhaps as a lower cost operation than BA.

To be honest, I think Willie Walsh is just unwilling to come out and say that the bmi brand will disappear.

I just don't see it fitting with the IAG strategy to maintain/launch a lesser known brand than BA or Iberia.

Also, I think the days when BA would seize the opportunity to use acquiring bmi to launch a lower cost in house operation are over. Mixed Fleet cabin crew operation is up and running and the ground operation has been overhauled in recent years.

[Skipness One Echo]

how exactly would you define success?

Still trading and sold for a kings ransom to a duped Germanic suitor?
KERCHING I believe is the technical term.
As to building a still lower cost around BMI, BA have just fought a very bloody fight with the one union that wouldn't engage and won. They "appear", I say appear to be, in a concilatory rebuilding phase. To have a trojan horse of BMI being seen to further undermine already eroded ts & cs at this time would be pouring oil on troubled waters. It would undermine the brand refresh, rebuild and recovery strategy.

If BA get BMI, BMI needs to "go away" as soon as possible with as many good people taken on under BA as the business needs, which *may* be rather a lot as it happens if BMI short haul slots end up being used on BA long haul.

[Facelookbovvered]

Well they could pull all BA London flights into LHR (other than city) and shove bmi down to LGW and either keep it or flog to Stelios, that would offset the purchase costs for IAG and end up with the LHR slots in BA which is what this is really about anyway?

Any bmi staff wanting to stay in LHR could apply to BA, but not transfer, thus avoiding any seniority issues, or take their chances with LGW

[acbus1]

BA bought bmi for the LHR slots, to expand LHR long haul.

Go figure the rest. It's not difficult.

[G-AWZK]

Go figure the rest. It's not difficult

.
LGW 777s to go to LHR for long haul services
BMI 319/320s to be based out of LGW, replacing the 737-400s (EuroGatwick Mk2)
Some BMI 320s to Iberia Express

Regional sold and baby sold/closed.

[Surreyman]

IAG - BMI costly issues

IAG will certainly need to take drastic action to stem the losses.

It has been stated that they are buying the company, so amongst other things, they presumably will inherit a large wide bdy hangar at LHR, a training centre in Stockley Park with a 44 yr lease, and numerous contracts/agreements with suppliers/airports/governments.
BMI and Lufthansa have spent the last 12 months 'finding synergy' by combining their Handling/Cargo/Line maintenance etc at LHR + Star Alliance agreements/forward bookings.
That little lot is going to take some time to unravel, also given the limitations on terminal space/stands etc, BMI is going to be around in some form or another for at least 12 months.

[Count von Altibar]

You plugged into Willie's laptop? Nobody knows the plan except those at the very top and even that will probably change in the coming months.

[racedo]

Nobody knows the plan

You mean you think there is a plan ?

[davidjohnson6]

You mean you think there is a plan ?

racedo - you're often good at analysing, but could you lay off the cheap gag please ?
I very much doubt a large well run company would be preparing to take on thousands of staff, spend hundreds of millions of pounds, take on a once in a generation chance to expand service, but not have a plan. The board of IAG would be fundamentally failing in their duties if they hadn't see a comprehensive (albeit confidential) business plan before giving backing to the takeover of bmi.

[acbus1]

Agreed, davidjohnson6. The attitude on this thread is understandable, though, given that most of the posters are accustomed to the standard bmi 'management' technique: several changes of plan, followed by a last minute panic (or three), followed by a continuous process of crisis (mis)management.

I expected better directional control from Lufthansa, though. From external observation (OK, admittedly not the most reliable method) they appeared to have a rather passive, 'wait-and-see' approach. T'was more likely an intentional 'wait and sell' plan.

[le grand fromage]

Acbus, hardly a "wait and sell" plan....they've been busy integrating the mainline business into LH for the last 18 months, and waiting to sell at a time the biggest annual loss is about to be made, a new res and inventory system is about to be implemented at great cost and are in the midst of upgrading on board product is hardly smart. They genuinely thought they could turn it around with their usual strategy of reduce capacity, extract cost synergies and throw the weight of the LH sales machine behind it before expanding once profits start to flow(as per Swiss, and in due course OS). What has happened is that time has run out to turn it around, indeed they probably realise it can never make a sensible return on the capital invested and have to get out at almost any cost rather than burn more cash for years to come. The truth is that there is a structural strategic problem with the mainline business which has existed for many years and was disguised until 2008 by the JV with LH and SAS which passed 90% of the losses back to them. It's too small to compete with BA as a network carrier and the old domestic and short haul Euro market has been decimated by lo-cost and train. Personally I don't think that anyone could have made money with bmi over recent years and it is only BA who can make a reasonable case for why it makes sense to them now. It might have been better if the JV had never existed and the consolidation that was needed had happened earlier when the business was still in reasonable shape.

[acbus1]

If Lufty weren't playing a 'wait and sell' game and genuinely intended to turn bmi around, then the only explanation is staggering incompetence. As you correctly identify, their actions since acquiring bmi have been targeted at irrelevancies.

In which case, I wonder which mine in Siberia WPS and those on the Lufty board responsible for monitoring his performance are being sent to.

[Facelookbovvered]

ACBus 1

If i recall DLH offered bmi for sale when they first took control, there were no takers, at least at a price deemed acceptable at that time.

They set about trying to breath life into bmi including a major fleet revamp at a cost reported of £30m

We all know that the Arab spring did bmi no favours and some marketing has been very poor.It is this that did for bmi, its cost base is manageable for a full service carrier, the product is excellent, it lacks passengers and that is down to a confusing brand image and a miss match of routes flying to just about anywhere where there is trouble in the world.

Alas it is to late to turn it around now and it will fall to IAG to sort out, which will probably mean the brand will go, together with a good few jobs, a sad end for a once great airline. One can debate until the cows come about whether it could have been turned around, but from what i have read and heard it seems WPS did all he could given the cards he held.

[G-AWZK]

We all know that the Arab spring did bmi no favours and some marketing has been very poor.It is this that did for bmi, its cost base is manageable for a full service carrier,

I disagree. The business had a number of fundamental flaws. Waste was of epidemic proportions, but since every area operated almost independently of each other it was impossible to make any decisions about how or where to make cuts and efficiencies.
There had been no investment in IT or back office systems for over 10 years, there was a lack of flexibility among the middle and senior management which contributed to an inability to identify and focus on some basic fundamental issues. the cost base was out of control and WPS should have made it his first priority to bring it under control.
There were too many people firefighting and management would constantly change direction without explaining their "plan" to those had to implement it. An exhausting and frustrating way of working.