bmi restructures mainline and bmi regional operations

bmi has today announced the restructuring of its mainline and regional operations. The move takes place against a background where the airline industry is facing the challenges of a downturn in demand and the worst recession in the UK since records began. In addition to cost saving initiatives the programme also includes a wide range of revenue enhancement initiatives.

The restructuring plan will see bmi focus on the following key areas:

• Suspending loss making routes

• Adjusting capacity to optimise efficiency and profitability

• Strengthening organisational productivity and efficiency in all areas

• Making use of the synergies of Lufthansa and other partner airlines in all areas

• Maximising revenue generating opportunities with codeshare and Star Alliance partners

The airline's goal is to focus on maintaining within bmi mainline and bmi regional a core network of services in the UK and Ireland, Europe, the CIS, The Middle East and the Kingdom of Saudi Arabia. Through a combination of improved aircraft productivity and efficiency, and from early 2010 the suspension of non-core and unprofitable services, bmi will reduce the number of aircraft in its mainline operation by nine from the current 39. This reduction will include two of five Embraer aircraft operating on mainline routes that will be returned to bmi regional.

Leases will not be extended on aircraft when they expire in the first half of 2010, including two of the three long haul A330 aircraft. bmi will therefore continue to serve mid haul markets with two long-range aircraft and its fleet of A321s.

bmi regional, which through its niche market position and a long term charter agreement with Airbus, is maintaining a viable operation but is feeling the impact of a prolonged downturn in business-type travel. The return of two Embraer aircraft from the mainline operation at Heathrow and one additional spare aircraft will result in these three units being surplus to requirements. The company is in discussion with potential customers with a view to mitigating this situation.

A reduction in the number of aircraft deployed in bmi mainline and bmi regional operations will result in job reductions coming from all areas of the business, operational and corporate functions. The number of full-time equivalent jobs at risk of redundancy is expected to be approximately 600. However further job cuts cannot be ruled out as corporate overheads will also be cut to reflect the reduced flying programme. Management has today commenced consultations with unions and staff representatives with a view to minimising the number of compulsory job losses wherever possible.

The Lufthansa Group took over bmi in July 2009 and shortly after undertook a due diligence exercise which highlighted the need for a restructuring of the business. Lufthansa has given bmi its full support for the actions it is undertaking in this restructuring programme.

Once stabilised, the business can then be grown again in the years ahead when the economic environment improves and market demand justifies it.