[Anonymous]

[VintageKrug]

Article in The Times here:

http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article6898737.ece

Seems massive restructuring is on its way; bmi is on track to lose £200 million this year.

The announcement coincides with Wolfgang Prock-Schauer’s first day at bmi. This is a very high-profile appointment, so the decision not to sell must have been reached before he was head-hunted.

As for what happens next, who knows!

There’s still talk of a possible sale once bmi has been cleaned up, and I daresay that a place for Herr P-S would be found elsewhere in the LH group in such circumstances.

I suspect it makes the end of Diamond Club more likely, although an alternative view would be that it will be saved for inclusion in that possible future sale.

In other bmi news, a blogger named Johnny Rocket had the pleasure of attending the inaugural ceremonies of Continental joining the Star Alliance last week.

All the CEOs of the 25 member airlines were there including bmi’s outgoing CEO Nigel Turner.

If you don’t have time to hear it, in summary:

– Bmi are not seeing a recovery in terms of the economy

– Implementation with Lufthansa is going well and very supportive

– No plans to change cash & points redemption

– No plans to introduce bag charges at present but makes sense to do so

– No plans to bring back the routes to America or the regional UK airport

– Blames Heathrow operator BAA for the demise of regional flights

You can listen to the whole interview below:

http://www.4shared.com/file/144748885/280a0f12/Bmi.html

Though obviously anything NT says has to be taken with a pinch of salt given the incoming CEO’s dramatic change of direction on his very first day in the role.

[Hess963]

I think I am not the only one who is surprised that Nigel Turner is not the CEO anymore which such a dismal performance.
It is obvious that LH will not sell BMI underprice after investing that much. BMI just doesn’t fit in LH’s strategic plans anymore.
It might have been in the time when former LH CEO Weber thought BMI was a company to acquire. Times have changed and LH has now a bitter pill which cost them a lot of money.

So LH is trying with a new CEO ( German or not German!) to consolidate and put together everything working again till it is time to sell BMI for a better price. As a whole or in parts.

I know it sounds harsh but everyone in the business knows if you really don’t want the product -you try as quick and profitable as it gets to sell it. In the end it is the slots-question after all !! Who can control the most traffic rights in LHR.

[Senator]

Dear Hess,

I am not sure if I agree with you on this one. Yes, the timing for LH is dreadful. They are in the middle of M&A work for SN and OS, and now add BD on top of this. Nevertheless, BD owns 11% of the landing slots at LHR and they must alone be worth more than the approx £250m + £19m paid to SK even in today’s market.

Yes, BD may cost another £250m in loss in the next 18 months. While LX was already on a decent path when LH bought them, the work LH has done to manage this airline into profit is remarkable.

I would not be surprised if there is a bigger Star Alliance ploy here; keep BD and the slots – wait for the upturn. If anyone can turn this ship around, LH is the company.

[Hess963]

Hi Senator !!

Yes, there is a sense in this “game” -when LH founds out it is not profitable to sell BMI as whole or in parts to the biders–they decided to employ Mr Prock-Schauer to unwind the bad performance BMI has been undergoing for a while now. If the new CEO succeeds in bringing BMI in the profitable margin, it is great and LH could really think of keeping BMI–but it is just too obvious that LH and its strategic Star Alliance plans do not foresee a huge traffic slot from LHR. LH has sincerly no big interesse in UK domestic market from / to LHR as it is more focus on its own market and the feeder traffic to/from FRA to different parts and cities in Europe directly. LH want more Brits to travel directly from their UK cities through FRA or ZRH or CPH or VIE rather than flying through LHR.
That is why the interesse in other entreprises like SN, OS, SAS, LX
So why not BMI ?? Well after the misfortunate first try of selling–it is time to invest and try to pimp the “ugly duck” to be more suitable for the buying parties in the future.

It is just a huge competition in LHR with BA, VS,…. and the real possible outcome is that BA or VS or a possible “3rd party” will acquire the slots from LH/BMI and the rest of the company–well who knows and what the future brings.

[Author]

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