This month sees more signs of the gradual transition taking place at British Midland International, under the leadership of Wolfgang Prock-Schauer following Lufthansa’s acquisition of the Star Alliance carrier just over a year ago.
Newly announced flights from London Heathrow and Manchester to the Swiss city of Basel see the network overhaul continue, while moves to update and unify its premium product have begun with the rolling of its new business class on its shorter-haul Airbus narrowbodies. All this is part of restructuring which aims to turn round the near £200 million ($318 million) loss recorded in 2009/10.
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As part of an initial £100 million improvement programme begun last summer, the airline dropped weaker routes, cut capacity and upped productivity. The fleet has been cut by nine aircraft to 60 and staff levels by 900 as part of these efforts, getting the carrier to a size Prock-Schauer is comfortable with.
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Read the in-depth feature on the bmi turnaround from our interview with Wolfgang Prock-Schauer from November 2010 Airline Business issue |
The new Basel routes, to be operated in conjunction with fellow Lufthansa Group member Swiss, fits with this strategy, as do other recent additions such as Vienna, Beirut and Tripoli.
“We service our own network and service the Lufthansa Group hubs. We have plenty of options. We are not only a London carrier. We have a presence across the UK. All these cities can be connected even better. With the opening of a new runway at Frankfurt, there will be opportunities for new flights. We are actively looking at this together with Lufthansa,” he says. “We have other routes we are evaluating closely and could start in the summer. We are very actively searching for new routes in the Middle East.”
But domestic operations, which generate around a third of its revenues, have come further under the microscope – particularly in the light of higher charges that apply at Heathrow from this April. Prock-Schauer has been critical of the increase – planning to appeal the rise with the UK CAA – and the airline says its weaker routes are under review. But Prock-Schauer insists domestic remains key to the airline. “It’s been clear from the beginning we want to keep a meaningful presence on domestic, but shift the weaker elements,” he explains.
While it has already reduced flights from Manchester to Heathrow, and its Glasgow flights are being reviewed, Prock-Schauer points to the strength of other markets such as Edinburgh and Belfast. Indeed at Belfast he points to the strength of its three-pronged group structure – featuring bmi mainline, regional and low-cost operation bmibaby – in giving it a strong proposition across markets into Belfast City airport.
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Bmi has just begun rolling out its new short-haul business class product |
“We keep our identity as a British airline and get the economies of scale from the Lufthansa group,” says Prock-Schauer. These synergies, in areas like sales and purchasing, are key in the carrier improving its financial performance. While Prock-Schauer will not comment on bmi’s likely 2010/11 financial performance, he says the £100 million target is on track – though noting as this was launched last April the full impact will not be seen until next year. Bmi had a €90 million ($123 million) loss at the nine-month stage of the financial year it has just completed.
If it is on track with the first £100 million than Prock-Schauer acknowledges delivering the next £100 million in improvements will be harder. “The second 100m is more difficult to achieve, as you have taken the easy wins,” he says. “But we are confident we can achieve this.”
Source: Airline Business
