Germany's Lufthansa Group has outlined the financial damage inflicted by BMI ahead of its planned disposal to International Airlines Group, after posting a net full-year loss of €13 million ($17 million).
Lufthansa Group's profit from operating activities dropped by 44% to €773 million - although Lufthansa's normal adjustments brought this figure to €820 million - as a 9.3% rise in expenses outstripped a 6.7% increase in operating income.
After taxes this generated a profit from continuing operations of €289 million.
But this was wiped out by the €285 million impact of treating BMI as a discontinued operation, reflecting the intended sale to IAG.
Lufthansa says the €285 million comprises BMI's after-tax loss of €155 million and negative after-tax sales proceeds of €130 million.
It says BMI's gross sales price of €207 million was reduced by €55 million in financial liabilities and another €153 million in pension obligations remaining with Lufthansa Group.
Other price adjustments - notably restructuring expenses at BMI Regional and BMIbaby - dragged the net sales price into negative figures, says Lufthansa.
BMI's revenues for 2011 were down by 3.5%, and the operating loss sank by a further 37% to nearly €200 million.
Lufthansa says the outlook for BMI is "difficult" partly owing to "structural factors" in the UK market and London Heathrow.
"For this reason it has not been possible to realise the full strategic value ofBMI's slots within the Lufthansa Group," says the German company. "The strategic significance of the company for the Lufthansa Group is therefore limited."
Lufthansa's passenger airline division suffered a "sharp fall" in profit contribution to the group, down by 44% to €349 million during the year despite higher revenues. Lufthansa attributes this to higher fuel costs and €361 million in German and Austrian air traffic taxes.
The Lufthansa-branded carriers accounted for €168 million of the division's operating result. Swiss International Air Lines performed well, but even its €259 million result was below the previous year's figure.
Austrian Airlines continued to drag with an operating loss of €62 million, although this was a 6% improvement, and budget carrier Germanwings suffered from the traffic taxes with an operating loss of €52 million.
Source: Air Transport Intelligence news
