The bmi group has reported a pre-tax profit of £10 million for the
financial year ending 31 December 2005, up from £2.6 million in 2004.Commenting on the results, bmi chairman Sir Michael Bishop said: “These
figures demonstrate good progress. We beat expectations last year and
bmi’s strategic focus created further substantial improvements in 2005.
Our concentration on higher yields, better resource allocation and cost
control has delivered a good foundation for future growth.”

His review of the figures continued:

“Group turnover rose 4.7 per cent to £869.0 million (2004: £ 830.1
million), on an increase in revenue passenger kilometres (RPKs) of 6.3
per cent to 9,325 million. At an operating level the group moved from a
loss of £3.2 million in 2004 to a profit of £5.5 million in 2005.

“The improved performance was a result of the group’s focus on yield
growth within each of its airlines, on more efficient and effective use
of aircraft and other infrastructure and on rigorous cost control across
the business. There were three underlying factors behind bmi’s improved
performance in 2005.

“The introduction in August of a modular offering for passengers from
Heathrow, allowing travellers to build the right fare and service levels
for their needs, led to improved yields and wider customer choice. An
e-enablement strategy improved speed of booking and check-in whilst
reducing costs significantly. The introduction of catering choices on
many routes lowered costs and reduced wastage significantly.

“The group’s fleet rationalisation strategy was completed, enabling each
of the three business units to operate a single fleet - Airbus A320/A330
family for mainline (Heathrow and long haul) operations, Boeing 737
classics for bmibaby and Embraers 145/135 for bmi regional. Airbus A321
aircraft were replaced by the smaller Airbus A319 at Heathrow, a
strategy that will continue in 2006, reducing capacity but improving
load factors and yields. In addition, the group rationalised its
engineering activities, outsourced heavy maintenance, as well as
introducing equalised maintenance programmes, significantly improving
efficiencies in this area.

“The launch of bmi’s first long haul routes from Heathrow, to Mumbai and
to Riyadh, marked an important step forward in the group’s development.
bmi will extend the number of long haul destinations it serves from
Heathrow with the launch next month of a three times a week service to
Jeddah.

“bmi regional continues to make a solid contribution to the group’s
overall profitability and has further extended its route network in 2006
with services between Aberdeen and Amsterdam.  bmibaby continues to
widen its market penetration and presence. The UK’s second largest
low-cost carrier launched services from its fifth base at Birmingham at
the start of 2005, which proved to be its most successful launch to
date. 

“The group’s improved figures come despite the continuing impact of high
oil prices which cost the group £37.5 million in 2005. As in past years,
part of this cost was recovered through passenger fuel surcharges.

“The financial performance of the group continued to provide strong
liquidity. At the year end the group had cash of £143.4 million (2004:
£138.6 million) and debt had been reduced to £85.8 million (2004: £122.3
million).

“We have a very clear strategy. In our mainline business we are focusing
on quality business-purpose traffic and at the same time managing the
availability of the lower yield - the amount paid by each passenger -
traffic. We are willing to accept volume reductions in certain markets
if it improves overall levels in yield, resulting in increased
profitability. This was the case last year and is the case so far this
year, where we are already ahead of our comparative 2005 financial
performance. 

“One of the key themes in the UK aviation sector this year will be a
focus on yield improvements, particularly for carriers operating from
preferred major hub airports. The business environment remains tough but
we are confident that this strategy is proving successful for bmi.”
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