bmi british midland Reports Profits Increase to £12.4 Million

bmi british midland today reported an increase in pre-tax profits of 51.2 per cent to £12.4 million (2000 = £8.2million), on a 2.4 per cent growth in revenues to £756.9 million (2000 = £739.2 million) for the year ending 31 December 2001.

Passengers carried declined by 5.2 per cent to 6.7 million (2000 = 7.1 million) as a direct consequence of the tragic events in September. The company estimates that £35 million revenue was lost as a result primarily through a significant drop in transfer passengers through the Heathrow hub post 11 September.

The company incurred an operating loss of almost £12 million for the year that was mitigated by the net effect of several exceptional items. These included the sale of the company`s handling division, the write off and advanced depreciation of business systems and equipment, pre operational transatlantic launch costs, redundancy costs and the migration to Lufthansa reservation and business systems.

Sir Michael Bishop, chairman of bmi british midland said:

“2001 was a defining year in the aviation industry and one of marked contrasts for bmi. Prior to 11 September we had already commenced a restructure of the organisation in the light of softer trading conditions which had been evident earlier but we were still anticipating achievement of our budgeted operating profit. Subsequently we were obliged to take more radical action with reductions in capacity and a substantial redundancy programme, and ended the year with an operating loss.


“In spite of the increased difficulties in the market place post 11 September and the UK Foot and Mouth outbreak - particularly in the North West of England - we are extremely encouraged by the performance of our long haul services launched from Manchester to Washington and Chicago in the Spring of 2001. Volumes have picked up strongly over the last two months with current load factors well over 70%.

“We have had an exceptionally encouraging start up of our no-frills carrier bmibaby, which is trading well ahead of budget and which recently announced three new routes and significant expansion of its fleet. The current booking rate indicates that more than 500,000 passengers will be carried in the nine months of operation of the current financial year and 1.5 million in 2003.

“Our ability to bring wider competition to transatlantic services from Heathrow still continues to be frustrated by the restrictive Bermuda II agreement. This provides, what we think, to be an unlawful advantage to our UK competitors at Heathrow, who have the freedom deprived to bmi and others, to develop services to the USA from Heathrow. This continues to deny consumers genuine choice and lower fares.

“Trading in 2002 continues to be extremely challenging and we do not anticipate a recovery until next year. Despite the early signs of the shoots of growth and some recovery in volume, yields continue to be under pressure and we do not anticipate that this trend will change significantly for the remainder of the year. The UK aviation market continues to be one of the most competitive in the world but we remain committed to be a competitive force in a wide range of markets.”

Highlights during the year included: . the first major rebrand of the airline for nearly 20 years . investment in long haul equipment with the delivery of three Airbus A330 - 200 aircraft . investment in an innovative three class long haul product . re-entry into the transatlantic market with the launch of schedule services from Manchester to Washington DC and Chicago . application by bmi and United for anti-trust immunity from the United States Department of Transportation - this has now been approved subject to an open skies agreement between the UK and the USA . submission of a formal complaint to the European Commission contesting the legitimacy of the Bermuda II agreement . the announcement at the end of the year that bmi would enter the low cost market at East Midlands Airport with the launch of bmibaby . the airline received a number of awards including Best UK Domestic Airline and short haul business airline