As we continue on the path to uncertainty, it’s time to catch up on the weekend’s news and rumours over BMI and it’s future.
In the Financal Times, they report Virgin Atlantic and Etihad have had talks on forming a Joint Venture to take over BMI. Apparently, bids for the sale of BMI were due on Friday.
Etihad itself is looking at how it could integrate BMI’s short and long haul network into it’s own feeder for it its routes. If Etihad decided to go by itself, there would be issues regarding Foreign Ownership rules in UK law.
The Independent reports in with BMI costing Lufthansa a massive £140 MILLION over the period it has owned it (a grand total of 18 months or so).
One line from the whole report sums up the situation for Lufthansa:
“It’s fair to say that the BMI deal hasn’t worked out too well for Lufthansa.”
The Independent also reports that Virgin is talking to the regulators about any take over and the implications of it, as well as the race to take over BMI.
Meanwhile in the Sunday Times, the black hole of pensions appeared again, which is believed to have a deficit of more than £100m. The BMI Pension trustees have threatened to scuttle the sale if it affects the pension fund. Which is far better than a dead airline of course.
The Airline Economics Newsletter (Entry Reproduced at FlyerTalk) sums up what this whole battle for BMI will be – not the people, or the aircraft or the routes – but the London Heathrow slots. Pointing to Etihad, Virgin and IAG as all who want to grow at London. With the slots worth £400 Million, BMI is worth only so much to IAG after the pension charge.
The newsletter also points out the one of the star qualities of BMI (and sadly, the people who will be hit the most by all of this) – the staff. And whilst us bloggers can wonder about the validity of Miles, what will the new miles be worth, who owns who, there are also real people at the end of this with livelyhoods that could well be wound up thanks to this.
At a later point this week (before I go and get some more Diamond Club miles in probable vain), I’ll do a little preview of what-if’s and maybes of who takes over BMI, and what the possible outcomes could or might be’s.
(To my American Readers – I know writing about a British Airline may be boring, but as a lot of you probably have BMI Diamond Club Star Gold cards, this will affect you – hence my practical non-stop coverage of this).