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HS748
Topic Author
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Bmi Turnover And Profit Up, Pax Down

Fri Apr 28, 2006 7:11 am

Airline Business (May 2006) is reporting that in 2005 bmi group saw turnover rise by 4.7% to £869 million and profit rise by 400% to £10 million. At the same time, passenger numbers were down 6% at bmi and up 7% at bmiBaby.
 
boeingguy1
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RE: Bmi Turnover And Profit Up, Pax Down

Fri Apr 28, 2006 7:31 am

How in gods name are they making money!?
"...Gatwick South!? Id rather crash in Brighton!"
 
HS748
Topic Author
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RE: Bmi Turnover And Profit Up, Pax Down

Fri Apr 28, 2006 7:42 am

Quoting Boeingguy1 (Reply 1):
How in gods name are they making money!?

Well according to bmi it's their strategy of focusing on high yield passengers and increased long haul operations. Additionally, they expect passenger numbers to be flat in 2006, whilst yields in the first quarter of 2006 are up on those for the first quarter of 2005.
 
Tango-Bravo
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RE: Bmi Turnover And Profit Up, Pax Down

Fri Apr 28, 2006 8:16 am

Quoting HS748 (Reply 2):
Well according to bmi it's their strategy of focusing on high yield passengers and increased long haul operations. Additionally, they expect passenger numbers to be flat in 2006, whilst yields in the first quarter of 2006 are up on those for the first quarter of 2005.

So then, contrary to the mantra of the U.S. legacies, it actually is possible to be profitable in the airline business without making market share and load factor the top priorities?! Wink
 
rojo
Posts: 2308
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RE: Bmi Turnover And Profit Up, Pax Down

Fri Apr 28, 2006 8:38 am

Quoting Tango-Bravo (Reply 3):
So then, contrary to the mantra of the U.S. legacies, it actually is possible to be profitable in the airline business without making market share and load factor the top priorities?!

Thanks to the valuable slots at LHR which help keep some competition away... BD needs to make business travelers its priority which will help increase the average fares charged. For example, the company I worked for used to pay US$1000 for a round trip flight LHR-BSL-LHR. I could have flown from LTN, but for me, convenience was more important, since I did not pay for the flights!!
 
HS748
Topic Author
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RE: Bmi Turnover And Profit Up, Pax Down

Fri Apr 28, 2006 10:22 pm

Quoting Rojo (Reply 4):
Thanks to the valuable slots at LHR which help keep some competition away

Not true....bmi serves India and Saudi Arabia long haul from LHR. Both have competition, particularly India. On this occassion the issue of LHR slots is a red herring.
 
timboflier215
Posts: 807
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RE: Bmi Turnover And Profit Up, Pax Down

Fri Apr 28, 2006 10:40 pm

Quoting HS748 (Reply 2):
Well according to bmi it's their strategy of focusing on high yield passengers

hence why they scrapped business class??
 
StarGoldLHR
Posts: 1346
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RE: Bmi Turnover And Profit Up, Pax Down

Fri Apr 28, 2006 11:14 pm

Selling A321's added to the balance sheet.
So far in 2008 45 flights and Gold already. JFK, IAD, LGA, SIN, HKG, NRT, AKL, PPT, LAX still to book ! Home Airport LCY
 
bmiexpat
Posts: 154
Joined: Wed Sep 21, 2005 11:11 am

RE: Bmi Turnover And Profit Up, Pax Down

Fri Apr 28, 2006 11:31 pm

Quoting StarGoldLHR (Reply 7):
Selling A321's added to the balance sheet.

bmi do not own any of their A321s. They are leased and as the leases expire they are being returned to the leasing company. Another red herring there I think?
 
jacobin777
Posts: 12262
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RE: Bmi Turnover And Profit Up, Pax Down

Sat Apr 29, 2006 12:09 am

BD's business plan is a mess...they killed their lucrative MAN-IAD route....ok, so they have valuable LHR slots? big deal...without a business plan, those routes mean nothing..

BD could have completely gangstered northern England with MAN.....the Asian market in itself is huge enough for a carrier to be successful, never mind all the other places.....

I've flown with BD before, and I've liked their services...........I hope they do well in the future...
"Up the Irons!"
 
bmiexpat
Posts: 154
Joined: Wed Sep 21, 2005 11:11 am

RE: Bmi Turnover And Profit Up, Pax Down

Sat Apr 29, 2006 1:08 am

Quoting Jacobin777 (Reply 9):
BD's business plan is a mess

Is that why they posted an increase in profits last year, despite a fall in passenger numbers?

Quoting Jacobin777 (Reply 9):
...they killed their lucrative MAN-IAD route....

From day one MANIAD didn't even come close to making a profit for bmi. I know the changes in schedules/dropped flights made for an unreliable service, but the cuts wouldn't have been made if the route was making a sufficient return on the investment.
 
CPDC10-30
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RE: Bmi Turnover And Profit Up, Pax Down

Sat Apr 29, 2006 1:20 am

From day one MANIAD didn't even come close to making a profit for bmi

Is ORD-MAN doing a bit better than this? I have been on this flight and was very impressed by the service from BMI.
 
bmiexpat
Posts: 154
Joined: Wed Sep 21, 2005 11:11 am

RE: Bmi Turnover And Profit Up, Pax Down

Sat Apr 29, 2006 1:22 am

Quoting CPDC10-30 (Reply 11):
Is ORD-MAN doing a bit better than this?

It is bmi's most successful route in it's whole network!
 
jacobin777
Posts: 12262
Joined: Sat Sep 11, 2004 6:29 pm

RE: Bmi Turnover And Profit Up, Pax Down

Sat Apr 29, 2006 1:26 am

Quoting Bmiexpat (Reply 10):

Is that why they posted an increase in profits last year, despite a fall in passenger numbers?

the entire industry has done well..there are enough threads here about the failure BD's business plan...

Quoting Bmiexpat (Reply 10):
From day one MANIAD didn't even come close to making a profit for bmi. I know the changes in schedules/dropped flights made for an unreliable service, but the cuts wouldn't have been made if the route was making a sufficient return on the investment.

once again, your comments would contradict many other threads from people who have done very good analysis on BD.....

i'm not mentioning anything ground breaking..

and I still reiterate that BD would have done well by focusing on MAN rather than LHR...
"Up the Irons!"
 
JobsaGoodun
Posts: 112
Joined: Tue Nov 16, 2004 6:35 pm

RE: Bmi Turnover And Profit Up, Pax Down

Sat Apr 29, 2006 2:29 am

I wonder how much SAS/Lufthansa had to pay into BD this year to facilitate these profit figures??

There is no way on earth that BD made money this year without some creative accounting.
 
bmiexpat
Posts: 154
Joined: Wed Sep 21, 2005 11:11 am

RE: Bmi Turnover And Profit Up, Pax Down

Sat Apr 29, 2006 3:32 am

Quoting Jacobin777 (Reply 13):
..there are enough threads here about the failure BD's business plan...

Most of the comments on this site about BD's failed business plan revolve around posters dislike of the new business model, the fact that they have to pay for a cup of tea etc.... disguised as how it has failed.

I don't know how much creative accounting took place in order to get to the recently announced 2005 financial results, but you cannot deny that the company is going in the right direction results wise. Increase in turnover, increase in profit, reduction in debt, despite group passenger numbers remaining static. This does not indicate to me the failure of BD's business plan.

Quoting Jacobin777 (Reply 13):
and I still reiterate that BD would have done well by focusing on MAN rather than LHR...

I don't disagree that there are opertunities to be had at MAN with regards to long haul, the MANORD route is a big money maker for bmi. However bmi's biggest asset is it's LHR slots. There is very little money to be made in being a short haul operator based at LHR, the only way to really make money is to fly long haul and that is why the third A330 was taken from MAN to start long haul flights from LHR. Believe me, I was very disappointed when the IAD route was dropped, but such is the nature of the airline industry.
 
Capital146
Posts: 2099
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RE: Bmi Turnover And Profit Up, Pax Down

Sat Apr 29, 2006 4:44 am

Well, however bmi have arrived at these figures, I think most people are a little surprised at ANY profit, let alone an increased one! Passenger figures down, business class scrapped on most mainline routes and yet they still increase profits?

Really hope this is not just a case of 'creative accountancy' and that a corner really has been turned at bmi.
Like a fine wine, one gets better with age.
 
jacobin777
Posts: 12262
Joined: Sat Sep 11, 2004 6:29 pm

RE: Bmi Turnover And Profit Up, Pax Down

Sat Apr 29, 2006 4:47 am

Quoting Bmiexpat (Reply 15):

Most of the comments on this site about BD's failed business plan revolve around posters dislike of the new business model, the fact that they have to pay for a cup of tea etc.... disguised as how it has failed.

I wouldn't agree with that......many people have given a good analysis as to why basing their hub out of man would have been much better than LHR (a reason which I mentioned above is one of my ideas)

Quoting Bmiexpat (Reply 15):
I don't disagree that there are opertunities to be had at MAN with regards to long haul, the MANORD route is a big money maker for bmi. However bmi's biggest asset is it's LHR slots. There is very little money to be made in being a short haul operator based at LHR, the only way to really make money is to fly long haul and that is why the third A330 was taken from MAN to start long haul flights from LHR. Believe me, I was very disappointed when the IAD route was dropped, but such is the nature of the airline industry.

I think the reason why it does well is because it codeshares with UA, which allows UA pax to get to northern England w/o having to deal with LHR (and vice-versa)...not to mention, the population is large enough to support 3 carriers - AA daily and PK 2x/weekly...

utilising LHR just takes away from allowing BD to make MAN a more effective hub......yes the money in short-haul LHR routes isn't there, but I felt they were holding their own and they should have expanded LHR after they made MAN into a fortess

cheers
"Up the Irons!"
 
bmiexpat
Posts: 154
Joined: Wed Sep 21, 2005 11:11 am

RE: Bmi Turnover And Profit Up, Pax Down

Sat Apr 29, 2006 5:32 am

Quoting Jacobin777 (Reply 17):
they should have expanded LHR after they made MAN into a fortess

....but out of 6 routes from MAN, only ORD was/is able to make any money. It would be foolish to concentrate on a hub operation that makes overall losses just to gain market share and scale of operation. bmi needs to make use of it's LHR slots in the most profitable way which is through long haul operations, and with it's lack of long haul aircraft, this meant moving one aircraft from MAN to LHR to begin establishing a long haul base there. MANIAD was not and never had made any money for the company over 4 years and was therefore the route to face the chop.

Quoting Jacobin777 (Reply 17):
......yes the money in short-haul LHR routes isn't there, but I felt they were holding their own

For the operating profit compared to turnover to be as low as it is, bmi is hardly holding their own with regards to LHR short haul operation. Hence the reason for the new business model on short haul which everyone seems to think has failed. I would argue that although it has not been a great success it has begun to move the company's financial results in the right direction. And as the company's financial situation improves, hopefuly there will be in future the sort of returns that can justify the significant investment it will take to bring in more long haul aircraft.
 
ATLFlyer323
Posts: 512
Joined: Sun Jan 16, 2005 2:01 am

RE: Bmi Turnover And Profit Up, Pax Down

Sat Apr 29, 2006 5:42 am

I know this wont really contribute much I hope BMI keeps flying seeing I really like their livery. I like BMIBaby's also.

~Brandon
Everyday, the fluffy temptation of wheat!
 
HS748
Topic Author
Posts: 621
Joined: Tue Oct 11, 2005 3:01 am

RE: Bmi Turnover And Profit Up, Pax Down

Sat Apr 29, 2006 6:13 am

Quoting Timboflier215 (Reply 6):
Quoting HS748 (Reply 2):
Well according to bmi it's their strategy of focusing on high yield passengers

hence why they scrapped business class??

High yield passengers on long haul routes, where business class has not been scrapped.
 
bmiexpat
Posts: 154
Joined: Wed Sep 21, 2005 11:11 am

RE: Bmi Turnover And Profit Up, Pax Down

Sat Apr 29, 2006 6:27 am

Quoting Timboflier215 (Reply 6):
Quoting HS748 (Reply 2):
Well according to bmi it's their strategy of focusing on high yield passengers

hence why they scrapped business class??

The demand for business class travel within Europe has collapsed since 9/11, and the burst of the dot com bubble amongst other things, and a large number of companies were introducing economy only travel policies for their staff. That is why bmi scrapped it's business class on most short haul routes, as the cost of providing it was not justified by the number of passengers. However within the economy cabin there are still high yielding passengers for bmi to aim for, those who purchase full fare (premium) tickets, and it is these high yielding passengers that bmi are focusing on, through lounge access, extra miles, dedicated check in desks, seating at front of aircraft etc..... and this strategy seems to be working through increased yields and therefore increased profits.
 
RJ100
Posts: 3904
Joined: Wed Nov 22, 2000 1:37 am

RE: Bmi Turnover And Profit Up, Pax Down

Sat Apr 29, 2006 6:48 am

I agree on this one with bmiexpat. I work part time for a large company. We, apart for higher management travel, switched to LCCs or economy class for staff travel.

By the way, are there any news concerning the rumoured MAN-BSL service with bmi regional? They once applied for slots...

As a passenger I can only recommend bmi. Flew them several times and they were very good.  Smile

Cheers,
RJ100
none
 
jacobin777
Posts: 12262
Joined: Sat Sep 11, 2004 6:29 pm

RE: Bmi Turnover And Profit Up, Pax Down

Sat Apr 29, 2006 7:07 am

Quoting Bmiexpat (Reply 18):
..but out of 6 routes from MAN, only ORD was/is able to make any money. It would be foolish to concentrate on a hub operation that makes overall losses just to gain market share and scale of operation. bmi needs to make use of it's LHR slots in the most profitable way which is through long haul operations, and with it's lack of long haul aircraft, this meant moving one aircraft from MAN to LHR to begin establishing a long haul base there. MANIAD was not and never had made any money for the company over 4 years and was therefore the route to face the chop.

hmmmm....seems you are the only person saying that MAD-IAD was a "failure"..i.e-money loser....from what I've read here by a number of knowledge people on BD, MAN-IAD was doing quite well..but as you stated, BD needed the aircraft for LHR....

as I stated before, MAN-Pakistan/India alone could have been a blockbuster for BD..some of the Mid-East carriers such as EK serve ISB/KHI/DEL/BOM via a stop at their hubs...where as BD could have done it directly....and that's not including HKG, SIN, BKK, NRT.....add JFK.... the possibilities were quite good that BD could have done very well........not only could BD have taken control of the entire Northern England area (God save the Queen.. Smile ), they could have taken over a lot of the northern United Kingdom area...such as GLA, SNN,etc with feeder flights.....

now they are relegated to what? Competing with BA, VS, EK, QR, CX, GF, SV, SQ, AI and a billion other carriers.......doesn't sound too much of a business plane to me..

Quoting Bmiexpat (Reply 18):
For the operating profit compared to turnover to be as low as it is, bmi is hardly holding their own with regards to LHR short haul operation. Hence the reason for the new business model on short haul which everyone seems to think has failed. I would argue that although it has not been a great success it has begun to move the company's financial results in the right direction. And as the company's financial situation improves, hopefuly there will be in future the sort of returns that can justify the significant investment it will take to bring in more long haul aircraft.

I wish I was as sanguine as you...but I'm not..... no 
"Up the Irons!"
 
bmiexpat
Posts: 154
Joined: Wed Sep 21, 2005 11:11 am

RE: Bmi Turnover And Profit Up, Pax Down

Sat Apr 29, 2006 9:05 am

Quoting Jacobin777 (Reply 23):
as I stated before, MAN-Pakistan/India alone could have been a blockbuster for BD..

I'm not sure what the bilaterals would allow between MAN and Pakistan/India, I'm sure someone else on the board can enlighten us with regards to that. But if (1) they would allow bmi to operate flights and (2) that those flights would be such money spinners then they would have been considered.

Quoting Jacobin777 (Reply 23):
hmmmm....seems you are the only person saying that MAD-IAD was a "failure"..i.e-money loser....from what I've read here by a number of knowledge people on BD

I was quite well involved in the bmi operation in IAD, and although the route was popular with passengers, they were not paying the kind of fares which could sustain the route.
 
jacobin777
Posts: 12262
Joined: Sat Sep 11, 2004 6:29 pm

RE: Bmi Turnover And Profit Up, Pax Down

Sat Apr 29, 2006 9:53 am

Quoting Bmiexpat (Reply 24):

I was quite well involved in the bmi operation in IAD, and although the route was popular with passengers, they were not paying the kind of fares which could sustain the route.

i'll give you the benefit of doubt, however, I believe that with BD being the sole MAN-IAD carrier, they would be able to charge a premium..

I wouldn't be surprised if BA is cleaning up IAD-LHR-MAN now...

Quoting Bmiexpat (Reply 24):
I'm not sure what the bilaterals would allow between MAN and Pakistan/India, I'm sure someone else on the board can enlighten us with regards to that. But if (1) they would allow bmi to operate flights and (2) that those flights would be such money spinners then they would have been considered.

given that PK has made MAN into a nice sized hub, I wouldn't be surprised to see if BD would have been able to use MAN has a hub to Pakistan...

the same might be true of India..........

more information would be needed to know exactly what the bilaterals were..
"Up the Irons!"
 
bmiexpat
Posts: 154
Joined: Wed Sep 21, 2005 11:11 am

RE: Bmi Turnover And Profit Up, Pax Down

Sat Apr 29, 2006 11:48 am

Quoting Jacobin777 (Reply 25):
i'll give you the benefit of doubt, however, I believe that with BD being the sole MAN-IAD carrier, they would be able to charge a premium..

I wouldn't be surprised if BA is cleaning up IAD-LHR-MAN now...

To be honest, at least 80% of the traffic MAN-IAD was interline with UA, and was bucket and spade traffic going to the likes of MCO etc.... so there was not much money to be made there, and the premium traffic was not enough to sustain the route.

Quoting Jacobin777 (Reply 25):
the same might be true of India..........

The relaxation of the bilateral with India last year only enabled bmi to operate a daily service LHRBOM even though they applied for more. I would imagine that services from MAN are restricted in quite the same way (although I stand to be corrected if I am wrong)


I think the way things stand at the moment bmi have a good range of long haul services. The LAS service is performing better and better, the ORD service continues to perfom extremely well, the Caribbean services are popular, if not cash cows. Out of LHR, with BOM going daily, providing a better service for business, things stand to get better, and with the use of the B767 on RUH and JED, with the larger business cabin, forward C class bookings are well above expectations.
 
jacobin777
Posts: 12262
Joined: Sat Sep 11, 2004 6:29 pm

RE: Bmi Turnover And Profit Up, Pax Down

Sat Apr 29, 2006 3:24 pm

Quoting Bmiexpat (Reply 26):
The relaxation of the bilateral with India last year only enabled bmi to operate a daily service LHRBOM even though they applied for more. I would imagine that services from MAN are restricted in quite the same way (although I stand to be corrected if I am wrong)


I think the way things stand at the moment bmi have a good range of long haul services. The LAS service is performing better and better, the ORD service continues to perfom extremely well, the Caribbean services are popular, if not cash cows. Out of LHR, with BOM going daily, providing a better service for business, things stand to get better, and with the use of the B767 on RUH and JED, with the larger business cabin, forward C class bookings are well above expectations.

as I've stated before, I hope you are right..but I'm not as sanguine as you are.......lets see how BD does 2-3 years from now...we'll have a better picture then...
"Up the Irons!"

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