Bmi operating profit up 85.5%

Bmi group grew its operating profit, before exceptional items, from £5.5m in 2005 to £10.2m in 2006.

The airline group said this growth was despite the impact of the August security alert at Heathrow and fog in December which together cost it £10m in lost revenues.

Chairman Sir Michael Bishop said: “This is an excellent set of results. They demonstrate the benefits of our strategic focus on managing yields, using aircraft and infrastructure more efficiently, as well as controlling costs.

“The 85.5% increase in operating profit was achieved in the face of extremely difficult operating conditions and would have been better but for very challenging issues at Heathrow.

“These were precipitated by the poor implementation by the airport owner of draconian new security measures which materially increased an already negative perception by passengers in using the airport.

“It is estimated to have cost the airline £10m in lost revenues. Increased fuel costs, significantly higher user charges at Heathrow and an increased pension charge were additional factors in restraining greater profitability for the year.”

But Bishop said these factors were offset by focusing on managing yields and continuing cost reduction initiatives.

Talking about the group’s mainline business, he said: “The new business model for short haul operations has continued to deliver benefits of reduced operating costs and improved yields in an intensely competitive market environment.

“Capacity has been trimmed through the progressive introduction of additional smaller Airbus A319 aircraft in substitution for larger A321 and A320 aircraft.”

Meanwhile its low cost airline, bmibaby, has carried nearly 40% of the total number of passengers carried by the group.

“It is anticipated that this proportion will show a steady increase in future years,” said Bishop.

The total number of passengers carried by the whole bmi group during the year was 10.5 million, the same level as 2005.

Looking forward, bmi plans to integrate the operation of its recently acquired BMED into bmi mainline from October 28.

“The opening of Terminal 5 at Heathrow airport in April 2008 should have a material impact on improving passenger satisfaction in using all the terminals at the airport when the pressure on existing facilities is reduced and the consumer experience is enhanced,” added Bishop.

“It is anticipated that a growth in passengers and routes served from Heathrow by bmi mainline will emerge as a larger route network is established and the overall reputation of the airport is restored.”

By Bev Fearis