Bmi profits halved to £15.5m

Bmi saw pre-tax profits halve from £29.7 million in 2006 to £15.5 million last year.

The group’s passenger carryings rose just one per cent to 10.6 million in the period, with revenues up by almost 13% to £1,022.6 million.

Chairman Sir Michael Bishop said:  “Our underlying trading performance continues to be resilient against a background of difficult trading conditions throughout the aviation industry.

“The prospects for any significant immediate improvement remain unlikely, but we continue to invest for future growth and are well equipped to achieve it.”

The group acquired BMED during the year to accelerate growth into mid-haul routes from Heathrow.

“BMED and its route network are already having a positive impact upon the business and will bring substantial benefits to the bmi group in the future,” said Bishop.

The group also disclosed that he value of the take off and landing slots it holds at Heathrow totals £770 million.

But bmi has no immediate plans to start transatlantic services from the London hub despise the introduction of US-EU open skies freedoms.

CEO Nigel Turner said: “The mid haul network we acquired on acquisition of BMED provides significant opportunities for profitable growth.

“For this reason, despite the advent of Open Skies, we do not plan any services from London Heathrow to the United States in the short term, although they remain within our medium term strategic thinking.”

He added:  “Trading conditions will be challenging for the entire aviation sector in 2008 with significant increases in costs that are out of the control of bmi.

“Nevertheless, we believe that actions that were taken in the past in redefining our strategy and focus going forward, means we can face these difficult conditions from a position of strength.”

Turner also reiterated concerns about expansion of Heathrow and the regulatory regime.

“The development of London Heathrow remains an issue of concern,” he said

“The resulting delays and disruption at the opening of Terminal 5 and the choreographed terminal moves, which will continue until the opening in 2012 of Heathrow East, have the potential to affect all Heathrow carriers.

“The Civil Aviation Authority (CAA) has recently reached its final determination on the maximum charges allowed at Heathrow for the period 2008 to 2013.

“The continuation of inflation-busting increases will see charges rise by approximately 86 per cent over the next five years.

“This is in our view is wholly unjustified. Bmi will focus its efforts on ensuring a comprehensive change to the future regulatory framework for Heathrow charges and the removal of the CAA as regulator.”

by Phil Davies