From the IAG Traffic Stats document, it seems the British Airways pilots have voted to integrate BMI  Mainline (A319/A320/A321/A330) into the British Airways arm after the merger is approved

IAG plans to integrate bmi mainline into British Airways, subject to receiving regulatory approval for the acquisition. This follows agreement by British Airways’ pilots to make productivity changes that justify the integration.

Reading further into the subject, the current timetables will operate as is to the end of Summer 2012, and BMI whilst owned by IAG will operate under it’s own Air Operators Certificate.

So what are we seeing? Well when IAG finally grabs BMI, the BMI name will finally end after a period of time. I’d expect major changes from Winter 2012/13 and Summer 2013 onwards where de-duplication can begin, and new British Airways routes appear.

With the slow dismembering over everything bar BMI Mainline, it’ll soon be down to regulators to approve, or not.

Well I was going to write about the Virgin threat, but lets be frank – It isn’t creditable unless they manage to throw a big spanner with the EC/Monopolies Commission. So let me wrap up this discussion for a bit – until it all goes pear shaped (which knowing BMI – is entirely likely)

• Status – If you’ve got to a certain point, hang on tight. If you’re short before say April, boost your miles and fly to get those status miles
• Miles – You should be in burn, burn burn mode now. If you’re hoping for a 1:1 transfer of BMI to Avios, I’d expect to be disappointed.
  
• Don’t buy any more miles unless you need them for a redemption
• Look out for options for Star Gold in the future. I’d even advise open up an Aegean Airways account and credit any Star Alliance flights to them.  Also keep an eye out for status matches AFTER the take over
• Expect some beanies when IAG/BA takes over, but not that many.

Thankfully, we’re not in a Anslett or Varig situation – and if BMI is brought, then hopefully things should transfer over and all will be well.

Yes, I know it’s unlikely too.

GhettoIFE.com will continue watching and keeping a close eye on the takeover, as I suspect there is going to be a few more bounces before this is all done and dusted.

There’s been am Elephant in the Room in the sale of British Midland Airways to Interational Consolidated Airlines Group, and it’s been BMI Baby.

The Low Cost Carrier (operating a fleet of 737-300/500 aircraft, based out of various UK airports) has been a questionmark in the sale of the sale – with IAG getting a discount from Lufthansa if they failed to sell the unit off.

According to Bloomberg,  Intro Aviation GmbH is the company who are looking at the books of BMI Baby to see if they can turn the airline around  or approrpiatly restructured. And they’ve had experiance of turning around airlines – in the past they turned around Deutsche BA (before selling it to Air Berlin) and LTU (who they also sold to… Air Berlin).

Whilst Intro Aviation has come out with it, BMI states there are several intrested parties and BMI are idenfiying a preferred buyer.

Meanwhile the sale of the BMI Regional arm is all but complete, subject to preconditions left.

This will leave IAG the bits of BMI they want – the slots and the remains of the mainline airline.

BMI Baby has a tough time of it, being formed from the cast-offs of the BMI Fleet when BMI switched from Boeing to Airbus, and adding older jets as needed. The route map is very leisure orientated (with a few core business routes). Alas, BMI Baby by itself does make tough work of it life by a shifting route network and heavy competition from Ryanair, EasyJet and even Jet2.

However, I’ll say this: If the sale goes through – and people keep their jobs, then it’s a foundation to hopefully rebuilt the airline into something better.

Those of you who were hoping to match to Miles and More from BMI Diamond Club – some very bad news for you (and if truth be told, I’ve sort of known this after chatting to a few people last week).

From http://forum.airliners.de/index.php?showtopic=44637&view=findpost&p=607297 and translated by Google:

The sale of bmi IAG (the parent company of BA) – shall be completed by the end of the first quarter of 2012 – subject to regulatory approval. Further details are not yet known.

A mile or transfer status of bmi Miles & More is not provided.

Whether the frequent flyer program is transferred from bmi to BA and on what terms are negotiated bilaterally between bmi and BA. Unfortunately we have no information about the status of talks.

And there it is. Those of you who were hoping to be matched to Miles and More had better start Start hunting for a decent Star Alliance programme.. Ooh. Now.

And those sitting on piles of BMI Diamond Club destination miles – there proviso that you should be aware of in the terms and conditions (Section 9 for those who want to scroll past and think I haven’t copy and pasted directly):

9) Length of programme

1. In the event that the Diamond Club programme should be closed, bmi shall use every reasonable endeavour to publicise at least three months’ notice of the closure of the Diamond Club programme. At the end of that period members shall no longer be able to earn Destinations Miles or Membership Status Miles, redeem Destinations Miles or utilise Membership Status Miles nor shall the member be entitled to any benefits under the Diamond Club programme other than flights or other services already redeemed but not yet utilised prior to the end of such period.

Those of you with mileage piles – if you haven’t started burning already,  you’re being a bit foolish – certainly I’m not expecting every mile to be converted into an Avios. It’s a remote possibility (and did happen when Aer Lingus left OneWorld – 3 months notice was given to burn redemptions off before it was impossible to redeem on OneWorld metal), but it exists.

The advice from GhettoIFE towers is clearer than ever.

Got BMI Miles? Burn them. Now.

(There was going to be a what happens if we move to IAG’s BA Avios Programme, but I’m icing that for today as I haven’t written it in a way that makes sense yet – more on the BMI futures tomorrow)

Well the clue of the post is in the title – Should you be aiming to re-qualify for Gold or Silver?

Well the short answer is Yes. Because when BMI finally goes, it’s pretty much a given status will be matched by the overtaking airline – be it IAG’s British Airways or Virgin Atlantic.

Based on the current timetables, here’s my thoughts on when if to go for the full renewal:

Remember the only guaranteed ways of getting BMI Status miles is to fly.  Destination Miles (miles earned by shopping, hotels, etc.) do not count your status.

For UK Residents, there is also the BMI Plus Credit Card which can give youa 4,000 miles boost too, however think carefully before taking any credit commitment, and ask yourself a question “What will happen to my credit card miles after BA/Virgin takes over?”

As most of you sadly know, I am an ardent supporters of BMI and their Diamond Club programme. Heck, I’ve even flown with BMI. So yes, it is an airline and not just a frequent flyers programme that we all dump miles into

However, as the Bob Dylan song goes, The Times, They Are A Changing…

For this week, I’ll be talking about a few different things such as:

• Should I re-qualify for BD Gold/Silver?
• Where do I go next with my miles?
• Where do I go after Diamond Club?
• What if it all goes to plan and we become Avios and BA?
• What are the realistic chances of Virgin getting in?

Now, I’ll point out I have no inside knowledge of what’s happening in Donnington Hall, Waterside, or the Regulators. This is based on conjecture and wild guesswork. But it sort of makes sense.

I’ll be publishing these musings on the evening slot, keeping the morning news highlight free, with the late-late show for anything I can find interesting.

Of course, your  feedback and thoughts are welcome. You know how to use the comments box – feel free to do so

As we are all aware (or if you’ve been living under a rock), British Midland Ltd – comprising of British Midland International, BMI Baby and BMI Regional is on the block to be sold by Lufthansa to International Consolidated Airlines Group (owners of British Airways and Iberia) with Virgin Atlantic making grumbling noises in the background.

Well a post on the FlyerTalk BMI Sold thread has surfaced from Wolfgang Prock-Schaucer (CEO of British Midland Ltd) to rally the troops.

For prosperity – the post is below:

We understand that the future of the company is a concern for all of you. Now that we have filed our annual accounts for 2010 with Companies House, I wanted to provide you with more details about this and also an update on the proposed sale of British Midland Ltd to IAG.

1. Filing of our accounts 2010

The accounts were filed on a going concern basis and the directors have provided a ‘going concern’ statement. This statement confirms that we are satisfied based on a review of all circumstances and a prudent assessment of the financial position of the company, that the company can continue in business for the foreseeable future. The auditors have approved the director’s report.

2. The proposed sale of British Midland Ltd to IAG

Following my previous message to you regarding the signing of the purchase agreement (SPA) for 100% of the shares of British Midland Ltd to IAG, the completion of the transaction is expected by quarter one 2012 and is subject in particular to achieving competition clearances. During this pre-completion phase, bmi has certain obligations. We need to carry on our business in the normal course, consistent with past practice. This means for example that we have the resources available to operate the planned summer 2012 schedule, that we carry on with our sales and marketing activities in the ordinary course and ensure that we continue operating the slots associated with bmi.

For anything that is not of a routine or normal course, we need to comply with an approval process. This refers for example to capital investment, entering into contracts above a certain threshold, changes in industrial agreements and in financial and corporate policies.

These are only a few examples and not the full list. The senior management team have been given the full information and a process has been set up with the legal teams to ensure compliance. Please consult your manager if any decisions need to be taken outside the normal course of business.

For the time until completion of the transaction, we will continue to treat BA / IAG as a competitor of ours.

3. bmi Regional and bmibaby

We are actively pursuing the option to sell bmi Regional and bmibaby before completion.

With bmi Regional we have concluded an agreement with a UK based investor group which is subject to certain pre-conditions which are to be fulfilled.

With respect to bmibaby there are several interested parties and we are in the process of identifying the preferred buyer and aim to conclude a purchase agreement as soon as possible.

4. Conclusion

Taking into account the current economic climate and the difficult market position, the sale of bmi to IAG is the most sustainable solution for our company. It is crucial that we fulfil all our pre-completion obligations, have all the resources available to operate our planned schedule, and continue with our safe and customer focused operation.

We understand that you have many questions and concerns. Please be assured that we are giving you as much information as we can and we will continue to keep you updated.

With best regards,
Wolfgang Prock-Schauer

What do we learn from this?

• BMI is still a going concern according to all the paperwork so far – for IAG this is important so they can extract the value from it
• It seems it’s business as usual for now until the takeover is complete, with BMI vs BA for a bit.
• The transaction is heading to a End of Q1 completion
• We know BMI Regional has been sold already
• BMI Baby. Well – I’d be happy if it was sold and brought by someone. Hopefully someone will for the sake of the hard working crew in the airline. Alas, the fact that no-one has public come out so far says a fair bit.

It’s a rallying call to keep going. And for the sake of the staff who are there slogging their guts out – I wish them the best.

Well it’s been coming for some time as I’ve been dancing around OneWorld with and Qantas their Paper Status (thanks to that wonderful British Airways Ashes Fare a couple of years ago). With a pathetic 6000 miles or so in my Qantas account, I’ll keep that alive with the odd Aer Lingus flight (or dread the thought – pay and top up the account for something actually useful).

But it’s time to let Skippy go with the advent of  IAG subsuming British Midland, and consolidate my miles.

This is next for me though:

Oh well – only 250 Avios to earn before I’m allowed a British Airways Blue card…

Let the great game begin – anew!

It’s Christmas Day, and a Merry Christmas to all.

It’s Sunday still, so it’s time for some airplane art. This week, it’s a present International Consolidated Airlines Group brought for it self from Lufthansa – British Midland Airways Limited.. and with that, a BMI Airbus A319 taxing at George Best International Airport

More airplane art over the week as it’s Christmas week, and news is normally quiet this week…

Looking through the slide deck from the IAG  have published on their investors relations site, it is now confirmed that BMI’s membership of Star Alliance will terminate upon completion of the purchase of BMI by IAG.

The transaction is due to be completed by 31st March 2012, subject to regulatory approvals.

The slide deck also reveals a few more features:

• BA will be gaining a fleet comprising 27 aircraft (23 leased and 4 owned)
• The 56 slot number applies to weekdays only
• bmibaby to be wound down and closed if a sale of bmibaby is not executed (or as written “if bmi baby is not sold by May 2012, Lufthansa will provide compensation to cover costs of orderly exit”)
• It looks like mixed terminal running to start with, with the possibility of moving to T5/T3 (“Possibility to co-locate bmi mainline capacity at Heathrow in the Western Campus (T5 / T3) with the rest of IAG, after T2 phase 1 completion in 2013)
• The IAG slot portfolio will increase to around 53% post completion
• BMI used 25% of it slots with regional aircraft (ERJ-145′s) for Summer 2011.

Slide deck is at http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MTE5NzI3fENoaWxkSUQ9LTF8VHlwZT0z&t=1. Worth a read.

Subject to nothing else breaking out, I’ll be doing an analysis a bit later on this evening.

The press releases for today’s big announcement today of the sale of British Midland Airways to International Consolidated Airlines Group (IAG)

First up, Lufthansa – http://presse.lufthansa.com/en/news-releases/singleview/archive/2011/december/22/article/2054.html

Following the announcement on November 4, 2011, Deutsche Lufthansa AG (Lufthansa) and International Airlines Group (IAG) have signed a binding agreement for the sale of British Midland Limited (bmi) to IAG. The price is GBP 172.5 million (approx. EUR 207 million) in cash for bmi. The price is subject to certain reductions. Both parties aim for a closing of the transaction by the end of the first quarter 2012.

After signing the agreement, Christoph Franz, CEO and Chairman of the Executive Board of Deutsche Lufthansa AG, stated, “bmi’s employees and management team have shown great motivation and unfailing commitment in dealing with the financial challenges of the past years. For this I owe them my thanks and appreciation. It was therefore especially important for us to find the solution that best provides the company and its employees with sustainable prospects for the future. This has been achieved through the sale of bmi to IAG. And as part of Lufthansa’s strategic development the sale means that our customers, shareholders and employees will benefit from a sharpened corporate profile and a stronger financial position of the Group. Both of these are necessary elements to enable sustainable, profitable growth.”

Transaction highlights:

• Sale of bmi for a gross purchase price of GBP 172.5 million (approx. EUR 207 million), subject to certain reductions
• Net of total potential reductions, the net purchase price expected to be clearly negative; however, the transaction is expected to have amortized for Lufthansa after around one year
• As part of the agreement, a British holding company of Lufthansa, is to take on bmi’s defined benefit pension scheme
• Deal remains subject in particular to competition clearance
• bmi will be accounted for as “asset held for sale / discontinued operations” for Financial Year 2011
• Closing of the transaction is aimed for the first quarter of 2012
• Transaction offers sustainable future prospects for bmi
• Lufthansa aligns airline portfolio to strategic fit and benefits from stronger earnings position

Meanwhile over at IAG http://www.iairgroup.com/phoenix.zhtml?c=240949&p=irol-rnsArticle_Print&ID=1642163&highlight=

BINDING AGREEMENT FOR BMI PURCHASE

Following the announcement on November 4, 2011, International Airlines Group (IAG) and Deutsche Lufthansa AG (Lufthansa) have today reached a binding agreement for IAG to acquire British Midland Limited (bmi). The cost is £172.5 million in cash though the price is subject to significant reductions. bmi consists of three distinct business units – bmi mainline, bmi regional and bmibaby.

Transaction highlights:

• Acquisition of bmi for £172.5million in cash
• IAG’s Heathrow slot portfolio to increase by up to 56 additional daily slot pairs
• Lufthansa to take on bmi’s defined benefit pension scheme
• Lufthansa has the option to sell bmi regional and bmibaby before completion
• Significant price reduction if Lufthansa does not opt to sell bmibaby before completion
• Deal subject to competition clearance
• Earnings per share (EPS) accretive by 2014 at the latest
• 2015 operating profit target of €1.5 billion to increase by more than €100 million with consequent increase in EPS
• Underpins goal of 12 per cent return on capital employed by 2015
• Restructuring costs spread over three years and significantly lower in total than bmi’s current annual losses

Willie Walsh, IAG chief executive, said: “Buying bmi’s mainline business gives IAG a unique opportunity to grow at Heathrow, one of our key hub airports. Using the slot portfolio more efficiently provides the option to launch new longhaul routes to key trading nations while supporting our broad domestic and shorthaul network.

“This deal is good news for the UK as we will maintain a comprehensive domestic schedule including Belfast. Our plans to expand our longhaul network would guarantee growth by making Britain better able to compete on a global scale. It will also help maximise Heathrow’s position as a world class hub airport.

“Customers will benefit from access to new destinations, more convenient schedules, enhanced frequent flyer benefits and greater investment than had been possible for loss-making bmi.

“Given the scale of bmi’s losses, there is an urgent need to restructure the business. Unfortunately, this will mean some job losses but we will secure a significant number of high quality jobs here in the UK and create similar new jobs in the future. IAG’s purchase of bmi will protect more British jobs than if the airline had been closed and had its Heathrow slots sold off. There will be restructuring costs spread over three years but these will be significantly lower in total than bmi’s current annual losses.

“bmi regional and bmibaby are not part of our plans and Lufthansa has the option to sell them before completion”.

Financing

IAG intends to finance the purchase from its own funds. £60 million of the purchase price will be paid in four instalments to Lufthansa pre-completion. This amount will be secured by Heathrow slots.

Pensions

Lufthansa has agreed to take on bmi’s defined benefit pension scheme.

Timetable and conditions

It is hoped that the transaction will be completed during Q1 2012 subject to regulatory clearance from the European Commission and other bodies. There is a termination fee of £10 million which is only payable by IAG if phase 1 EU regulatory approval is not achieved by March 31, 2012 and either party elects to terminate the sales purchase agreement.

About bmi

bmi mainline operates Airbus aircraft to destinations in the domestic UK market, Europe, CIS states, Middle East and Africa from London Heathrow. bmi regional operates an Embraer fleet and offers shorthaul flights within the UK and Europe from 7 regional airports. bmibaby operates Boeing aircraft and is a low-cost airline flying primarily out of East Midlands and Birmingham airports.

bmi reported gross assets of £284 million as at December 31, 2010 and a £153 million loss before tax on revenues of £777 million for the year 2010.

So what new things do we learn?

• BMI is loosing money hand over fist still.
• BMI’s pension scheme is still Lufthansa’s problem (operated by a LH controlled UK holding company)
• IAG gets a significant price reduction if Lufthansa fails to sell BMI Baby
• BA Brand gets a chance to launch more long-haul routes out of London Heathrow
• Belfast to retained as a destination from London
• IAG remains “London focused” with it not wanting to deal with BMI Baby – showing what BA’s attitude to the regional areas of the UK
• It’s still all down to the competition authorities.

There will be further coverage of this during the day, including an analysis later on today.