The small UK airline bmi is being sold by Lufthansa to International Airlines Group (IAG), which owns British Airways and Iberia. Details are very unclear at this stage, and no information has been given of how much will be paid for the loss-making airline.
Memos have been sent to bmi staff saying that for a short time bmi will operate under its own air operator's certificate (AOC) which is the approval granted from The Civil Aviation Authority to an aircraft operator to allow it to fly.
The deal is expected to be completed in the first quarter of 2012, and until then the current set up of the company remains unchanged. bmi’s route network for winter 2011/2012 remains as planned and the memo states that the summer 2012 network will operate without any major changes. Both airlines have a largely complementary network, with few overlaps.
Lufthansa bought the 50% of bmi owned by its then chairman Sir Michael Bishop in 2008, having already owned 30%. However, after having made a go of sliming down the airline by selling a third of the long-haul fleet, it decided to sell it as the carrier's losses widened. bmi reported a loss of £133m for the first nine months of 2011, hit by rising fuel costs and social unrest in some of its destinations in North Africa and the Middle East.
Once the deal is completed, there seem to be three main options for British Airways. It could operate the airline as it's own offshoot, as it did with the low-cost carrier Go in 1998. However this is unlikely, as bmi has much higher costs and it has valuable Heathrow slots. Or, it could restart its operation BA Connect, a similar airline it sold to Flybe - indeed BA still owns 15% of FlyBE. Alternatively it could just rebrand the aircraft in its own colours, move the routes to Terminal 5, and operate the airline as one.
The third option would result in the axing of the much loved Frequent Flyer scheme bmi Diamond Club: indeed for many years the popularity of the club has been such the airline has been called a Frequent Flyer scheme in need of an airline. This is the major consternation of many passengers: however bmi have confirmed that, for the moment, the Frequent Flyer scheme and all bookings remain as is. However, as with previous mergers it is clear that when change comes, it will come quickly.
For many aircraft and crew, they have spent many years operating in BA colours: bmi bought British Mediterranean Airways (BMED) in 2007, and now bmi is BMED (having shut down many of its existing routes). BMED was a British Airways franchise partner, operating a large number of obscure routes to Africa, Middle East and Central Asia. As part of the deal it did however have to sell back to BA a number of BMED's Heathrow slots, however this purchase gave the airline a lifeline: it was able to start flying on routes where there was no competition from BA or low cost airlines, and as these destinations were mainly to 'slightly dodgy oil ports' as they were described at the time, bmi could start charging a serious premium. Now BA would have those routes.
There are two parts of the airline that will not be sold. bmi has a no-frills subsidiary called BMIBaby and the Scottish-based bmi Regional. bmi announced is October that it was in advanced talks to sell bmi Regional to an investor group that will continue to run it as an independent airline. Therefore, some hope that the bmi name will live on.
