British Airways (BA) is preparing to disband bmibaby, the low-cost unit it unwelcomely acquired from bmi after previous owner Lufthansa failed to find a buyer. But as the saying goes: one man’s meat in another man’s poison and the news of bmibaby’s grounding was welcomed by multiple airlines including Monarch, Flybe and Jet2.com, all of which are swiftly stepping in to backfill capacity.
Anemic-turns-dynamic is not exclusive to bmibaby’s network but a development seen following the recent demise of other small- and medium-sized airlines in Europe such as Spanair, Malev and Cimber Sterling. In those cases, competitors have reacted swiftly and within a couple of days to fill the void.
bmibaby’s closure is indicative of a recent development in Europe: the lavish injection of capital in loss-making carriers is coming to a standstill with public and private shareholders alike halting the operations of these entities, mostly small- and medium sized airlines, a trend long overdue and induced by low or no economic growth in most EU countries implementing stark austerity measures, and high fuel prices.
British Airways is planning two stages to wind up bmibaby, although it remains open to receiving offers that would allow it to transfer ownership and operations to another party. bmibaby has lost GBP100 million over the past four years. “IAG has consistently said that bmibaby and bmi Regional are not part of its long-term plans. Progress has been made with a potential buyer for bmi Regional, but so far this has not been possible for bmibaby, despite attempts over many months by both Lufthansa and IAG,” Peter Simpson, bmi interim managing director, said in a statement last week.
Mr Simpson added: “bmibaby has therefore started consultation to look at future options including, subject to that consultation, a proposal to close in September this year. To help stem losses as quickly as possible and as a preliminary measure, we will be making reductions to bmibaby’s flying programme from June.”
bmibaby’s size and network has reduced dramatically over the past years, and it presently focuses its operations around three bases (East Midlands, Birmingham and Belfast-City) with a fleet comprising 12 Boeing 737-300s and two -500s. Last year, as part of yet another restructuring exercise the carrier closed its bases at Manchester and Cardiff. It carried 2.2 million passengers in 2011, down from 4.3 million in 2007.
Gravity always wins!