British Airways expects to start breaking even with BMI six months earlier than forecast, owing to rapid progress on integrating the carrier.
BMI was losing some £200 million ($320 million) per year when BA acquired the airline on 20 April, and BA had expected around £150 million of these losses to transfer to its own accounts.
But BA chief financial officer Nick Swift says the integration process is "nearly at the end", around 90% complete, and will be finished by the end of this year.
"We deliberately integrated first and optimised second," he says, adding that the process has "gone really nicely". All 25 BMI aircraft, as well as 1,400 personnel, have been moved to the BA fleet. Thirteen BMI stations have been closed.
The integration effort has already saved £20 million in costs and generated £40 million in revenue benefits, meaning that BMI's post-acquisition operating losses this year will be around £90 million, far below the £150 million guidance figure.
Swift says the loss will fall to £50 million in the first half of 2013 and the operation will break even in the second half, six months earlier than the previous estimate of 2014.
"We're starting to move into the 'optimise' phase," he says. BA started optimising the BMI schedule at the beginning of the winter season in October and this will continue next year, assuming that a dozen slot remedies for summer 2013 are accepted.
BMI has brought 20 new routes for BA's London Heathrow network for the winter plus additional capacity on eight BA routes from the hub.
Swift says that "plugging BMI into the BA machine" has resulted in "some good feed" on transfer flows. Revenues on one route - which he declines to identify - are up 37% on a 17% capacity increase, while there is evidence of improved performance on flow to key US destinations.
The optimisation process will include consolidating Heathrow operations to two, rather than three, terminals from 2014.
It will also involve gradually converting some slots to long-haul. BA has already chosen to open services to Seoul using slots obtained through the BMI acquisition.