BMI to stay intact as restructuring aims to halve losses

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Lufthansa Group's UK carrier BMI is aiming to halve losses in 2010 after sustaining a deficit last year which exceeded even that of 2008, when it posted a pre-tax loss of £157 million ($242 million).

Speaking in London today, BMI chief executive Wolfgang Prock-Schauer outlined the difficulties which the carrier has faced but insisted that Lufthansa had no plans to break up the company.

He says BMI's "relatively small size", compared with competitors, has been a weakness and that the carrier has experienced strong competition from the "advanced" budget carriers in the UK.

Prock-Schauer adds that London Heathrow, which is BMI's main base, is "not conducive" to short-haul operations owing to the airport's charging structure.

He says the carrier, whose losses last year were "slightly worse" than in 2008, has been undergoing in-depth assessment following its acquisition by Lufthansa Group last year.

Prock-Schauer, who took over last December, says this has resulted in a restructuring plan worth £100 million - primarily from network adjustments and the shedding of 800 jobs - and he believes that BMI's losses will halve this year.

There is "no intention" of breaking up BMI - which includes mainline, regional and budget operations - adding that the company is "here to stay".

"There was obviously a problem," he says, referring to the losses incurred by the carrier. "But there is a new beginning now, and we're getting a lot of support [from Lufthansa] for this restructuring."