International Airlines Group – the owners of British Airways and Iberia is planning to convert the 18 options it has for Boeing 787 aircraft into orders.

The 787′s will be used in part to replace existing Boeing 747-400 aircraft in the British Airways fleet. Deliveries are scheduled from 2017 to 2021.

Currently, IAG has orders for 24 787′s – split into eight 787-8′s and 16 787-9′s for delivery to British Airways. The conversion of the 18 options don’t specify which version of the 787 Dreamliner will be chosen – although if they’re targeting 747-400 fleet replacement, it would have to be another mixture of 787-8′s for range and 787-9′s for capacity.

IAG has selected Rolls Royce Trent 1000 engines to be installed on their 787 aircraft.

The interesting side effect is for Iberia – who IAG is considering 787′s for. According to IAG they have secured commercial and delivery terms for the aircraft. However, an order will only be made when Iberia has restructured appropriately, with a reduced cost base and a position to grow.

British Airways operates a mixed fleet of Airbus and Boeing equipment, whilst Iberia is an Airbus only operator.

The order will be subject to confirmation and approval by IAG Shareholders.

British Airways are due to get their first Dreamliner in 2013 – however when is a good question due to the ongoing grounding of the 787 that is preventing airlines flying the aircraft, and Boeing from delivering the aircraft.

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As we all remember, Virgin Atlantic moaned its way through the sale of BMI to IAG. Part of the deal was that IAG had to disperse 14 pairs of slots of Heathrow to buy BMI.

These slots are assigned for shot haul and domestic use.

Well, it seems Virgin Atlantic has full authority on these slots from the UK Civil Aviation Authority (CAA) and the European Commission, confirming routes to the following:

  • Manchester (pre-announced and confirmed to operate)
  • Edinburgh (pre-announced)
  • Aberdeen  (pre-announced)
  • Nice (new)

It seems Virgin Atlantic’s focus on its flying between Scotland and Heathrow, running multiple daily flights from Edinburgh and Aberdeen to London Heathrow.

The slots which were assigned for Moscow are to be re-assigned as Virgin Atlantic lost the offer of route authority (with EasyJet winning the 2nd Carrier status between London and Moscow)

Steve Ridgway CEO of Virgin Atlantic says:

“We have fought hard for the right to fly short-haul and take a strong challenge to British Airways within these shores. For 28 years both airlines have battled for customers all over the world and it has meant that British consumers have ultimately had some of the world’s best flying and lowest fares.

“This is the beginning of an exciting new era in Virgin Atlantic history and we now feel a responsibility to everyone that has supported us in this challenge. Passengers can look forward to a great short-haul service with us but most importantly reap the benefits from the re-injection of vital competition we can provide on these routes.

Timetables are being firmed up for all services, as well as equipment leases (mainly as Virgin Atlantic currently operate a wide-body only fleet at the moment, and for shorter haul legs they won’t fill those seats for all the will in the world). It’s looking Virgin will lease some A320′s for this purpose.

The only other known operator to bid for the slots was Aer Lingus – who have a rather large slot portfolio at Heathrow already.

The big question that needs to be asked however is will Virgin Atlantic manage to turn a profit on these routes? Whilst Virgin Atlantic will provide welcome competition on these short-haul legs, turning a profit is a different matter. Considering BMI were substituting larger A320′s and A319′s for a ERJ-145′s on these routes at a lot of points – and still managing to loose £36 per passenger, I can’t help feeling this could be a costly exercise for Virgin.

However, if they can combine this short haul feed with an alliance membership – who knows.

It’ll be down to the old chestnut – Yield Per Passenger.

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It seems IAG’s patience with Iberia is running out quickly, as it announced today a sharpening of the job axe.

Up to 4500 positions are up for the cut, along with five long haul aircraft and 20 shorthaual aircraft to be removed for the Iberia mainline fleet (156 planes down to 131 planes).

This will also reduce Iberia’s routes by 15%, to focus on the profitable routes.

IAG revealed a 30% drop in pre-tax profits due to Iberia’s poor performance, as well as the purchase of British Midland Airways (better known as BMI), and that olde bugbearer of airlines – fuel.

Willie Walsh, CEO of IAG says:

“The group performance is coming back to the levels seen in 2011 and this is particularly true if you strip out the BMI losses of 31m euros in the quarter,”

“However, there remains a strong difference between the performances of British Airways and Iberia.”

IAG flagged that Iberia’s future wasn’t rosey in the last quarter report – and that jobs would be on the line. That promise has now been delivered sadly.

Rafael Sanchez-Lozano, Iberia’s CEO puts it bluntly.

“Iberia is in a fight for survival,”

“It is unprofitable in all its markets.

“Unless we take radical action to introduce permanent structural change, the future for the airline is bleak.”

Ouch.

As well as the 4500 jobs to go, there will also be what IAG describes as “permanent salary adjustments to achieve a competitive and flexible cost base”.

Or pay-cuts and cuts in conditions to you and me.

Iberia has gone out to the Unions (who were expecting 7000 jobs to go to the axe), but has set itself a deadline of 31st January 2013 to have all deals agreed.

With Iberia burning through €1.7 Million a day, there is motivation to sort something out, with the ominous threat of if no agreement is reached, deeper cuts will have to be made.

This comes at a time where IAG itself is going to make a 100% control bid of Vueling, purchasing the remaining stake of Vueling for €113 million.

IAG believes with Vuelings lower cost base, it can create more jobs and operate more lower cost services.

How it will convince the regulators is another matter completely.

Sadly, this is an indication of the weakeess of the Euro-area. Everyone is trying to drive down costs – at all costs it seems.

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For International Airlines Group, it’s been a rather good year getting control of British Midland Airways in the United Kingdom. However, in Spain things have been a bit more fraught.

The setting up of Iberia Express has caused a lot of friction between the management and the pilots and cabin crew.

Well it looks like the management are looking for a way out – and its name appears to be Vueling.

Vueling is a Low Cost Carrier based in Spain (with multiple bases around Europe), operating 56 Airbus A320′s and 3 Airbus A319′s, and seems to do the low cost carrier thing like most low cost carriers do. It’s history is an interesting one as it was an independent airline to start off with, before merging with ClickAir (which was a low cost carrier started up by Iberia). To save money, both airlines merged, with Iberia retaining a 48.85% holding in the company.

In a statement, IAG says the following:

“No decision to make an offer has yet been reached nor, accordingly, on any of its potential terms, including in particular the price. Further announcements will be made in due course when a decision is made,”

“IAG’s subsidiary Iberia L.A.E. Operadora, S.A. has a 45.85% shareholding in Vueling.”

If it does, this could be an interesting play. Whilst there is no room for another LCC in the United Kingdom (as far as IAG are concerned – they closed down bmibaby), Spain offers a real interest as it has both shorthaul domestic, Europe and possibly Africa if agreements are reached.

However, for a 100% takeover, this would probably have to head to the regulators – which is where this deal could stumble…


Something I don’t want to stumble is my Comments for Hurricane Sandy Dollars Drive. Sandy was a hell of a storm, and with each of your comments in a blog post, I’m aiming to get lots of commments so I can donate a lot of cash with other Boarding Area Bloggers.

Time is running out for this (I’m closing this 19:00GMT/12:00EDT), so PLEASE comment in http://ghettoife.boardingarea.com/2012/11/05/after-sandy-ways-to-help-and-get-points-and-a-way-to-get-me-to-help/ and help me donate cash!

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For those of us who watch the skies, the sight of the White and Blue whale will soon disappear from the sky on bigger birds as British Midland Internationals Operating Certificate expires today.

BMI Airbus A320 at London Heathrow

A short potted history:

The Early Years

  • bmi began life in 1938 as Air Schools Ltd, specialising in RAF pilot training
  • In 1949, the company became known as Derby Aviation, diversifying operations to include passenger and cargo charter services
  • In 1959, the company became known as Derby Airways, changing to British Midland Airways in 1964, when it moved to the newly opened East Midlands Airport in 1965

1970s

  • Throughout the 1970s, British Midland Airways further expanded domestic and international passenger services, including longhaul destinations
  • The company celebrated a landmark in 1979, when over one million passengers were carried for the first time in a single year

1980s

  • bmi’s growth continued during the 1980s and passenger carryings were recorded at 1.8M
  • The company established its headquarters at Castle Donington near East Midlands Airport in 1982, and in 1986 the airline changed its name to British Midland
  • In 1989, Scandinavian Airlines (SAS) purchased a 24.9% stake in the airline at a cost of £25M

1990s

  • By the end of the 1990s, British Midland enjoyed passenger carryings of over 6.5M a year
  • In 1992, Scandinavian Airlines increased its share to 40%
  • In 1993, it became the first European carrier to offer a separate Business Class cabin for business travellers and in 1995, it became the first airline to offer a booking service with payment over the internet
  • In 1999, Lufthansa acquired a 20% stake in British Midland from the 40% owned by Scandinavian Airlines

2000s

  • British Midland joined Star Alliance on 1 July 2000
  • The turn of the century saw an expansion of routes and the beginning of longhaul operations to the USA, India and Saudi Arabia
  • The airline’s new global ambition was accompanied by a rebranding to bmi British Midland in 2001, subsequently shortened to bmi two years later
  • In 2002, bmibaby, a low-cost subsidiary with its own unique brand, was launched
  • Following the acquisition of BMED in 2007, bmi enjoyed rapid expansion to 17 midhaul destinations in the Middle East, Asia and Africa
  • The route network was strengthened further with the addition of more midhaul destinations including the launch of services to Russia
  • On 1 July 2009, bmi became a member of the Lufthansa group
  • In 2012, International Airlines Group (IAG) became the new owner of British Midland Limited and bmi Regional was sold from IAG to Sector Aviation Holdings Ltd (SAH). bmibay was shut down.

bmibaby Boeing 737-300 landing at East Midlands Airport

Of BMI, the only thing that remains is BMI Regional, which is now part of Sector Avation who begin operations on their own from 28th Ocotber (with their own ticket stock – Code 480).  bmibaby’s planes have been sent to storage, pending dispersal to other carriers.  As of BMI Mainline itself, the Blue and White Whale will be painted over (and is in the process of being painted over into British Airways Chatham Dockyard colours, with the A330′s disposed of whilst BA keeps the A319′s, A320′s and A321′s.

BMI A330 taxing at Manchester Airport

Flight BD928 will be the final flight and is operating from Baku. It will arrive at Heathrow (subject to ATC) around 10:30BST, who have operated from the T1 complex for over 30 years. The flght will be greeted with a water-cannon salute as it pulls in for the final time as a BMI service (before becoming a British Airways plane).

And that will end the name British Midland International, British Midland Airways for the time being.

G-MEDF completing the final BMI flight with a water cannon salute – Picture – TCX69 via FlyerTalk

From the 28th October, FlyBMI.com will unavailable, and you’ll need to access www.diamondclub.org to access you miles and get them out of Diamond Club over to British Airways Executive Club. Also note that all earnings have now ended except via the BMI Credit Card.

For all non UK residents (except South Pacific), you’ll need to get your miles transferred to Avois by 31st December. UK residents have more time whilst the BMI Credit Card exisits. South Pacific Members have had their accounts frozen, pending a decision on what to do with them (as the default oneworld membership for that region is Qantas)

And so, another footnote in British Aviation history is added.

So long and thanks for all the cheese toasties.

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Earlier this year, Sector Aviation Holdings successfully purchased BMI Regional from IAG as part of the breakup of British Midland Airways.

Today, the airline has annouced its first new routes and will operate the two new routes as well as the current ones:

  • Bristol and Aberdeen,
  • Manchester and Antwerp.

The new routes will commence on 29th October and will operate twice daily, with further routes to be announced later on.

BMI Regional and IAG are operating under a transition agreement as the airline gets feet on the ground. On 28th October, the airline will become a fully independent airline and will operate from a base at East Midlands Airport.

They’ve also launched a new website at bmiregional.com, with a spanking new logo too – it maybe familiar to some of us…

Bookings on BMI Regional routes can be made at the old BMI site for now, with a new frequent flyer scheme in the works too.

BMI Regional have also inherited a nice IATA Code – BM  as its flight designator

And for those at BMI Regional – the best of luck to you all. It’s a tough business, but Regional was one of the few parts of BMI that was making any money at one point.

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It’s getting close to closing time for the Low Cost Carrier offshoot of BMI – BMI Baby.

With the final flights set for the 9th September (Sunday this week), they’ve put a little ditty out on their website:

BMI Baby was create out of the spare Boeing 737′s BMI mainline had leftover after mainline switched to Airbus operations. Based out of different airport during its time (Birmingham, East Midlands, Durham Tees Valley, Manchester and Belfast), it tried to play the LCC game – and came out rather bruised each time compared to the giants of Ryanair and EasyJet.

Whilst the BMI Baby brand at some points had better recognition than BMI itself, this wasn’t enough as Lufthansa tried to dispose of the airline during the sale of BMI to IAG.

IAG decided not to retain BMI Baby, and the airline has been in wind-down mode since the IAG purchase with routes from Belfast City Airport cut to nothing and most duplicate routes cut in the first phase of the shutdown.

The final shutdown will be after 9th September after the last planes land at Birmingham Airport and East Midlands Airport.

 

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International Airlines Group (BA/Iberia/BMI) is having a bad time of it – loosing €390m  ($476m; £306m) loss for the six months to the end of June.

This is especially bad as the group turned in a €39 million pre-tax profit in the same period in 2011. Revenue increased in the period by10% to €8.5bn vs €7.8bn in the same timeframe.

Whilst revenue has been up, costs has also risen, with fuel costs going up by 25% as well as the costs of business restructuring (especially since it’s taken on BMI too)

Most of the trouble seemingly has come from the Spanish arm of Iberia which sustained a loss €263 million during the first half of 2012.

IAG’s CEO – Willie Walsh has thrown out a warning

“Iberia’s problems are deep and structural and the economic environment reinforces the need for permanent structural change. We are currently working on a restructuring plan for Iberia which we anticipate will be finalised by the end of September.”

“Inevitably, we will not be able to avoid job losses as part of this process.”

As well as redundancy costs, migration costs to Iberia Express, the economic conditions that the Iberia business unit operates in are worsening in Spain.

Very few carriers are making it through unscathed this year as the European downturn is having a major hit. Combined with high fuel costs, carriers are trying to reorganise themselves to make profit.

But when there are staff losses, it always makes those profits a bit more bitter.

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Lets have a good news story to end the day on.

International Airlines Group has completed the sale of BMI Regional to Sector Aviation Holdings.  This move should go some way to saving the 330 jobs that are at BMI regional.

The completed sale price of £8 million has been approved by the CAA, and thus Sector Aviation Holdings are in business.

BMI Regional operate a fleet of  4 Embraer ERJ-135 and  14 ERJ-145 regional jets with 330 jobs, and operate to 14 destinations in the United Kingdom and Northern Europe.

Sadly, IAG has very little interest in the regional market in the United Kingdom, leaving it to FlyBe and the Low Cost Carriers to fight over.

BMI Regional will retain its name as part of the sale – and thus the BMI name will live on. What Sector Aviation will do BMI Regional has yet to be decided.

Oh, and the sound in Cologne you’re hearing is Lufthansa executives wondering how the hell they’ve let this get away as it would had increased the value of the sale of BMI to IAG…

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In what can be described as some good news, BMI Regional has been sold by International Airlines Group to a company called Sector Aviation Holdings.

The price: A cool £8 million.

The sale is pending CAA approval, but IAG anticipates this will be completed within two weeks.

For that cool £8 million, Sector Aviation Holdings will get:

  • All of BMI Regional’s fixed assets and long-term liabilities
  • A fleet of 18 Embraer ERJ-135 and -ERJ-145 regional jets.
  • And the staff of BMI Regional – around 330 jobs.

Sector Aviation is a consortium of businessmen including Ian Woodley, – the founder of Business Air which was sold to BMI, which became BMI Regional – a full circle if you will, with funding provided Stephen and Peter Bond, who are also investors in Scottish airline Loganair.

Future plans for Regional have not been announced at this time – I’d expect something soon enough.

It’s good to see that BMI Regional has survived the axe that was being sharpened for it. Its previous performance should give it a fighting chance for the future and the people who work for Regional.

 

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As BMI is taken over by IAG and becomes part of British Airways, here’s a list of dates that are important:

As of now:

  • Diamond Club members can earn on BA Flights and vice versa.
  • BMI has formally exited from the Star Alliance
  • Diamond Club Members can access BA lounges at LHR and LGW

Big upcoming dates

  • 1st May – Diamond Club to BA Executive Club status matching begins
  • 31st May – Final Star Alliance matters need to be tied up.  That includes: Any Earning, Any Redemptions and any access to Star Alliance facilities through the member airlines (except on Lufthansa family airlines – that flight has long since departed)
  • 1st June – It’s BA and BMI sitting in a tree.. K-I-S-S-I-N-G. By that point I’d hope you’d matched any status over to preserve lounge access privileges. Note that BMI will not have a Oneworld badge on it at that tim.
  • 3rd July – Diamond Club Destination Miles to Avios transfers begin. You’ll not this excludes ANY status miles transferred to BA Tier Points
  • End of Summer Time Table: Major changes begin, with who knows what to come.

The big question of when to do the status match is important. And it’s going to be very personal as for some of you who will be switching to Executive Club for the first time will be governed by when your next flight is, and how many Tier Points you’ll need/want.

My plans.. are a lot more muddier sadly mainly due to my excessive cargo carrying habits and my love of lounge hopping. I’ll be writing on how this change is going to impact me a bit later on….

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