British Midland profits soar

BRITISH Midland Airways, the country's second-biggest scheduled airline, had its most profitable year ever in 1997, despite increased competition from new low-cost carriers.

The privately owned airline yesterday reported an increase in pre-tax profits to pounds 17.3m from pounds 6.1m in 1996 on sales that rose 10.7 per cent to pounds 530m.

Sir Michael Bishop, chairman, said traffic and loadings were boosted by investment in its premium Diamond EuroClass service and route connection alliances with 17 international carriers at its home base at London Heathrow airport.

British Midland also benefited last year from a strike by cabin crew at British Airways which boosted profits by pounds 3.5m-pounds 4m.

Traffic was up 7.5 per cent at 5.7 million passengers but capacity growth was just 2.3 per cent, which gave a rise in average seat sales to 65.4 per cent of capacity from 63.2 per cent in 1996.

The airline also announced that it would launch a new route between Heathrow and Warsaw on 10 July, to break the route duopoly of British Airways and the Polish carrier LOT.

Sir Michael said BM had pioneered bringing new competition to Europe's scheduled air markets and he was confident of taking on the new low-cost airlines, including BA's own venture Go, which announced its first routes today.

But he warned that sooner or later there would be casualties as economic realities took hold, predicting there could be at least one failure within the next 12 months among the newer airlines.

Bishop said the low-cost phenomena in Europe was likely to go the way of the US market when deregulation 20 years ago triggered a proliferation of similar start-up "no frills" airlines, only for most to be gradually killed off.

Go takes off, page 3