BMI launches 'low-cost, full-frills' restructuring

BMI British Midland, the country's second biggest scheduled airline, yesterday unveiled radical plans to transform itself into a "low-cost, full-frills" carrier in the wake of 11 September.

Austin Reid, BMI British Midland's chief executive, insisted it would remain a full-service airline but one which operated on "low-cost principles" offering cheaper fares.

No further job cuts are planned on top of the 650 announced last month. But BMI British Midland will operate fewer short-haul European routes and will aim to achieve cost savings through greater use of its aircraft and higher productivity from its pilots.

Mr Reid said BMI was likely to make a loss next year and a re-think of the way it operated was necessary if it was to return to profitability. Last year it made £7m but its profitability this year has been severely affected by the downturn following the 11 September attacks.

"BMI remains and will continue to remain a full-service airline and we have no intention of becoming a budget carrier. However, it is vital that if we are to survive in the current climate we have to continually examine the cost of the operation as a whole," Mr Reid told an air transport conference in London.

"The short-haul mainline air business is inherently unprofitable," he added. "If we are still going to be profitable we have to adjust our cost base and if we are going to compete our prices will have to be lower and more transparent. People flying somewhere in under two hours are looking for value for money."

The Heathrow-based airline is likely to reduce the number of cities it flies to by around 15 per cent. It also intends to work its planes and pilots harder and phase out its Boeing 737 aircraft so its fleet is entirely Airbus A320s. At present, its planes spend a third less time in the air than easyJet aircraft while its pilots work 600 hours a year compared with Ryanair pilots who work closer to the 900 hours allowed by law.