British Airways to Buy and Integrate BMI mainline

BMI and BA integration Pending Sale

Pending the sale of BMI on or about April 20, British Airways has started consultation with the trade unions on proposals to integrate BMI mainline into its Heathrow Operations.

The green light was given to IAG, International Airlines Group, British Airways’ owner, from the European Commission in late March to go-ahead with the acquisition.  BMI continues to bleed over £3m a week and short of acquisition, would face closure.

With regulatory approval in place, it is anticipated the deal will be complete on or about April 20, 2012.  However, it may not be completely smooth sailing as Virgin Group’s Sir Richard Branson is looking to block the deal because of the additional Heathrow slots this is providing IAG and British Airways.

British Airways proposes the full integration of BMI mainline into British Airways; this will secure nearly 1,500 jobs; unfortunately, it will also result in nearly 1,200 layoffs.   Jobs secured include nearly 1,100 cabin crew, pilots, and Heathrow based engineers.  An additional 400 passenger service jobs would be kept at Heathrow Terminal 1.

The proposed UK layoffs consist primarily of roles at BMI’s headquarters at Castle Donnington and at regional airports.  The consultation process will seek to reduce the number of layoffs, including potential to fill vacancies within British Airways at Heathrow.

At the same time, British Airways is looking at potential job opportunities among industry partners in the Midlands, such as Rolls-Royce and its engineering facility in Glasgow from January 2014 once the contract for BMI heavy maintenance work outside the UK expires.

Keith Williams, British Airways’ Chief Executive, said, “bmi is heavily loss making and is not a viable business as it stands today. Our proposals would secure around 1,500 jobs that would otherwise have been lost. As we look to restructure the business and restore profitability, job losses are deeply regrettable but inevitable. We will work with the unions to explore as many options as possible and are already working with industry partners.”

Williams added, “This deal is good news for our customers and will offer new destinations, new routes and new schedules in due course. For customers with bmi bookings to or from Heathrow this summer, it is business as usual and customers can continue to book with confidence.”

Lufthansa is to take on BMI’s defined benefit pension scheme before completion of the transaction, expected on or about April 20th, as announced December 22nd last year.  The pension scheme has been closed and terms on which pensions will be retained is an issue between Lufthansa and the BMI pension trustees.

Once the deal is completed, British Airways stated they fully intend to maintain the BMI defined contribution pension arrangements for BMI employees with the potential, subject to the outcome of consultation, to transfer some or all of the BMI employees to the British Airways defined contribution scheme.

The acquisition of BMI mainline will provide British Airways an additional 56 daily slot pairs at Heathrow, however up to 14 slots will have to be relinquished to other carriers for deal completion.

Slot pairs kept in the process will be used by British Airways’ at Heathrow to expand operations including the potential for new destinations and better schedules.  Proposed integration will also include repainting the BMI mainline aircraft into British Airways’ livery.

Discussions with potential buyers for bmibaby and bmi Regional are continuing.

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