Tough year sees bmi post record loss

In a year that has seen the downturn in the airline industry crippled many of the sector's major players, bmi has reported its biggest-ever annual loss.

According to its 2002 financial results, the group recorded a pre-tax loss of £19.6 million against a pre-tax profit of £12.4 million in 2001.

However, a new strategy plus additional cost-cutting measures, say bmi, enabled the group to generate a "strong positive cashflow with record levels of liquidity at 31 March 2003".

In what was described as "an exceptionally tough trading environment for the airline industry," there were positives – including record growth in passenger numbers.

A new segmentation strategy - which saw the launch of no-frills subsidiary bmibaby and further development of bmi regional, in addition to the main airline’s UK, European and transatlantic operations - resulted in an 11.9% increase in revenue passengers to 7.5 million – up 1.2 million on 2001.

Commenting on the results, bmi chairman Sir Michael Bishop, said: "The tragic events of 9/11 impacted on our performance especially in the first half of the year and the highly competitive UK business travel sector eroded yields. Despite these difficulties, the growth in passengers carried has now returned to pre-9/11 levels."

At the operating level, bmi performance losses were reduced by £7.3 million to £21.7 million – and could have dipped further but for "our decision to ground four aircraft at the beginning of the year due to the aftermath of 9/11, at a cost to the business of £8.5 million".

However, Sir Michael said that the growth of bmibaby was "very encouraging" with more than 700,000 passengers carried in the first nine months of operation to December 2002.

He added: "2003 promises to be another tough year for the airline industry. However, the very recent signs of a slight upturn in confidence and bookings following the latest developments in Iraq may provide the prospect of a return to a more stable operating environment in the second half of the year.

"I am confident that our segmentation strategy combined with the continuation of our vigorous cost-cutting programme, giving greater efficiency to our aircraft fleet, will put us on a sound footing in volatile market conditions."

(GMcG)