Airline industry downturn will continue for some time, British Airline executive says

26 April 2002 6:00am

London._ Veteran airline boss Sir Michael Bishop has warned aviation investors not to expect any relief from the pain in the industry until the summer of next year, according to a report on Hotel Online news service.

Announcing a sharp fall into the red at his privately-owned BMI British Midland, Bishop said: "Trading in 2002 continues to be extremely challenging and we do not anticipate a recovery until next year.

"Despite the early signs of shoots of growth and some recovery in volume, yields continue to be under pressure and we do not anticipate that this trend will change significantly for the remainder of the year."

He continued: "I am being pragmatic, not downbeat, but I do not expect to see any real bounce until the summer season of 2003."

While revenues in 2001 went up 2.4 percent to UKpound 756 million, the number of passengers carried by BMI fell 400,000 to 6.7 million, back below the seven million mark broken through by the traditional full-service carrier for the first time in 2000.

That compares unfavourably with record passenger levels at European short-haul competitors Ryanair, easyJet and Go.

The carrier, with a fleet of 57 aircraft, calculates that the 11 September terrorist attacks on the US cost the airline UKpound 35 million in lost revenues -- mainly through the significant drop in passengers transferring to BMI from transatlantic flights into Heathrow or from fellow airlines in the Lufthansa-led Star Alliance.

As a result BMI posted operating losses of UKpound 12 million for the year. It struggled to a UKpound 12.4 million profit at the pre-tax level only after the gain from the UKpound 72 million sale of its ground handling business to train and bus group Go Ahead.

Exceptional losses in the year include the cost of laying off 600 staff -- nearly one in eight of the workforce -- in the weeks after 11 September and the cost of last summer´s launch of its transatlantic service out of Manchester to Washington and Chicago.