BMI Regional enters administration.

It’s just been announced that BMI Regional, the last vestiges of British Midland that wasn’t bought out by British Airways, has gone into administration this evening.

Back in the day, BMI was actually three different airlines in the one group; the main BMI; BMIBaby, the low cost arm; BMI Regional, which operated a fleet of Embraer 140 and 145s from across the UK to secondary destinations in Europe.

A press release on their website says:

It is with a heavy heart that we have made this unavoidable announcement today. The airline has faced several difficulties, including recent spikes in fuel and carbon costs, the latter arising from the EU’s recent decision to exclude UK airlines from full participation in the Emissions Trading Scheme. These issues have undermined efforts to move the airline into profit. Current trading and future prospects have also been seriously affected by the uncertainty created by the Brexit process, which has led to our inability to secure valuable flying contracts in Europe and lack of confidence around bmi’s ability to continue flying between destinations in Europe. Additionally, our situation mirrors wider difficulties in the regional airline industry which have been well documented.

Flybmi operates 17 regional jet aircraft on routes to 25 European cities. All flights have been cancelled with effect from today.

Personally speaking, I think it’s a huge shame. BMI were an excellent little airline, with a fantastic frequent flier programme in Diamond Club. Getting bought out by British Airways was the beginning of the end for them, but Regional soldiered on.

This comes after a number of different airlines in Europe entering administration, with Germania, the German low-cost airline the most recent one.

The obvious question is who’s next?

The Icelandic low-cost carrier, Wow Air still limps on, but a far smaller entity than it once was. Norwegian has had a number of issues with liquidity, however has had a recent cash injection after compensation payouts from Rolls Royce due to engine issues on the 787 fleet. They’ve also been going through substantial cost-cutting like removing lounge access from nearly all passengers (unless on fully flexible fares), and removing free drinks from their Premium Economy cabin.

Norwegian have managed to fend off a take-over offer from IAG, who have now committed to selling their holding, however Lufthansa Group are waiting in the wings and I’m sure would be interested in rolling them into their Eurowings brand.

Finally, the other contender is of course Alitalia. They are €900m in the hole with ‘short-term’ government backed loans, and are in another re-structuring with the state-owned railway company. However with the current Italian government, even if the EU declared the ‘loans’ as illegal state-aid, I’m not sure they would ever let them fail.

Interesting times ahead.

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