June 1 (Bloomberg) -- U.K. airline BMI Regional was the healthiest part of former parent BMI and will be viable without major restructuring, Sector Aviation Holdings Ltd. said after sealing its purchase of the unit from British Airways owner IAG.
With a fleet of 18 Embraer SA jets serving more than a dozen European cities from seven U.K. airports, BMI Regional has been successful for at least a decade, a fact disguised by its allotment of central overhead costs from the BMI group, Ian Woodley, its new chairman, said today in a telephone interview.
“The business has suffered in the past three of four years like everyone else, but relatively speaking it’s the most viable part of the entire group and has been generating cash,” Woodley said. “Not very much, but it has still been generating cash.”
IAG agreed to sell BMI Regional to SAH for 8 million pounds ($12 million) on May 10 after acquiring the unit’s parent from Deutsche Lufthansa AG the previous month to secure scarce operating slots at London’s Heathrow airport. The BA owner is still seeking a buyer for the BMIbaby discount arm, which it says will be closed in September if no purchaser is found.
BMI Regional will retain its operating base in Aberdeen, Scotland, and is seeking a new head office close to East Midlands airport, central England, as it prepares to vacate the country house in nearby Castle Donington where BMI had its HQ. The airline will carry on under its existing name, with SAH having acquired full rights over the brand, Woodley said.
About 330 existing jobs are safe and 40 more will be created after the office move as the airline takes charge of its own sales, customer service and finance functions, he said.
Woodley, who helped form BMI Regional when Business Air, of which he was chief, was taken over by British Midland Airways in 1996, said he has a stake in the new venture. Stephen and Peter Bond, backers of Scotland’s Loganair, are the majority owners.
Woodley said he’s aiming to improve utilization of BMI Regional’s fleet of 49-seat ERJ 145 and 37-seat ERJ 135 planes, while seeking to extend code-share tie-ups with SAS AB and Lufthansa, including the German carrier’s Brussels Airlines unit. Five planes are currently providing flights for BA at Heathrow, having operated for BMI’s mainline business there, and new lease or charter terms will be sought for these, he said.
IAG, as International Consolidated Airlines Group SA is known, said in a statement that the sale of BMI Regional was completed today. Its stock was trading 0.7 percent higher at 139.70 pence as of 12:58 p.m. in London.
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