flybmi goes into receivership, all flights cancelled – why did it happen?

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flybmi (not to be confused with Flybe) went into administration on Saturday evening.

All flights were cancelled with immediate effect.

This is the official statement published on their website:

British Midland Regional Limited, the East Midlands-based airline which operates as flybmi, has today announced that it has ceased operations and is filing for administration.

flybmi operates 17 regional jet aircraft on routes to 25 European cities.

All flights have been cancelled with effect from today. Customers who booked directly with flybmi should contact their payment card issuer to obtain a refund for flights which have not yet taken place. Customers who have booked flybmi flights via a travel agent or one of flybmi’s codeshare partner airlines are recommended to contact their agent or airline for details of options available to them. Customers who have travel insurance should contact their travel insurance provider to find out if they are eligible to claim for cancelled flights and the procedure for doing so.

flybmi goes into receivership

A spokesperson for flybmi said:

“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.

“Against this background, it has become impossible for the airline’s shareholders to continue their extensive programme of funding into the business, despite investment totalling over £40m in the last six years. We sincerely regret that this course of action has become the only option open to us, but the challenges, particularly those created by Brexit, have proven to be insurmountable.

“Our employees have worked extremely hard over the last few years and we would like to thank them for their dedication to the company, as well as all our loyal customers who have flown with us over the last 6 years.”

Why did flybmi go bankrupt?

Where was flybmi flying?

flybmi carried just over 500,000 passengers on 29,000 flights last year, using a fleet of 17 Embraer aircraft.

The airline had three main bases, in Aberdeen, Bristol and Munich, with its head office at East Midlands Airport.  flybmi served Aberdeen, Bristol, Brno, City of Derry, Dusseldorf, East Midlands, Esbjerg, Frankfurt, Hamburg, Jonkoping, Karlstad, London Stansted, Lublin, Milan Bergamo, Munich, Newcastle, Norrkoping, Nuremburg, Oslo, Paris Charles de Gaulle, Rostock/Laage, Saarbrucken and Stavanger.

As well as flying under its own brand, it sold tickets under codeshare deals with Lufthansa, Brussels Airlines, Turkish Airlines, Loganair, Air France and Air Dolomiti.

The airline is the final remnant of the old British Midland.  After IAG acquired BMI in 2012, IAG sold the non-core routes which did not fly into London to Sector Aviation.  In 2015 it came under the control of Loganair’s owner Airline Investments.

It is important to note that Loganair is not impacted by this announcement, despite the two airlines having the same parent.

Why did flybmi go into administration?

Whilst flybmi is not related to Flybe, there is no doubt that the two airlines had been facing the same issues in recent months.  This move may give Flybe the opportunity to pick up a few of the better performing routes.

Let’s be clear about one thing though – flying 522,000 passengers on 29,000 flights in 2018 means an average of just 18 passengers per flightAn Embraer E145 can seat 49 people whilst an E135 holds 37, so we are looking at very weak loads.  Whatever factors are being blamed for its closure, the answer may be closer to home than the airline wants to admit.

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Comments

  1. Charlieface says:

    Isn’t a move of five hours defined as a cancellation anyway? Also worth checking the flight numbers, if they changed it’s a cancellation as well even if it only moved 5 min.

    • Yes, but I seem to remember that a few years ago a “cancellation” didn’t trigger my travel insurance where as a (less disruptive) “delay” did. So cancellation may be better for EU compensation but not necessarily insurance

  2. Are we going to see Loganair pick up some of the routes since owned by the same people.
    Recently at least one of the jets was transferred from Bmi regional to Loganair so be interesting to know if aircraft are leased or owned.
    Bet Eastern Airways glad they are owned by I believe same people as own Bristow Helecopters so they will also no doubt be interested in some routes as well.
    Big loss of connectivity as am sure Flybe under new owners will bin a lot of routes.

  3. Jonny Price says:

    I can’t help but sense something a bit dodgy about the whole thing. If Flybmi was part of an airline group with Loganair, surely Loganair could have continued to subsidise it if they had wanted to (as they have done since the group was created)? Other airline groups subsidise loss making carriers with the profits of other airlines all the time. Did the management of the group actually want Flybmi to go bust?

    Some interesting points…
    – Flybmi / bmi regional has never made money since it was purchased from IAG in 2012
    – It has a high cost base – expensive old aircraft, expensive staff on old former bmi contracts, niche regional routes with low load factors
    – It would’ve been expensive to restructure/rebrand the company and/or formally merge it into Loganair. By “going bust”, they could suspend operations with no liabilities (no staff redundancy costs, no ticket refunds, no supplier costs etc.)
    – Loganair has always been the more successful airline in the group – and they can make it even more successful by picking up the profitable parts of Flybmi’s network and getting hold of some of their aircraft cheaply from the administrators
    – Now is a convenient time to go bust – they can blame it all on external factors, even if this has been their strategy for some time (admittedly the uncertainty surrounding Brexit doesn’t help a British airline which operates many routes within/between countries on the continent and whose UK network includes many routes to/from Brussels)

    Events that make me believe this was deliberate..
    – Flybmi have already transferred two Embraer ERJ-145s to Loganair
    – Flybmi’s European-based aircraft were positioned back to the UK on Friday evening, before the announcement (and whilst tickets were still selling)
    – Loganair announced they would pick up five of Flybmi’s routes (from Aberdeen and Newcastle) less than 24 hours after Flybmi’s announcement – and have since announced interest in the subsidised Derry to London rote
    – They returned their business customers ‘home’ on the Friday before half term and went bust the following day on what would normally be a quiet week – giving time for Loganair to step in once business traffic picks up again after half term

    • Agreed, there is clearly some intra-group work here. However the administrators have a legal right to get the best possible price for the pieces. Also worth noting that, whilst Loganair is ‘picking up routes’, it is not taking over existing tickets. Anyone else can still open those routes. The Embraers would be leased so the lessor would be happy to release quickly.

      To be honest, who else would want in anyway? Not a lot of competition.

      The timing issue could be something to look at, if anyone thought the company was trading whilst insolvent, which is an offence.

  4. I have minor sympathy for these ‘stranded’ travelers. Europe has such high airport density / flight competition that within 2 hrs of driving, you can easily find another airport for an alternative way home. Same with landing in UK – so many airports to choose from. Be flexible and go to BRS or MAN instead of BHX. While its frustrating, its a solvable problem with a bit of flexible thinking and desire.

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