Airline BMI today revealed it had fallen deeper into the red but insisted plans to revamp the company would lead to profitability.

The airline, which is wholly-owned by German carrier Lufthansa, suffered a £198 million post-tax loss in the year to December 31, up from the £180.8 million deficit in 2008. It said the losses included the cost of a five-year restructuring programme to get the company back on track.

With the economic downturn creating a tough trading environment across the airline industry, BMI’s passenger numbers dropped from 9.5 million in 2008 to 7.4 million in 2009.

BMI, the second largest airline at Heathrow Airport, has cut nearly 600 jobs and removed 11 of its mainline aircraft since the end of last year, under the five-year recovery plan. It currently has 3,774 employees.

Wolfgang Prock Schauer, BMI chief executive, said: "We are reshaping the BMI group so that it will be in a strong position to thrive in the changing aviation industry."

Mr Schauer said the restructuring programme launched last November would achieve annualised savings of £100 million, and the 2010 results are expected to be much better than 2009. The group aims to return to profit in 2012.

The proposals involve suspending loss-making routes, adjusting flight capacity and entering into codeshare agreements with other airlines to boost revenues.

The company said losses were already being reduced, while successful new routes to Berlin and Tripoli had been introduced, and Lufthansa had injected £60 million into the business.

BMI began life in 1938 as Air Schools Limited, and specialised in RAF pilot training.

It was rebranded BMI British Midland in 2001, which was subsequently shortened to BMI two years later. In 2002, BMIbaby, a low-cost subsidiary was launched.

BMI today operates 1,700 flights per week over a network of 46 airports in the UK, Europe, the Middle East, Africa, Asia and Saudi Arabia.