Fight to buy BMI is won by IAG
December 23, 2011
British Airways owner IAG is to buy BMI from Lufthansa for £172.5 million (US$271m), and warned the deal could lead to job losses.
IAG, which also owns Spanish airline Iberia, will gain 56 more slots at Heathrow Airport in a deal that has angered rival carrier Virgin Atlantic, also in talks to buy BMI.
The takeover remains subject to clearance by competition bodies, and Virgin Chairman Sir Richard Branson said he would urge them to block the tie-up.
In a statement, he said: "BA is already dominant at Heathrow and their removal of BMI just tightens their stranglehold at the world’s busiest international airport.
"We will fight this monopoly every step of the way, as we think it is bad for the consumer, bad for the industry and bad for Britain."
IAG and Lufthansa said they hoped the takeover would be completed in the first three months of next year.
BMI employs more than 3,600 staff, but reported a £153 million loss in the year to 2010.
IAG CEO Willie Walsh said: "Given the scale of BMI’s losses, there is an urgent need to restructure the business.”
He said the restructuring would be carried out over a three-year period, and added: “Unfortunately, this will mean some job losses, but we will secure a significant number of high-quality jobs here in the UK and create similar new jobs in the future.”
BMI, which is based in Castle Donington in Leicestershire, operates flights to Europe, the Middle East and Africa, offering belly space for cargo.
It has 8.5% of the landing slots at Heathrow, the UK’s busiest airport, which are seen as the main attraction of a purchase, after which, IAG’s share of slots would rise from 45% to 53%, consolidating its position as the airport’s most powerful carrier.
BMI also operates the bmibaby and bmi regional brands, which have no landing slots in London airports. Lufthansa has the option to sell both bmibaby and bmi regional before the deal with IAG is completed.
Courtesy of IFW
