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British Airways owner, IAG, to buy Lufthansa's bmi


IAG, which also owns Spanish airline Iberia, beat Virgin Atlantic to the £175m deal for bmi

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IAG, owner of British Airways and Iberia, won the race to buy bmi, Lufthansa's UK arm, for £175 million, beating rival bidder Virgin to bag the coveted runway slots at Heathrow.

IAG will gain more than half the daily take-off and landing slots at Heathrow - Europe's busiest airport, which is operating at full capacity after plans to build a third runway were scrapped – if the deal goes ahead.

Virgin Atlantic, which tabled a competing offer earlier this month, said it would ask anti-trust regulators to block the deal, which is subject to regulatory approval, as it would stifle competition and push up prices.

"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," Virgin's Richard Branson said.

IAG currently holds 43.1 percent of the slots at Heathrow and would have around 52 percent of the hub's slots if its bid for bmi is approved by regulators.

The group said absorbing bmi's runway slots would give it the option of launching lucrative new long haul routes from Heathrow, and that it aimed to complete the deal by March.

Willie Walsh, IAG chief executive, said there would be "some job losses" as part of an effort to turn around ailing bmi, which last year racked up pretax losses of £153 million.

IAG shares were up 0.96 percent at 146.5 pence at 1030 GMT, in line with the FTSE Eurofirst 300 index of top European shares. Lufthansa was 1.9 percent higher.

Lufthansa has the option of selling bmi's 'bmi regional' and 'bmibaby' units before the deal completes, and IAG will pay a lower price if those business are not offloaded, IAG said

Under the deal, the German airline also holds onto bmi's staff pension liabilities.


Photo credit: Reuters

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British Airways owner, IAG, to buy Lufthansa's bmi
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