British Airways owner buys BMI from Lufthansa

LONDON: British Airways owner, IAG, has agreed a binding deal to buy BMI from Lufthansa for 172.5m, but has warned the deal could lead to job losses.IAG, which also owns Spanish airline, Iberia, will gain 56 more slots at Heathrow airport in the deal, according to a report by the British Broadcasting Corporation on Thursday.The airlines said they hoped the takeover would be completed in the first three months of next year.The deal remains subject to clearance by competition bodies, and rival Virgin has said it will oppose the tie-up.Lufthansa had signed a non-exclusive agreement with IAG in November, but had also been in talks with Virgin.In a statement, Sir Richard Branson, chairman of Virgin Group, said, BA is already dominant at Heathrow and their removal of BMI just tightens their stranglehold at the worlds 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.BMI employs more than 3,600 staff, but reported a 153m loss in the year to 2010.IAG chief executive, Willie Walsh, said, Given the scale of BMIs losses, there is an urgent need to restructure the business.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.Walsh said the restructuring would be carried out over a three-year period.BMI, which is based in Castle Donington in Leicestershire, operates flights to Europe, the Middle East and Africa.It has 8.5 per cent of the landing slots at Heathrow, the UKs busiest airport, which are seen as the main attraction of a purchase.BMI also operates the BMI Baby and BMI Regional brands, which have no landing slots in London airports.Lufthansa has the option to sell both BMI Baby and BMI Regional before the deal with IAG is completed.
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