IAG Seals bmi Deal, Budget Units Included

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Published: April 20, 2012

BA and Iberia owner IAG said it had completed the acquisition of Lufthansa’s UK airline bmi and that the price of the deal would be reduced after the German carrier failed to sell two of bmi’s units.

Bmi comprises three under-performing businesses: a traditional airline serving Europe, the Middle East and Africa; bmi regional, serving the UK; and low-cost unit bmibaby.

IAG said bmi’s mainline operation would be integrated into British Airways but that bmibaby and bmi regional had not been sold prior to completion.

“Under the terms of the purchase agreement, IAG will also acquire these businesses (bmibaby and bmi regional) and receive a significant price reduction,” IAG said in a statement.

IAG reached a deal worth GBP£172.5 million (USD$ 277 million) to buy bmi late last year after trumping rival Virgin Atlantic.

“Bmibaby and bmi regional are not part of IAG’s long term plans and will not be integrated into British Airways. IAG will pursue options to exit these businesses and more details will be provided in due course,” IAG added.

IAG said the costs associated with exiting these businesses, including the impact of operating them in the short term, would likely be offset by the price reduction.

BA last week said 1,200 jobs were under threat as a result of plans to integrate bmi into its operations at London’s Heathrow Airport and that it had begun a consultation with unions over the proposed job cuts.

BA said the integration plan for bmi, which is losing over GBP£3 million a week, would see some 1,500 jobs retained, including around 1,100 cabin crew, pilots and engineers based at Heathrow.

Last month, BA was given regulatory approval from the European Commission to buy bmi from Lufthansa.

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