Lufthansa completes bmi takeover deal

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Published: April 21, 2012

British Midland International A319. By Rob Finlayson

Lufthansa (LH) Group announced Friday it has completed the sale of British Midland Ltd. (bmi) to British Airways (BA) owner International Airlines Group (IAG). LH Group said the gross purchase price was £172.5 million ($ 278 million).

BA said last week it will cut up to 1,200 jobs as it absorbs bmi’s mainline operations (ATW Daily News, April 13).

According to an IAG statement, bmi mainline will be integrated into BA and consultation has already begun with bmi mainline staff and their trade unions. Under the terms of the agreement, IAG will also acquire Bmibaby and bmi regional at a “significant price reduction,” it said. “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,” it said.

In December 2011, the Lufthansa Group and IAG reached the agreement on the loss-making bmi (ATW Daily News, Dec. 23). The European Commission (EC) approved the deal early this month, saying that competition concerns were addressed by conditions that were proposed as part of the deal. The decision requires IAG to give up 14 daily slot pairs at London Heathrow (LHR) and to commit to carry connecting passengers to feed long-haul flights of competing airlines out of LHR (ATW Daily News, April 2). Virgin Atlantic, which made a rival offer for bmi, has said it would appeal the European Commission’s decision (ATW Daily News, April 17).

LH also closed down LH Italia last year and will sell its Chinese Joint Venture Jade Cargo. LH chairman and CEO Christoph Franz told several German media outlets this week that there is no safety-zone anymore [for any subsidiary] that is loss-making. “That can’t be accepted anymore,” he said, adding that all LH business units have to be profitable.

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