Bmi’s chairman Sir Michael Bishop has ended months of speculation by exercising an option obliging Lufthansa to buy his majority stake in the airline.
The agreement will see Lufthansa take an 80 per cent share in Bmi. The German carrier already owned 30 per cent of Bmi, having originally purchased 20 per cent in 1999, before increasing its holding by a further 10 per cent in 2002. Bishop meanwhile currently holds a controlling 50 per cent plus one share in the airline, with Scandinavian carrier SAS owning the remaining 20 per cent. Under the terms of an agreement laid down in 1999, Bishop had until the end of 2008 to exercise an option to sell his shares to Lufthansa at a preset price.
Lufthansa’s third interim report January-September 2008, released today, “the
completion of the exercise is expected to take place not before January 12,
2009”, and is subject to anti-trust requirements and regulatory approval. It is
not clear at this stage how much Lufthansa has paid for Bishop’s shares, and Lufthansa said that "discussions regarding the future structure and options [of the airline] are ongoing between Lufthansa, Sir Michael Bishop and Bmi".
Bmi’s future has
been subject to much speculation over the last few months, with Abu Dhabi-based
carrier Etihad rumoured to have approached the carrier about a possible merger
last month. Bmi owns over 10 per cent of take-off and landing slots at Heathrow, making it an attractive propostion for suitors.
When BA bought 51 slots from Bmi in March 2007, it paid about £30m. Since the Open Skies agreement was signed between the US and the EU, opening up Heathrow to all American and EU carriers, slots at the airport have increased in value - when Continental Airlines bought four take-off and landing slots at the airport in March this year, just before the Open Skies deal came into force, it reportedly paid £105m for them.
Report by Mark Caswell