The holding company for BA and Iberia has agreed a £172.5 million deal to purchase Bmi from Lufthansa. The group will gain up to 56 slots at Heathrow as a result of the deal, which is subject to competition clearance.
The £172.5 million price tag includes the three business units of Bmi – Bmi Mainline, Bmi Regional and Bmibaby.
IAG said that the last two units are “not part of our plans”, and Lufthansa has the option to sell them before completion of the deal. There will be a “significant price reduction” on the purchase price if the loss-making Bmibaby is not sold.
The deal will see IAG gain up to 56 daily slots at Heathrow, while Lufthansa will take on Bmi’s defined benefit pension scheme.
IAG’s proposed purchase of Bmi was announced last month (see online news November 4), although Virgin Atlantic subsequently said that it was in discussions with Lufthansa over the sale of the carrier.
Announcing the purchase IAG’s CEO Willie Walsh admitted that the scale of Bmi’s losses meant there would be “some job losses”, but said that the purchase “will protect more British jobs than if the airline had been closed and had its Heathrow slots sold off”.
“Buying Bmi’s mainline business gives IAG a unique opportunity to grow at Heathrow, one of our key hub airports,” said Walsh. “Using the slot portfolio more efficiently provides the option to launch new longhaul routes to key trading nations while supporting our broad domestic and shorthaul network.
“This deal is good news for the UK as we will maintain a comprehensive domestic schedule including Belfast. Our plans to expand our longhaul network would guarantee growth by making Britain better able to compete on a global scale. It will also help maximise Heathrow’s position as a world class hub airport.
“Customers will benefit from access to new destinations, more convenient schedules, enhanced frequent flyer benefits and greater investment than had been possible for loss-making Bmi.
IAG says it will finance the purchase from its own funds, with £60 million paid pre-completion in four instalments, secured by Heathrow slots. The group hopes to complete the purchase during the first quarter of next year, subject to regulatory clearance.
For more information visit iairgroup.com, lufthansa.com.
Report by Mark Caswell
