11 December 2008

Virgin enters talks over Bmi

Virgin Atlantic has confirmed holding discussions with Lufthansa over the future of Bmi.

The German carrier recently acquired a controlling holding in Bmi, the second largest carrier at Heathrow.

Virgin, which has courted Bmi for a potential tie-up in the past, now sees a renewed opportunity to forge a link.

"Virgin Atlantic can confirm that it is holding talks with Lufthansa regarding the future of bmi. These discussions may or may not lead to an agreement and a further announcement will be made in due course," the airline said in a statement.

The long haul UK carrier believes its network would sit well with Bmi's mainly short and medium-haul routes.

Bmi founder Sir Michael Bishop exercised an option for Lufthansa to take control of the airline in October by raising its stake to about 80%.

Virgin Atlantic chief executive Steve Ridgway has made no secret of the attractiveness of a link with Bmi, which controls 12% of take off and landing slots at Heathrow.

Unlike British Airways, with its ambitions to do deals with American Airlines, Iberia and Qantas, Virgin and Bmi have complimentary rather than competing route networks.

The two UK carriers are seen as natural fit due to the lack of overlapping routes so no competition is being taken out of the market.

by Phil Davies