BA parent to buy BMI
British Airways and Iberia parent IAG has reached a deal with Lufthansa to buy loss-making British Midland.
The deal, believed to be worth over €350 million, is expected to be completed in the coming weeks, with the transaction taking place in the first three months of 2012.
The sale and closing of the deal remain subject to conditions including a binding purchase agreement, further due diligence and regulatory clearances.
The attraction of BMI lies in its control of 9% of valuable slots at London Heathrow.
The deal could be investigated by competition authorities as it would give BA more dominance at Heathrow.
Virgin Atlantic, which was reported to have also made a bid for BMI, is expected to oppose the purchase.
But speaking to BBC Radio 4 this morning, IAG chief executive Willie Walsh said IAG will have around half of the slots at Heathrow, still less than rivals Lufthansa at Frankfurt and Air France/KLM at Paris.
The move comes as IAG reported a 31% fall in third-quarter profit, which was better than expected in the challenging market.
Operating profit in the three months to the end of September fell from €528 million last year to €363 million.
Revenues rose 2.2% to €4.49 million thanks to a 3.5% rise in passengers during the period. But the group's fuel bill rose by 25% to €1.39 billion during the quarter.
Walsh said: "We are confident of a higher level of profitability in the fourth quarter of this year, even after the negative impact of the high fuel price. We expect to deliver a 2011 full-year operating profit of around double the year 2010 profits.
"Although we saw some demand softness in October, forward bookings for premium cabins are currently broadly in line with levels seen last year.
"Non-premium cabins are weaker than last year, particularly in the Spanish market. We remain ready to adjust our capacity quickly to respond to any sustained downturn."
by Bev Fearis
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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