Stansted/Norwich: Future of BMI routes unclear after IAG deal

BRITISH Airways owner IAG said today it had signed a binding agreement to buy troubled carrier BMI from German operator Lufthansa, in a deal valued at �172.5million.

But BA rival Virgin Atlantic, which had also tabled an offer for BMI, called on competition authorities to block the sale which will leave IAG with control of more than half of the take-off and landing slots at London’s Heathrow airport.

IAG (International Airlines Group), which also owns Spanish carrier Iberia, said it hoped the deal would go through in the first three months of next year, subject to regulatory clearance, but warned that job losses were likely at BMI due to restructuring.

The future of BMI’s regional division, which includes flights between Norwich and Aberdeen, and its low-cost arm Bmibaby, which includes services between Stansted and Belfast, remains uncertain, with Lufthansa retaining an option to sell the businesses before completion of the deal with IAG.

The deal will give IAG up to 56 additional slots at Heathrow, taking its share to 53%. IAG says this is comparable with Lufthansa’s 66% hold at Frankfurt airport and Air France KLM’s 59% grip at Paris’s Charles De Gaulle airport.

But Virgin Atlantic claimed the deal would “tilt the competitive landscape dangerously towards BA and cast a shadow over the British travelling public”.

Virgin insisted that its lower bid for BMI was a fair one in view of BMI’s financial position, and claimed that IAG was paying a premium to “cement” BA’s monopoly position at Heathrow.

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Sir Richard Branson, president of Virgin Atlantic, said: “We will fight this monopoly every step of the way as we think it is bad for the consumer, bad for the industry and bad for Britain.”

However, IAG chief executive Willie Walsh said the deal was “good news for the UK” and would see customers benefit from new destinations and more convenient schedules.

And Mr Walsh claimed that the deal would protect more jobs than if BMI had been closed and the slots sold off.

BMI, which employs more than 3,600 staff, made a �153million pre-tax loss in the year to 2010.