THE owner of British Airways has reached a binding agreement to buy troubled airline BMI for £172.5m in a move that will boost its stranglehold at Heathrow airport.
International Airlines Group (IAG), which also owns Spanish carrier Iberia, will acquire up to 56 additional taking off and landing slots at Britain’s biggest airport once it acquires loss-making BMI from German operator Lufthansa.
Willie Walsh, IAG chief executive, warned BMI job losses were on the horizon as the new owner will restructure the business after the deal is completed, which IAG hopes will go through in the first three months of next year, subject to regulatory approval.
Elsewhere, Lufthansa has the option to sell its business units BMI regional and low-fare carrier BMI baby before completion - and the price will be reduced if Lufthansa does not opt to sell the latter.
The deal will see IAG own more than half of the slots at Heathrow - 53 per cent - once completed, which compares with Lufthansa’s 66 per cent hold at Frankfurt airport and Air France KLM’s 59 per cent grip at Paris’s Charles De Gaulle airport.
The announcement will anger rivals such as Sir Richard Branson’s Virgin Atlantic, which also made a bid for BMI and has previously expressed concern over IAG’s dominant position at Heathrow.
However Mr Walsh said the deal was “good news for the UK” and said customers would benefit from new destinations and more convenient schedules.
He said IAG would use its increased number of slots to launch new longhaul routes but would maintain the domestic network.
IAG could not confirm the number of potential job losses at BMI and added that it would secure a “significant number of high quality jobs”.
The company also said the deal will protect more jobs than if BMI had been closed and the slots sold off.