IAG agrees binding deal with Lufthansa

IAG, the owner of British Airways, has agreed a binding deal to purchase BMI from Lufthansa for £172.5 million, securing 56 more slots at Heathrow for IAG.

The sale is still subject to approval by the competition commission, and airline Virgin still opposes the deal.

“BA is already dominant at Heathrow and their removal of BMI just tightens their stranglehold at the world’s busiest international airport,” Sir Branson, chairman of Virgin Group said in a statement.

“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,” he added.

It is thought that the deal will lead to job losses. IAG chief executive Willie Walsh said to the BBC that a restructuring process would take place over three years.

BMI has 8.5 per cent of the slots at Heathrow, and runs flights to Europe, Africa and the Middle East. Its strong presence at Heathrow is seen as the jewel in its crown for buyers.

Lufthansa can decide to sell bmibaby and bmi regional before the deal with IAG is complete. If it does not sell bmibaby before then IAG has said the price it would pay could be reduced.

It is expected that the tie-up will complete in the first quarter of 2012.

Read our story British Airways owner ready to buy Bmi.

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