Bmi to be ‘integrated quickly’ into British Airways
Date added: 2 March, 2012
IAG plans to integrate Bmi into British Airways “as quickly as possible” if it gets clearance for the takeover from regulators. The £172.5 million agreement for IAG to buy Bmi from Lufthansa is currently being looked at by European competition regulators and a decision could be made as early as March 16th. The process could be delayed if the Office of Fair Trading decides to ask for permission to investigate the deal. Virgin wants the deal blocked. Some in Scotland think the deal may reduce its services to Heathrow. Lufthansa has already reached a provisional agreement to sell Bmibaby to an unnamed UK-based company while BMI Regional is due to be sold to a group of UK investors known as Granite Aviation.
Posted Thursday, 1 March, 2012 (ABTN)
International Airlines Group plans to integrate Bmi into British Airways “as quickly as possible” if it gets clearance for the takeover from regulators.
The £172.5 million agreement for IAG to buy Bmi from Lufthansa is currently being looked at by European competition regulators and a decision could be made as early as March 16. Although the process could be delayed if the Office of Fair Trading in the UK decides to ask for permission to investigate the deal.
IAG chief executive Willie Walsh said that an agreement with pilots union BALPA would clear the way for BA and Bmi to be integrated as one airline which is expected to cost £100 million in restructuring.
Politicians in Scotland have voiced fears that the Bmi takeover by IAG will reduce services to Heathrow while Virgin Atlantic has urged the blocking of the deal. IAG has stated that it is committed to increasing flights from Scotland to Heathrow.
Walsh said: “We remain optimistic as we believe we have got a very strong case to allow the acquisition of Bmi to proceed. We have had some political resistance in Scotland which we are addressing. But it ‘s not an issue that will be determined by politicians, it will be determined by the competition regulator.
“We have taken the decision to integrate Bmi into BA. This follows an agreement reached with pilots represented by BALPA. Our intention is to move fast with this integration. It’s going to be challenging but it’s clear that the quicker we do it, the better it will be for everybody.”
IAG has only agreed to buy the main part of Bmi with Lufthansa attempting to sell both Bmi Regional and its no-frills subsidiary Bmibaby. Lufthansa has already reached a provisional agreement to sell Bmibaby to an unnamed UK-based company while BMI Regional is due to be sold to a group of UK investors known as Granite Aviation.
Walsh admitted IAG had already drawn up plans for what do with Bmibaby if it is not sold before the deal is completed.
“We do have plans in place if we end up acquiring Bmibaby that will form part of the same restructuring process,” added Walsh.
If IAG does acquire Bmibaby, then the price it pays to Lufthansa for Bmi will be reduced to offset the extra costs of restructuring the no-frills carrier.
Earlier
British Airways owner IAG buys BMI from Lufthansa
British Airways owner IAG has agreed a binding deal to buy BMI from Lufthansa – including their 56 slots (8.5% of Heathrow’s total) at Heathrow – for £172.5m, but has warned the deal could lead to job losses. Virgin opposes the take over, as they also wanted to buy BMI. BMI now employs more than 3,600 staff, but reported a £153m loss in the year to 2010. IAG and Lufthansa have agreed a purchase price of £172.5 million, but this is subject to heavy price reduction if Lufthansa does not choose to sell its budget arm BMIbaby before completion of the sale. The deal remains subject to clearance by competition bodies.
22 December 2011 (BBC)
British Airways owner IAG has agreed a binding deal to buy BMI from Lufthansa for £172.5m, but has warned the deal could lead to job losses.
IAG, which also owns Spanish airline Iberia,will gain 56 more slots at Heathrow airport in the deal.
The airlines said they hoped the takeover would be completed in the first three months of next year.
The deal remains subject to clearance by competition bodies, and rival Virgin has said it will oppose the tie-up.
Lufthansa had signed a non-exclusive agreement with IAG in November, but had also been in talks with Virgin.
In a statement, Sir Richard Branson, chairman of Virgin Group, said: “BA is already dominant at Heathrow and their removal of BMI just tightens their stranglehold at the world’s busiest international airport.
“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.”
Job losses
IAG chief executive Willie Walsh said: “Given the scale of BMI’s losses, there is an urgent need to restructure the business.
“Unfortunately, this will mean some job losses but we will secure a significant number of high quality jobs here in the UK and create similar new jobs in the future.
Mr Walsh said the restructuring would be carried out over a three-year period.
BMI, which is based in Castle Donington in Leicestershire, operates flights to Europe, the Middle East and Africa.
It has 8.5% of the landing slots at Heathrow, the UK’s busiest airport, which are seen as the main attraction of a purchase.
BMI also operates the BMI Baby and BMI Regional brands, which have no landing slots in London airports.
Lufthansa has the option to sell both BMI Baby and BMI Regional before the deal with IAG is completed.
If Lufthansa does not sell BMI Baby before the deal is completed, IAG said the price it would pay would be subject to a “significant” reduction.
Landing slots
Several European airline takeovers have been referred to the European Commission competition authority in the past.
The Commission has prevented takeovers between airlines that operate within the same country in the past, such as in the cases of Ryanair and Aer Lingus in the Irish Republic, and Olympian and Aegean in Greece.
However, the Commission analyses competition issues on a route-by-route basis, rather than on the basis of domination of a particular national market.
If a merger between two airlines restricts passenger choice along a route, then the Commission may ask the airline to give up some of its landing slots to enable another company to launch a competing service.
http://www.bbc.co.uk/news/business-16298167
also
Lufthansa faces heavy net loss from BMI sale to IAG
Lufthansa Group has detailed the harsh conditions under which it will sell BMI to International Airlines Group, including a potential substantial net loss from the deal.
While the two sides have agreed a binding cash purchase price of £172.5 million ($271 million), this is subject to heavy price reduction if Lufthansa does not choose to sell the budget arm BMIbaby before completion of the sale. Lufthansa also currently has the option to sell BMI Regional.
Lufthansa admitted that, after agreed reductions, the net purchase price is “expected to be significantly negative”.
Under the agreement with IAG reached today, the German company will also take on BMI’s defined pension benefit scheme through a UK holding company.
But Lufthansa said that the decision meant it would be “dissociating from a sustainably loss-making subsidiary”.
British Airways parent IAG will gain BMI’s slot portfolio at London Heathrow, increasing access by up to 56 daily slot pairs. The agreement is still subject to regulatory clearance.
Chief executive Willie Walsh said the acquisition would give IAG a “unique opportunity to grow at Heathrow”. He added that the company would maintain a “comprehensive domestic schedule” as well as expand its long-haul network.
Both sides are intending to complete the transaction by the end of the first quarter of 2012.
Lufthansa chief Christoph Franz said it was “especially important for us to find the solution that best provides the company and its employees with sustainable prospects for the future”.
http://www.flightglobal.com/news/articles/lufthansa-faces-heavy-net-loss-from-bmi-sale-to-iag-366309/
Earlier news items on BMI:
Sep 11, 2011 … Lufthansa wants to sell or break up BMI, which is loss-making. IAG wants.BMI, not for the whole airline, but for its valuable take off and landing … www.airportwatch.org.uk/?p=4571 |
Dec 13, 2011 … Lufthansa, which owns BMI, has said it has not yet decided on a buyer …The owner of British Midland International (BMI), Lufthansa, has said it … www.airportwatch.org.uk/?p=499 |
Sep 27, 2011 … British Airways has bought the lots from bmi, which now gives it 45% of the slots at the country’s major airport. This has increased specualtion … www.airportwatch.org.uk/?p=4584 |
for £105 million losses at Castle Donington-based airline BMI. BMI, which employs 527 people at Donington Hall, predicts a “return to profitability” in the medium … www.airportwatch.org.uk/?p=3413 |
Jun 3, 2011 … LOW-COST airline BMI Baby has moved into the base of its parent … next to East Midlands Airport , to Donington Hall, which is home to the BMI … www.airportwatch.org.uk/?p=2775 |
Bmi loses €145 million in 2010. 17.3.2011 (ABTN). by Sara Turner. Lufthansa- owned British Midland International (BMI) made an operating loss of €145 million … www.airportwatch.org.uk/?p=4164 |
Posted: Friday, March 2nd, 2012. Filed in General News, Recent News.
