BA-owner IAG completes BMI takeover
- 20 April 2012
- From the section Business
The owner of British Airways and Iberia, IAG, has completed its takeover of BMI from Lufthansa.
The main BMI airline is to be integrated with BA, but IAG reiterated that it did not intend to keep the BMI Baby and BMI Regional businesses.
IAG is receiving a "significant price reduction" on the agreed £172.5m purchase price for taking the BMI Baby and BMI regional airlines on.
BMI is estimated to be losing about £3m a week.
IAG's takeover of BMI was fiercely opposed by rival Virgin Atlantic, who argued that it would distort competition as IAG would have too many landing slots at London's Heathrow airport.
However, the deal was cleared by the European Commission last month on certain conditions, including that 14 slots at Heathrow airport were released.
BMI's main airline - which serves Europe, the Middle East and Africa - is to be integrated with British Airways.
Last week, BA said the merger could lead to the loss of 1,200 jobs, and that it had begun consultations with unions.
When IAG struck the original deal with Lufthansa, the German airline had the option to sell both BMI Baby and BMI Regional before the deal was completed.
However, as it did not, IAG got a discount on the takeover.
"BMI Baby and BMI Regional are not part of IAG's long-term plans and will not be integrated into British Airways. IAG will pursue options to exit these businesses and more details will be provided in due course," IAG said in a statement.
About 330 people are employed at BMI Regional and some 470 at BMI Baby.
"The costs associated with exiting these business, including the impact of operating them in the short term, are expected to be offset by the price reduction."