IAG announces takeover of bmi

International Airline Group (IAG) sprung something of a surprise on the Thursday before Christmas, announcing it had reached a binding agreement to acquire British Midland Ltd (bmi) from Lufthansa by the end of Q1 2012.  The cost is £172.5m, though the price will be reduced if the German airline cannot dispose of separately bmi regional and bmibaby.

Sir Richard Branson, on behalf of Virgin Atlantic, and a bidder for the airline, was quick to respond.  He argues that the deal cuts choices for consumers and puts the travelling public at a disadvantage.  He contends that the European Competition Commission should block the agreement noting that British Airways already dominates at Heathrow.  Virgin will lose vital UK feeder traffic into Heathrow routes where it competes with British Airways.  BA says that its major competitors hold the majority of slots at their hub airports.

Currently BA’s parent company IAG holds 44% of the slots at Heathrow, which will now rise to 53%.  Under the arrangement bmi disappears from Star Alliance and BAA will have to reconsider the total logistics for T2, currently under construction.  From a BA point of view, whilst it will be saddled with bmi losses for the next three years, new routes and increased frequencies can be introduced, duplications dropped, and poorly producing destinations eliminated. www.iairgroup.com

 

Index/Home page
 

OUR READERS' FINEST WORDS (All times and dates are GMT)

All comments are filtered to exclude any excesses but the Editor does not have to agree with what is being said. 100 words maximum

---