19 MARCH 2012

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Article from BTNews 19 MARCH 2012

BA and bmi an update

The proposed sale by Lufthansa (LH) of its bmi subsidiary to British Airways could or could not happen with a decision possible by 30 March.  It was due 16 March.  The delay has allowed BA to review its situation and offer guarantees.  Brussels could decide on an in depth review, bad news for everyone.

Life goes on with bmibaby the fully-owned subsidiary, which has celebrated 10 years of operation.  A deal was announced in February with an unknown buyer, completion said to take place within the first quarter of 2012.  Should no sale happen British Airways would seek a price reduction.

Last week’s COMMENT column was given over to the possible sale and the role in the matter by the UK’s Office of Fair Trading (OFT).  The decision is now with the European Commission.

What is now clear is that the powers of the OFT are in fact limited in respect of airline mergers with the precedent set years back, the original share deal between bmi and LH in 1999 decided in Brussels.  Likewise Lufthansa’s 100% acquisition of the British airline in the 2009.

Unless the arrangement can be sorted out quickly, cash haemorrhaging might mean the grounding of bmi, with very serious consequences. www.flybmi.com

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