IAG and BA Seek Heathrow Expansion with BMI Bid
The International Airlines Group has agreed on a bid to buy struggling budget carrier BMI from current owner Lufthansa.
The group, which owns British Airways and Iberia, is expected to complete the sale in early 2012, and will further consolidate IAG's position at Heathrow. Take-off and landing slots at the London airport are now highly prized after plans to build a third runway were shelved, and BMI currently holds 9 per cent of the airport's arrival and departure slots. The deal is seen as a major blow for BA rival Virgin Atlantic, whose presence at Heathrow is threatened by the potential expansion of BA at the hub.
However, while the IAG/BMI deal has been seen as a major coup for Willie Walsh, chief executive of IAG, it is also likely to prompt a competition probe over the sharing out of landing and take-off slots at Heathrow. Walsh admitted the deal would provide BA with the means to dominate services at the airport.
"It gives BA the opportunity to grow in the UK," said Mr Walsh, who also said the deal was yet to be finalised. The €355 million transaction would leave IAG with roughly half the slots available at Heathrow, but Mr Walsh stressed that this was less than Air France/KLM at Paris and Lufthansa at Frankfurt. Virgin Atlantic expressed concern over its rival's dominance at Heathrow, and said that the deal would damage the quality of services for passengers.
"British Airways' hold over Heathrow is already too dominant and we are very concerned - as the competition authorities should also be - that BA's purchase of BMI would be disastrous for consumer choice and competition," said the airline in a statement.
Travel Industry news posted by Jan Moys on 04 November 2011
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