Jobs to go as BA buys BMI
British Airways owner IAG seals deal to buy BMI for £172.5m
British Airways owner IAG has struck a deal to buy BMI from Lufthansa for £172.5m, and confirmed jobs will go because of the "urgent need" to overhaul the loss-making airline.
IAG will buy BMI for €206 million in cash in order to gain as many as 56 extra slots at Heathrow each day, which it plans to use for more international flights.
The airline said it expects the takeover to add to earnings per share by 2014.
"Buying BMI’s mainline business gives IAG a unique opportunity to grow at Heathrow, one of our key hub airports," said Willie Walsh, chief executive of IAG.
BMI operates a daily Dublin-London schedule. Willie Walsh said he will maintain Belfast-Heathrow route and will look at the scale of the Dublin –London flight schedule once they take control of the company.
"Using the slot portfolio more efficiently provides the option to launch new longhaul routes to key trading nations while supporting our broad domestic and shorthaul network."
However he confirmed there will be job losses at BMI because the airline needs to be made profitable. Mr Walsh said the takeover would "protect more British jobs than if the airline had been closed and had its Heathrow slots sold off."
The deal will see IAG own more than half of the slots at Heathrow, some 53pc, and the takeover is still subject to clearance from European competition authorities.
IAG and Lufthansa announced an "agreement in principle" over the sale of BMI last month, and today confirmed they have a binding agreement.
As part of the deal, Lufthansa will take responsibility for BMI's final-salary penion scheme.
BMI is made up of three businesses - BMI mainline, BMIbaby and BMI regional. Lufthansa has the option to sell the BMIbaby and BMI regional divisions before the sale to IAG completes.
There will be a "significant" price reduction if BMIbaby is not sold before then, IAG said today.