IAG (parent to British Airways) has reached a binding agreement with Lufhansa to buy BMI, despite a competitive counter-bid from Virgin Atlantic earlier this month.
The agreed price is £172.5 million and will be completed in the first quarter of 2012. The deal could mean job losses in order to restructure the ailing business.
BA chief executive Willie Walsh said: “‘Unfortunately, this will mean some job losses but we will secure a significant number of high quality jobs here in the UK and create similar new jobs in the future.”
The takeover is still subject to clearance by competition authorities as IAG will stand to gain an additional 56 daily slot pairs at Heathrow, a prospect Virgin Atlantic vows to fight.
A spokesperson for Virgin Atlantic said: “We will be asking the competition authorities to stop this deal and to protect the many millions of passengers on routes where BA and BMI currently compete. With Heathrow sewn up BA can use its monopoly power to force up prices at the expense of the consumer.”
But Walsh insisted the deal was good news for the UK and for consumers: “Using the slot portfolio more efficiently provides the option to launch new long haul routes to key trading nations while supporting our broad domestic and short haul network.
“This deal is good news for the UK as we will maintain a comprehensive domestic schedule including Belfast. Our plans to expand our longhaul network would guarantee growth by making Britain better able to compete on a global scale. It will also help maximise Heathrow’s position as a world class hub airport.”