IAG to buy BMI
November 10th, 2011 by elisa

IAG, parent carrier to BA and Iberia, has reached a deal with Lufthansa to buy BMI. The deal is believed to be worth over €350 million and is likely to be completed within the first three months of 2012.

BMI may be making a loss at the moment, but it is in control of 9% of coveted slots at Heathrow. Competition authorities could investigate the deal as Virgin Atlantic are expected to oppose the purchase as it would give IAG a rise from around 45% to 54% of landing slots. But speaking to BBC Radio 4, IAG chief executive Willie Walsh said IAG will have around half of the slots at Heathrow, still less than rivals Lufthansa at Frankfurt and Air France/KLM at Paris.

IAG reported a 31% fall in third-quarter profit, which was better than expected in the challenging market, and has prompted the move.

“We think the move would be a clear and meaningful positive for IAG in the long term, but would increase short-term risk, associated with the implementation of the deal. It is not clear how competition authorities will react,” said Andrew Lobbenberg, analyst at the Royal Bank of Scotland.

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