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Lufthansa offloads bmi to BA's parent
Source: Agencies |
December 23, 2011, Friday
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GERMANY'S Lufthansa signed a deal yesterday to sell its loss-making British Midland subsidiary to the parent of rival British Airways in a deal worth as much as 172.5 million pounds (US$270 million).
BA parent International Airlines Group, or IAG, said the price was subject to "significant reductions." Lufthansa made clear that it expected initially to lose money on the sale, but stressed it was selling "a loss-making subsidiary" and said the deal would ultimately strengthen its financial position.
Lufthansa and IAG announced a deal in principle on the sale in early November.
The binding purchase agreement signed yesterday gives Lufthansa the option to sell British Midland's bmiregional and bmi baby offshoots before the sale is completed. IAG chief executive Willie Walsh said that they are "not part of our plans."
A British holding company of Lufthansa will take on the pension benefit scheme of British Midland, or bmi. In all, Lufthansa said that "after agreed price reductions, the net purchase price is expected to be significantly negative."
The two firms plan to complete the sale in next year's first quarter, subject to antitrust authorities' approval.
British Midland has its main hub at London's Heathrow airport, Europe's busiest, as does British Airways, which along with Spain's Iberia is part of IAG. It operates flights to Europe, the Middle East and Africa.
Walsh indicated last month that he did not see any regulatory issues, but Virgin Atlantic has raised concerns over the potential impact on consumer choice and competition.
BA parent International Airlines Group, or IAG, said the price was subject to "significant reductions." Lufthansa made clear that it expected initially to lose money on the sale, but stressed it was selling "a loss-making subsidiary" and said the deal would ultimately strengthen its financial position.
Lufthansa and IAG announced a deal in principle on the sale in early November.
The binding purchase agreement signed yesterday gives Lufthansa the option to sell British Midland's bmiregional and bmi baby offshoots before the sale is completed. IAG chief executive Willie Walsh said that they are "not part of our plans."
A British holding company of Lufthansa will take on the pension benefit scheme of British Midland, or bmi. In all, Lufthansa said that "after agreed price reductions, the net purchase price is expected to be significantly negative."
The two firms plan to complete the sale in next year's first quarter, subject to antitrust authorities' approval.
British Midland has its main hub at London's Heathrow airport, Europe's busiest, as does British Airways, which along with Spain's Iberia is part of IAG. It operates flights to Europe, the Middle East and Africa.
Walsh indicated last month that he did not see any regulatory issues, but Virgin Atlantic has raised concerns over the potential impact on consumer choice and competition.
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