IAG looks to close bmibaby after finalising knockdown purchase

The future of the budget carrier bmibaby was uncertain yesterday after the owner of British Airways completed its deal to buy bmi and said it wants to exit the low-cost arm.

When International Airlines Group (IAG), which owns BA and Iberia, announced its acquisition of loss-making bmi from Lufthansa, it came with the proviso that the German airline either sell bmibaby and bmi Regional before completion, or give IAG a "significant reduction" on its £172.5m purchase price.

IAG said: "IAG will acquire these businesses and receive a significant price reduction.

"Bmibaby and bmi Regional are not part of IAG's long-term plans and will not be integrated into British Airways. IAG will pursue options to exit these businesses."

Closing bmibaby will cost about £60m. The carrier, together with bmi Regional, are thought to be losing about £82m a year.

IAG said all exit costs would be offset by its price reduction.