Sir Michael Bishop is selling his BMI airline to Lufthansa for £115m less than expected after withdrawing a lawsuit against the German carrier.
The disputed sale, first agreed in 1999, has been junked in return for a one-off payment by Lufthansa of £175m. Under an entirely new contract, Sir Michael's 50 per cent-plus one share of BMI is being bought by a Lufthansa-controlled UK holding company – LHBD – for £48m.
The combined proceeds of £223m compare with Lufthansa's original option to buy, which matured this year, with an expected price of $400m (£338m). But a row erupted over the state of BMI's finances, and last month Sir Michael, right, who has chaired the former British Midland Airways since 1978, launched court proceedings to force Lufthansa to close. With the sale now settled, Lufthansa will begin the task of renegotiating BMI's bilateral agreements. Until all the countries to which BMI flies have agreed to the routes being taken over by an airline of a different nationality, BMI will remain the property of LHBD. To satisfy strict rules on ownership nationality, Lufthansa has only a 35 per cent stake in LHBD, and the remaining 65 per cent is held by British nationals. Once new bilateral agreements are in place, Lufthansa will take over 100 per cent of the group.
Lufthansa's aggressive consolidation plans also include Swiss, Brussels Airlines and Austrian Airlines. But the German giant has its own problems, warning on Friday that it is heading for a loss in 2009. Yesterday, Moody's dropped its rating on Lufthansa from stable to negative.