Virgin and IAG in race to buy Lufthansa's BMI
Rivals go to regulators amid fears IAG could gain 55% of lucrative Heathrow slots
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Saturday 15 October 2011
Virgin Atlantic is vying with British Airways' IAG in the race to buy their smaller rival BMI, as its parent – the German airline Lufthansa – studies options for the loss-making business.
Virgin said yesterday it was in discussions with Lufthansa and expressed concern about the possibility of BMI falling in to the hands of IAG, which has also approached the German carrier. "[We] have confirmed our interest in acquiring BMI," it said.
Although loss making, BMI has lucrative assets in the form of flight slots at London's Heathrow; it controls about 10 per cent of the airport's take-off and landing slots, which were estimated to be worth around £400m by Citigroup analysts last month.
British Airways is the only airline with a bigger share, controlling around 44 per cent of the slots at Heathrow. With the 1 per cent controlled by its sister carrier Iberia, IAG is the dominant airline group at the airport.
Eyeing the potential competition hurdles faced by IAG, Virgin Atlantic, which is majority-owned by Sir Richard Branson's Virgin Group, also confirmed that it was talking to regulators.
"We are ... very concerned about the competition ramifications of an IAG purchase of BMI, due to BA's dominant position at London Heathrow, the world's busiest international hub, which is completely full," Virgin Atlantic said.
"We are talking to the regulators about the need to protect consumers' interests and choice and to ensure that overall competition in the market is preserved."
IAG's chief executive, Willie Walsh, has made no secret of his interest in taking over BMI. Speaking in Dublin earlier in the week, he told Bloomberg that BMI and the Portuguese carrier TAP were "the only two we're actively interested [in] at this stage".
His opposite number at Virgin Atlantic, Steve Ridgway, has been equally forthright about his interest in BMI. Lufthansa declined to comment on interest from either airline last night, saying only that it was still looking at various options for BMI.
It added that the process could result in a full or partial sale but stressed that no decision had been taken.
The German group, which took control of BMI from Sir Michael Bishop just over two years ago, is hoping to either turn around the ailing business or put a lid on the losses it generates. Last year, Lufthansa recorded €1.1bn in profits; BMI, in contrast, booked a 2010 net loss of £124.5m.
Adding to the pressure, Lufthansa, in common with the wider aviation sector, is facing headwinds from the slowdown in global economic growth and high fuel prices, with recent figures from the International Air Transport Association showing that, compared with July, international airline traffic had slowed in August.
"The industry has shifted gears downward," the body's director general, Tony Tyler, said at the time. "The pace of growth in passenger markets has dipped and the freight business is now shrinking at a faster pace. With business and consumer confidence continuing to slump globally there is not a lot of optimism for improved conditions any time soon."
- 1 Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
- 2 Google April Fools': company unveils backwards search engine and huggable digital assistant
- 3 I might be an MP, but that doesn't stop me fighting sexism with my breasts
- 4 April Fools' Day 2015: The best hoax news stories from around the internet
- 5 Gamers confess the worst things they've done in The Sims
Holborn fire: Chaos as 2,000 people evacuated to escape toxic smoke filling central London
University of Cambridge: Remains of 1,300 scholars are found under building
April Fools' Day 2015: The best hoax news stories from around the internet
April Fools' Day 2015 live: The best pranks and fake stories from around the world
Jeremy Clarkson 'could be given minder' ahead of a potential Top Gear return
Street preacher quoting from the Bible fined for calling homosexuality an 'abomination'
Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
Revealed: Putin's army of pro-Kremlin bloggers
Katie Hopkins reported to the police for race hatred by Labour MP Simon Danczuk after tweet about Pakistani men
iJobs Money & Business
£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...
£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...
£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...