The deal, which will increase Lufthansa’s stake from 30 to 80 percent, ends a spat with Sir Michael over its demand that he inject more capital into the struggling airline before the sale.Sir Michael took Lufthansa to the High Court last month in an attempt to force them to exercise an option agreed in 1999 that it had to buy out his stake in BMI at a later date.
But both parties have confirmed they had reached an out-of-court settlement, with Lufthansa paying Sir Michael £223 million for his controlling stake of 50 percent plus one share.
Sir Michael exercised the option last autumn, forcing Lufthansa to buy his stake for up to €398m, even though its value has been slumped after record losses last year to about €114 million.
Lufthansa warned that it could walk away from negotiations if Sir Michael did not put up more money to shore up the loss-making carrier’s finances.
But the out-of-court settlement announced by Lufthansa, which already owns a 30 percent stake in BMI, suggested the German carrier was able to secure a price cut instead of a capital injection it had demanded.
“By this transaction, Lufthansa is expanding its interest in an airline whose strategic asset is its control of more than 11 percent of all the take-off and landing slots at London Heathrow,” the German airline said.
BMI’s remaining shareholder, SAS, recently hinted it was interested in selling its 20 percent stake to Lufthansa, which also confirmed a possible purchase.
Lufthansa executives have already signalled that they want to slim down operations at the loss-making airline, which controls 11 per cent of take-off and landing slots at Heathrow, including a possible sale of BMI Baby.