Lufthansa acquires remaining BMI share ahead of sell-off

Lufthansa acquires remaining BMI share ahead of sell-off

Lufthansa’s acquisition of the remaining 20 percent of BMI has fuelled speculation that it could imminently try to sell the loss-making British airline.

Lufthansa agreed to pay about £19 million to SAS airline for the remaining stake which it did not already own, with a further £19 million to cancel a shareholder agreement with BMI.

Lufthansa will also have to pay SAS an additional undisclosed amount should the German carrier sell all or parts of BMI within the next two years.

There have reportedly been as many as 12 parties interested in BMI. Willie Walsh, BA Chief Executive, said this week that he would be interested but that no formal talks had been held.

Flybe has emerged as a potential runner in the race. The regional carrier is being tipped to make a joint bid with BA, although the latter has denied any talks. However BA might fall foul of competition regulators as a sole bidder due to its dominant share at Heathrow.

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A successful bid by Flybe would sidestep BA’s potential problems with competition watchdogs, and would also thwart Virgin Atlantic, which is considering its own bid for BMI.

In 2008, BMI generated £1.04 billion of revenue. The last set of accounts filed show the net pension plan deficit at £45.8 million on December 31, 2007.

Lufthansa said in June that BMI faced growing financial challenges brought on by increases in fuel prices and fall in demand as a result of the economic crisis.

The International Air Transport Association said this month that it expected the world’s airlines to lose about $11 billion this year.

Lufthansa was also on alert after a computer glitch on Wednesday left passengers stranded and halted much of Europe’s civil aviation. The problem mainly affected its Austrian Airlines services and meant that passengers had to be dealt with manually.