Budget airline bmibaby will be grounded from September, with some routes being stopped from next month, IAG has announced.

British Airways parent company IAG became the owner of bmi baby and bmi regional for a significant price reduction when it acquired bmi from Lufthansa
Group for an undisclosed sum last month.

The latest move by IAG puts almost 500 jobs at risk, although the carrier has said it is open to offers for the troubled low cost carrier – which is losses of £25m a year.

IAG revealed bmibaby and bmi regional would not be part of its long-term plans upon completion of the acquisition last month.

The Scottish consortium, Granite Aviation, is thought to be in advanced talks with IAG over the sale of bmi regional for £20 million.

IAG confirmed at the time of the acquisition that bmibaby and bmi regional would not be part of IAG’s long term plans and would not be integrated into British Airways.

Details of the bmi regional takeover are expected to be announced in the next couple of weeks.