German flag-carrier Lufthansa and International Airlines Group have reached an agreement in principle on the sale of British Midland (BMI).

IAG – which owns British Airways and Iberia – said it expected the deal to be completed in the first quarter of 2012.

No details have been given of how much will be paid for the loss-making carrier. However, the price is likely to be in the region of £300 million.

Regulatory approval will also be needed for the deal to proceed – with concerns over dominance at Heathrow Airport in London the chief concern for rival carriers.

IAG will control over half the slots at the busiest airport in Europe should the deal be completed.

Virgin Atlantic – which also bid for its loss-making rival – is expected to strongly oppose the deal.

“It is envisaged that the purchase agreement will be signed in the coming weeks,” explained a statement from Lufthansa.

International Airlines Group

Also today, International Airlines Group announced financial results showing pre-tax profits in the nine months to September 30th rose from €63 million to €355 million.

Revenues rose nearly 12 per cent to €12.3 billion over the period.

However, the figures for the three months to September 30th showed an impact from rising fuel costs as the operating profit fell from €528m to €363m.

Group net debt was down €293 million to €602 million from in €895 million December 2010.