Lufthansa Takes Control of BMI

31 October 2008

COLOGNE: German air carrier Lufthansa has taken a majority stake in its UK partner BMI British Midland, handing it the second biggest operating platform at London Heathrow airport, behind only British Airways.

Sir Michael Bishop, chairman of BMI, is selling his 50% (plus one share) to Lufthansa for around €400 million ($523m; £317m), which already controls a 30% (minus one share) stake in the British airline.

SAS Scandinavian Airlines controls the other 20% in BMI – which has a low-cost unit, BMI Baby, and a UK regional arm – and has indicated it would be interested in selling its holding.

BMI currently holds 11.4% of the available take off and landing positions at Heathrow, lagging only BA, which currently takes a 41.5% share.

The purchase is said to by analysts to strengthen the position of the Star Alliance, led by Lufthansa and United Airlines, versus the Oneworld group headed by BA and American Airlines

An alliance between Lufthansa and Virgin Atlantic is seen by analysts as another future possibility.

Steve Ridgway, Virgin Atlantic chief executive, says: "Everyone has speculated that it would make sense for Virgin Atlantic and BMI to combine their long-haul and short-haul networks. 

"There is now a major opportunity to do that and create a new, strongly viable competitor to BA."

Data sourced from Financial Times; additional content by WARC staff