BA outlines plans for BMI slots but fate of BMIbaby unclear

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British Airways intends to use BMI's valuable London Heathrow slots to increase its own long-haul network, but has yet to indicate the fate of the low-cost operation BMIbaby.

The UK flag-carrier has reached a tentative agreement with Lufthansa Group to acquire BMI, whose Regional division is already the subject of a separate proposed sale to other investors.

While BA parent International Airlines Group (IAG) did not give much further detail on potential plans for BMI, chief executive Willie Walsh said: "The BMI of the future will look very different from the BMI of today."

For the winter 2011-12 season BA is scheduled to hold 43.1% of Heathrow slots, while BMI has 8.7%, and the acquisition is set to give BA more than half of the slots available.

Walsh said the prospective deal is a "very positive development" for BA and IAG, which will "particularly" give BA the opportunity to expand its long-haul network to emerging-market destinations in locations such as Asia.

He said the carrier had sufficient flexibility in its fleet and could "quickly move" to expand the long-haul network.

Despite Virgin Atlantic's protests over BA's dominance at the hub, Walsh indicated that he was confident of securing regulatory approval for the takeover.

He said IAG and Lufthansa "wouldn't have progressed this" if it was not sure of obtaining clearance, although Walsh declined to detail any potential competition concerns.

BA has already taken over six BMI slot pairs at Heathrow, disclosing the purchase in September.

Walsh said he was confident that BA could also achieve "significant progress" in a "quick fashion" regarding loss-making BMI's commercial and revenue performance, although he added that it was "far too early" to put timeframes on a turnaround.

There is also a question over the prospects for BMIbaby, the low-cost division of BMI, which operates a leased fleet of older-variant Boeing 737s from UK regional airports. BMIbaby's operation appears not to fit easily within BA, which has gradually extracted itself from budget and regional services. But Walsh has not indicated plans for BMIbaby following the acquisition.

Pilots' representatives view the proposed takeover as "encouraging" regarding the safeguarding of jobs.

"Since the possible sale of BMI was first announced we have not hidden our desire to see it acquired by a British airline," said UK cockpit union BALPA. "The real prize in this acquisition will be for people to feel secure and positive about the future."