European Commission gives approval for BMI sale to IAG

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The European Commission has given regulatory approval for International Airlines Group's £172.5 million acquisition of loss-making of BMI from Lufthansa, saying the transaction "would not significantly impede effective competition".

IAG says it expects the deal to complete around 20 April, although some technical conditions remain to be finalised.

BMI's mainline operation will be integrated into British Airways "over the coming months" IAG says.

The Commission says the decision is conditional upon the release of 14 daily slot pairs at London Heathrow "in order to facilitate new entry", and upon IAG's commitment to carry connecting passengers to feed the long-haul flights of competing airlines out of the London hub.

In light of these commitments, the Commission concluded that the transaction would not raise competition concerns, it says.

Commission vice-president in charge of competition policy Joaquín Almunia says: "The Commission could clear this transaction in the first phase given the commitments package offered by IAG which addresses the competition concerns we identified.

"The commitments package includes an appropriate number of very sought-after slots at London Heathrow as well as far-reaching feeder arrangements as regards connecting passengers. We are therefore satisfied that the competitive dynamics will be maintained so as to ensure choice and quality of air services for passengers."

Two of the daily slot pairs released by IAG will be leased to Russian carrier Transaero for Moscow flights.

IAG chief executive Willie Walsh says: "We're delighted the EC has given competition approval for our acquisition of BMI. Their decision follows a thorough review during which the views of key stakeholders have been taken into account.

"This is great news for Britain. Over time we will launch new long-haul routes to key trading nations that are currently not served from Heathrow while supporting our short-haul network. This is good for UK business and UK consumers. We have already announced that British Airways will re-start flights from Belfast to Heathrow, maintaining important economic links."

Walsh says the deal will enable more of BMI's jobs to be saved than if the carrier were simply closed.

"We plan to operate BMI's summer schedule and will update their customers once the transaction has been completed," adds Walsh.

Virgin Atlantic, however, remains unhappy with the acquisition. "We are very concerned that a deal of such significance has been waved through with very little regard for the flying public.

"The last minute remedies offered this week by British Airways were not shared with the industry and they have not been subject to a detailed assessment," says the carrier in a statement.

It is now reviewing its options, it says.

The acquisition cost is unchanged at £172.5m in cash, on a debt-free, cash-free basis, confirms IAG, "but is subject to significant price reductions if Lufthansa does not opt to sell BMIbaby". Integration costs will amount to €100 million over three years, with the majority in the first year, says IAG.

The carrier group's slot portfolio at Heathrow will increase by an average of 42 daily slot pairs, it adds.

Meanwhile, the British Airline Pilots' Association (BALPA) warned that it will fight to secure its members' jobs at the merged operation, noting that neither BMIbaby nor BMI Regional feature in IAG's plans.

"BALPA will be looking to protect those jobs whether in IAG or with any other potential buyer," it says.