Lufthansa Group has detailed the harsh conditions under which it will sell BMI to International Airlines Group, including a potential substantial net loss from the deal.
While the two sides have agreed a binding cash purchase price of £172.5 million ($271 million), this is subject to heavy price reduction if Lufthansa does not choose to sell the budget arm BMIbaby before completion of the sale. Lufthansa also currently has the option to sell BMI Regional.
Lufthansa admitted that, after agreed reductions, the net purchase price is "expected to be significantly negative".
Under the agreement with IAG reached today, the German company will also take on BMI's defined pension benefit scheme through a UK holding company.
But Lufthansa said that the decision meant it would be "dissociating from a sustainably loss-making subsidiary".
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| © Keith Blincow/AirTeamImages.com |
British Airways parent IAG will gain BMI's slot portfolio at London Heathrow, increasing access by up to 56 daily slot pairs. The agreement is still subject to regulatory clearance.
Chief executive Willie Walsh said the acquisition would give IAG a "unique opportunity to grow at Heathrow". He added that the company would maintain a "comprehensive domestic schedule" as well as expand its long-haul network.
Both sides are intending to complete the transaction by the end of the first quarter of 2012.
Lufthansa chief Christoph Franz said it was "especially important for us to find the solution that best provides the company and its employees with sustainable prospects for the future".
Source: Air Transport Intelligence news
