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BMI acquires control of BA franchise BMed in £30m deal to expand medium-haul network for UK's Star Alliance carrier

BMI holding company British Midland has struck a deal to acquire Heathrow-based British Airways franchise carrier British Mediterranean (BMed).

It comes little more than a week after BMed widened negotiations to other parties beyond Lebanese-controlled M1 Group, with whom it disclosed it had been talking since the start of the year.

In announcing the deal BMI says its holding company has subscribed to approximately £30 million ($59 million) of new shares in BMed. Under the deal BMI senior executives Sir Michael Bishop, Nigel Turner and Tim Bye have joined the BMed board with immediate effect. BMed chief executive David Richardson will remain in the role.

BMI says an agreement has been reached with BA under which the franchise agreement and any other commercial agreements that exist with them will continue for a transitionary period until the end of the summer 2007 timetable.

BMI chief executive Nigel Turner says: “Bringing BMed into the BMI Group creates a business with a turnover in excess of £1 billion with substantial growth opportunities. The acquisition enables the BMI group to accelerate its strategy of expansion into medium-haul markets.

“BMed operates to 17 destinations in 16 countries and has no overlap with any current BMI route. Many of these destinations have restricted access to the market due to existing bilateral agreements. Synergies include BMed’s Heathrow base and the fact that it operates IAE engined Airbus A320 and 321 aircraft in a two class configuration.

“BMed has a first class workforce and they will be welcomed into the bi group and we look forward to working with them to rebuild the business after some difficult times over the past few months. In the short term we plan for the business to continue to operate as it does today with no immediate changes to network or structure. A comprehensive review of the business will take place over the next 30 days.”

Specialising in operations to the Middle East and Central Asia from London Heathrow, BMed has a fleet of eight Airbus narrowbodies. It has operated as an independent BA franchise partner since 1997.

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