
Lufthansa (Frankfurt) has sold British Midland Limited (bmi) to the International Airlines Group (IAG). The sale was completed at the close of business on April 19. The gross purchase price was approximately $277.6 million.
According to Lufthansa, “as price adjustments have been agreed as part of the transaction structure, the net purchase price will be determined at the end of the second quarter 2012, at which point the final amount will be transferred. It continues to be expected that the net purchase price will be negative. However the costs of the transaction for Lufthansa will amortize within one year. The gross purchase price is expected to be reduced by a number of items including agreed deductions for not selling bmi regional and bmibaby prior to the completion of the transaction.
Bmi’s underfunded Pension Scheme is to be transferred to the UK Pension Protection Fund. The pension shortfall for the members of the bmi Pension Scheme will be offset to a large extent by a one-off contribution from Lufthansa of GBP 84 million to a supplementary pension scheme.”
On November 4, 2011, Lufthansa and IAG agreed in principle to the sale of bmi to IAG, prior to a legally binding purchase agreement being signed by both parties on December 22, 2011. The validity of this contract was subject to regulatory approval by the European Commission, which was received on March 30, 2012.
IAG has vowed to operate bmibaby and bmi regional as subsidiaries only for the short term (Lufthansa was unable to sell either carrier prior to the sale date). IAG will now try to dispose of both bmibaby and bmi regional.
Meanwhile Virgin Atlantic Airways has vowed to continue to fight this transaction and hopes to acquire new slots at London Heathrow.
Lufthansa is now entering an austerity period where it will attempt to cut all operations that are not making a profit.
Top Copyright Photo: Antony J. Best. The bmi brand is expected to be retired very quickly by British Airways ending a long history for British Midland Airways, now operating as bmi.
bmi/British Midland Slide Show: CLICK HERE
bmibaby Slide Show: CLICK HERE
Bottom Copyright Photo: Paul Denton. What will happen to bmibaby, the airline that no one wants?

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