British Airways parent International Airlines Group looks set to increase its dominance at Heathrow Airport after Lufthansa agrees a £172.5 million deal to sell BMI to the airline. The takeover will now be subject to an examination by the competition regulators, but if allowed, the deal will see IAG acquire an additional 56 landing slots at one of the world’s busiest airports.
Sir Richard Branson, boss of Virgin, has said that he will attempt to block the deal going ahead. Virgin had also signed an agreement with Lufthansa to bid for the troubled airline. Branson said that if IAG were to increase its monopoly at Heathrow it would be damaging, not only to the airline industry and consumer choice, but to the UK as a whole.
IAG chief, Willie Walsh, said that he intends to drastically restructure the airline over the next three years. He added that this would inevitably lead to some of BMI’s 3,600 workers becoming redundant.
Since acquiring BMI, Lufthansa has failed to turn a profit from the Castle Donington-based carrier, and said that in 2010 the airline made a loss of £153 million. Both AIG and Lufthansa are hoping that the tie-up will be completed in the first quarter of next year.
Although the competition authorities in Europe have blocked airline mergers in the past, they have usually done so because there is a potential loss of competition on routes, rather than an increased presence for a carrier at a particular airport. IAG will see its slot allocation rise well above 50 per cent at Heathrow if the deal goes ahead.