IAG signs a pre-agreement to buy Lufthansa’s UK subsidiary

As reported in El Mundo, the company resulting from the merger of British Airways and Iberia, IAG, has signed a preliminary agreement to buy the British subsidiary of Lufthansa BMI, the second largest airline at Heathrow airport, according to the company’s statement in the presentation of results, in which it earned €365 million up to September.

If the deal goes through it will, says IAG’s chief executive Willie Walsh,

“expand our network, in particular our long-haul network.”

So far, the agreement does not guarantee exclusivity, but the company believes its offer is the most attractive. Its rival in the UK, Virgin Atlantic, could have made an offer, too, but it’s still working with Lufthansa.

Analysts estimate that the operation will come to about £300 million or €347 million euro. With 9% of the slots of take-off and landing, BMI is the second largest airline at Heathrow, the busiest airport in Europe. IAG is the largest operator in the aerodrome with a share of 43.1%, well ahead of Virgin, which ranks fifth with 3.1%.

Walsh is confident that the agreement will be approved by regulators, if compared with the share of other rivals. Lufthansa has two thirds of the slots in Frankfurt, while Air France-KLM has 59% of Charles de Gaulle in Paris and 57% of Schiphol in Amsterdam.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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