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Saturday, December 24, 2011

IAG beats Virgin for bmi buy-out

International Airlines Group (IAG) has beaten Virgin Atlantic to buy bmi in a deal worth £172.5 million. IAG, the parent company of British Airways, has reached an agreement with Lufthansa to buy all three arms of the carrier, bmi mainline, bmi regional and bmibaby, although the price will be reduced if the latter two are sold before completion. Willie Walsh, chief executive of IAG said bmi regional and bmibaby are not part of its plans for its restructure.

This is due to IAG's focus on Heathrow, where the group will gain up to 56 additional daily slot pairs, meaning it has more than half of slots at the airport. Walsh said the acquisition would give the company a chance to expand both long and short-haul networks at Heathrow.

“Using the slot portfolio more efficiently provides the option to launch new long-haul routes to key trading nations while supporting our broad domestic and short-haul network,” said Walsh. He said it would maintain its domestic schedule including Belfast. bmi will also be restructured in the deal, costs of which will be spread over three years and at a lower level that bmi’s current annual loss. “Given the scale of bmi’s losses, there is an urgent need to restructure the business. Unfortunately, this will mean some job losses but we will secure a significant number of high quality jobs here in the UK and create similar new jobs in the future,” said Walsh. 
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