BA's Walsh: £173m bmi buy is good for London

The deal gives IAG, the holding company of BA and Iberia, 56 more landing slots at Heathrow, lifting its share of the schedule at the world's busiest airport from 45% to 53%.

Willie Walsh, chief executive of IAG, admitted that there would be job losses when bmi - which has 2500 employees - is bought from Germany's Lufthansa, although he said exact numbers were not yet known. But Walsh hit back at Branson's attack on the impact on consumers, saying: "I don't take any notice of what he says. I don't think you'd expect him to come out with anything apart from opposition."

Walsh claimed the move was "good news for London and the UK" since BA will switch most of bmi's short-haul slots to long-haul destinations in emerging markets including China, Korea, Indonesia and Vietnam. "There's no question the balance of economic power is shifting towards the East," he said. "We need to get the UK connected."

Yet at Virgin, which launched a counterbid for bmi last month, Branson responded: "Claims that this deal is about new markets from Heathrow are a smoke-screen. This deal simply cuts consumer choice and screws the travelling public. We will fight this monopoly every step of the way."

The takeover is still subject to clearance, and analysts at Oriel Securities warned: "This is likely to be scrutinised." Walsh said IAG had already had early discussions with European Commission regulators. "We wouldn't have put so much time and effort into this deal if we didn't believe it was possible."

Analysts today said IAG had secured a good deal, particularly since Lufthansa has agreed to take over the liabilities of bmi's pension scheme, valued at about £180 million. "The [purchase] price is significantly lower than consensus forecasts of about £300 million," said Oriel Securities.

In October, Citigroup valued bmi's Heathrow slots alone at 460 million (£382.6 million). Three years ago Continental airlines paid $209 million (£133.2 million) for only four slots.

Lufthansa - which was forced to take control of bmi two years ago when its chairman, Sir Michael Bishop, sold his shares for £220 million - can still sell off the bmibaby and bmi regional brands before completion of the deal, scheduled to be in the first quarter next year. If it does, IAG said its final price would be "significantly" lower.

Walsh - who last year said IAG had a shopping list of 12 airlines - played down the chances of further purchases next year. Analysts have discussed IAG's interest in Portugal's national carrier TAP, but the chief executive said: "We've got work to do with bmi. Acquisitions next year are unlikely."