Morning:
8°c
BMI snapped up by Lufthansa in £600m takeover
Nick Goodway, City Correspondent29 Oct 2008
BMI, Britain's third largest airline, was today sold to German flag carrier Lufthansa in a deal valuing it at just over £600 million.
Sir Michael Bishop, the 66-year-old who has led the growth of the airline which was called British Midland for the last 40 years, agreed to sell his half share of the business to the Germans for ¤400 million (£318 million).
Today's sale will come as a major blow to Sir Richard Branson's Virgin Atlantic, which has held on-off takeover talks with Sir Michael for the last five years.
The deal will make Lufthansa the second largest operator out of Heathrow, the world's busiest airport, behind British Airways.Sir Richard had always hoped that he could buy bmi to give him the much-needed take-off and landing slots at Heathrow which he wanted to be able to compete fairly with British Airways.
Lufthansa now owns 80 per cent of bmi. The remaining 20 per cent is owned by SAS, the Scandinavian airline which has put itself and all its investments up for sale. The Germans are now the most likely buyer of that final stake.
Even today Virgin Atlantic chief executive Steve Ridgway was still arguing that a Virgin/bmi deal would be better for the airline industry because it would create a stronger competitor to the likes of BA.
Lufthansa bought its original 30 per cent holding in bmi in 1999 and Sir Michael has since held an option to force the German airline to buy his stake at an agreed price. The airline industry faces record losses this year on the back of soaring fuel prices and fewer flying passengers as recession bites. Already this year several airlines, including Zoom, XL, Silverjet and Sterling, have gone under.
Bmi carried 10.6 million passengers last year, had revenues of just over £1 billion and operates 70 aircraft. It employs 4,300 people with its main British base at East Midlands airport. The airline controls 11 per cent of the take-off and landing slots at Heathrow. British Airways dominates the airport with 43 per cent of the slots which can change hands
Sir Michael is perhaps best known for turning up and taking direct responsibility for a British Midland crash on the M1 which killed 47 passengers in 1989.
He began work in the industry as a baggage handler at Manchester airport and led a management buy-out of British Midland in 1978. He was knighted in 1991 and for five years was chairman of Channel 4 Television. He was one of Britain's first businessmen to admit to being gay.
