Binding Agreement for bmi Purchase

International Airlines Group (IAG) and Lufthansa AG have reached a binding agreement for IAG to acquire British Midland Limited (bmi), following the announcement on November 4.
The bmi mainline unit of the business will cost £172.5 million (US$271m), although this price could alter.  Lufthansa may still sell bmi regional and bmibaby – the two remaining units of bmi – before completion of the deal; however, if the subsidiaries are not sold, they will be included in the agreement with IAG and the total price of the package will be reduced.  IAG declined to comment on the reasons for this, claiming that it was “commercially confidential”.
Through the agreement, IAG’s London Heathrow slot portfolio will increase by up to 56 additional daily slot pairs.  This news has caused concern among other airlines and so the deal cannot close without competition clearance from the European Commission.
IAG’s Chief Executive, Willie Walsh, stated:  “Buying bmi’s mainline business gives IAG a unique opportunity to grow 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.”
He continued:  “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 number of high-quality jobs here in the UK and create similar new jobs in the future.  There will be restructuring costs spread over three years but these will be lower in total than bmi’s current annual losses.”
The transaction is hoped to be completed during the first quarter of 2012.