Lufthansa will take control of BMI following an out-of-court settlement that will make the German carrier the second biggest at Heathrow, but spells the end of low-cost subsidiary bmibaby.
The deal will cost Lufthansa £223 million, rather than the £298 million it agreed to pay BMI chairman and founder Sir Michael Bishop for his controlling stake in 1999. It follows legal action by Bishop to enforce an agreed sale.
Lufthansa already owns 30% of BMI, and the deal will give it control of the carrier’s 11% of slots of Heathrow – second only to British Airways.
In an out-of-court settlement, Sir Michael Bishop has accepted £175 million to cancel Lufthansa’s option to buy his 50% plus one share, and Lufthansa will pay a further £48 million for the stake itself.
A UK-based company partly owned by Lufthansa, LHBD Holding, will hold the controlling stake during the renegotiation of BMI traffic rights.
The remaining 20% of BMI is owned by SAS Scandinavian Airlines, which is keen to sell.
The deal values BMI at £96 million, 40% of the bill Lufthansa has paid but about one-fifth of the value Lufthansa placed on BMI 10 years ago. Lufthansa has previously made clear it has little interest in the loss-making bmibaby.