Virgin makes counter offer for BMI

Sir Richard Branson’s carrier is reported to have made an indicative offer and signed a “terms of agreement” contract with BMI owner Lufthansa so it can analyse the airline’s books.

The Virgin bid is thought to be in the region of £50 million, against IAG’s offer at about double that figure, excluding pension and restructuring costs, The Times reports today, quoting banking sources.

Virgin Atlantic is hopeful of being able to complete a deal quickly without the regulatory scrutiny that would accompany a BA-BMI takeover. Lufthansa is expected to make a final decision on a buyer for loss-making BMI early in the new year.

IAG and Virgin are keen to acquire the airline and gain control of its Heathrow landing slots, which analysts have valued at about €226 million.

A deal would allow Virgin to create a European feeder network for its Heathrow-based long-haul services. Virgin would be able to co-ordinate its schedules with BMI to enable passengers to transfer from short-haul to long-haul flights at the London hub.

Virgin said: “We have always been interested in BMI and are in constant talks regarding its future.” IAG said last month that it had reached an agreement in principle to buy BMI.