FRANKFURT, Jun 22 – The leading German airline, Lufthansa, said on Monday it had reached a new agreement to buy British Midland (BMI) from the carrier\’s founder and dominant shareholder, Michael Bishop.
The move is aimed at procuring more than 11 percent of all take-off and landing slots at London\’s Heathrow airport, the largest in Europe, a statement said.
In a first step, Lufthansa is to pay Bishop 175 million pounds (207 million euros, 288 million dollars) to cancel a so-called put option that would have forced the German airline to directly buy a stake of 50 percent plus one share in BMI.
A third company being set up with Lufthansa and a partner, Britain-based LHBD Holding Limited, is then to buy the majority stake for around 48 million pounds, while Lufthansa acquires 35 percent of the shares in LHBD.
The remaining 65 percent would be held by a British national who "is not a stategic partner," Lufthansa spokeswoman Stefanie Stotz told AFP.
She declined to identify the partner in question but said it was neither British Airways nor Virgin Atlantic.
"After obtaining the necessary traffic rights, Lufthansa expects to be able to acquire 100 percent of LHBD," the statement said.
It did not say how much Lufthansa would pay for the LHBD shares.
"We had to find a company with a UK national to keep British Midlands a majority UK-based company" with control of the traffic rights, Stotz explained.
"When the traffic rights are secured we\’ll then buy out the company," she said. "That\’s the same structure we\’re using for the takeover of Austrian Airlines, its quite common."
Lufthansa, which already holds 30 percent minus one share of BMI, would had to have taken over Bishop\’s stake for about 400 million euros (554 million dollars) under the terms of the original contract, even though BMI is now in a much weakened state after record losses last year of some 114 million euros.
SAS Scandinavian Airlines holds the remaining 20 percent of BMI.
"By this transaction, Lufthansa is expanding its interest in an airline whose strategic asset is its control of more than eleven per cent of all the take-off and landing slots at London Heathrow, Europe’s largest airport," the statement said.
Stotz told AFP the German airline would at term own 80 percent of BMI.
Earlier on Monday, EU regulators approved Lufthansa\’s plans to buy SN Brussels Airlines after the German carrier addressed concerns that the deal might hurt competition, the European Commission said.
The German carrier said in September that it planned to acquire full control of Brussels Airlines, the surviving rump of Belgium\’s former flag carrier Sabena.