Lufthansa
Sells bmi
Lufthansa sold British subsidiary bmi
(British Midland) to competitor IAG (British Airways + Iberia) for a
gross price of 207 million euros. Virgin Atlantic had also engaged in
the bidding, but came up empty.
After the deal was made public, Lufthansa’s
shares gained 2.09 percent at the Frankfurt stock exchange, jumping
to 9.21 euros each. The transaction, however, still needs to get the
green light from the antitrust authorities, which is expected to happen
during Q1, 2012.
The step is fully in line with Lufthansa’s
strategy to divest losing subsidiaries and business units. It further
consolidates the European aviation market.
The German flag carrier began purchasing
bmi stakes in 1999 and increased its financial influence step by step
until mid-2009, when it took over full control of the airline. But original
plans to compete with British Airways on its home turf with a local
airline like the British carrier had exercised before in Germany with
its offspring Deutsche BA (now part of Air Berlin) didn’t work
out. Instead, LH had to realize that bmi could not really challenge
rival BA due to lack of funds and operational strength.
This was aggravated by the fact that bmi’s
network is not linked with Lufthansa’s own. Instead, the carrier,
which was formed in 1949 as “Derby Aviation Limited,” is
focused on the British leisure market, offering many flights to Egypt,
Morocco and numerous places in the Middle East. When the so-called Arab
spring started with uprisings and power shifts in Tunisia, Yemen, Egypt,
Libya and Syria, bmi’s passenger numbers tumbled. This led to
a constant cashdrain as proven by cumulated losses of 154 million euros
from January to end of September.
By selling its daughter to the International
Consolidated Airlines Group S.A. (IAG), Lufthansa strengthens a major
competitor. bmi’s main assets are the highly valuable slots at
crowded London Heathrow airport, of which the airline possesses nine
percent. Aviation experts estimate their value far exceeds the worth
of the entire airline. British Airways will account for 51 percent of
all arrivals and departures at Heathrow when it takes over bmi’s
slots. But analysts would not exclude that BA might be forced by the
anti-monopoly commission to abandon some of its slots to comply with
competition rules.
As a consequence of the deal, bmi will
step out of the Star Alliance soon and join the Oneworld Club with Cathay,
BA, Iberia, American, LAN and Qantas instead.
Heiner Siegmund |
RE:
