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Lufthansa to sell BMI to IAG, the owner of British Airways

Deutsche Lufthansa AG (Lufthansa) and International Airlines Group (IAG), the owner of British Airways, have signed a binding agreement for the sale of British Midland Limited (bmi) to IAG for £172.5m (approx. €207m) in cash.

Lufthansa has the option of selling the ‘bmi regional’ and ‘bmibaby’ units separately before the sale is completed, expected by the end of the first quarter 2012. In such an event IAG will pay a significantly lower price.

IAG’s boss Willie Walsh has said there will be job losses due to magnitude of losses at bmi and the need for urgent restructuring at the carrier.

The main interest of IAG in bmi is to gain those extremely valuable slots at the over congested London Heathrow airport.

IAG would like to replace the smaller aircraft flown by bmi by the bigger ones flown by British Airways. The deal though is likely to face regulatory hurdles and it will not be an easy time for IAG.

It is too early to comment on what will be the impact on bmi’s London Amritsar flight.

About Devesh Agarwal

A electronics and automotive product management, marketing and branding expert, he was awarded a silver medal at the Lockheed Martin innovation competition 2010. He is ranked 6th on Mashable's list of aviation pros on Twitter and in addition to Bangalore Aviation, he has contributed to leading publications like Aviation Week, Conde Nast Traveller India, The Economic Times, and The Mint (a Wall Street Journal content partner). He remains a frequent flier and shares the good, the bad, and the ugly about the Indian aviation industry without fear or favour.

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