Lufthansa Struggles to Dump BMIbaby to Complete IAG Deal: Bloomberg

Posted: April 17, 2012 in Airlines, Europe
Tags: , , , ,

Deutsche Lufthansa AG (LHA) is struggling to offload discount airline BMIbaby, potentially reducing proceeds from the sale of its entire U.K. business to British Airways parent IAG.

German turnaround specialist Intro Aviation GmbH, which had expressed an interest in BMIbaby, has ended talks

German turnaround specialist Intro Aviation GmbH, which had expressed an interest in BMIbaby, has ended talks

German turnaround specialist Intro Aviation GmbH, which had expressed an interest in BMIbaby, has ended talks, Managing Director Peter Oncken said in a e-mail. Charter carrier ACL has also dropped plans to make a bid, said a person familiar with the matter who declined to be identified discussing private talks.

IAG, or International Consolidated Airlines Group SA (IAG), agreed in December to pay 172.5 million pounds ($274 million) for BMI, while negotiating a “significant” discount should Lufthansa fail to find a home for the no-frills operation. The acquisition won European Union clearance on March 30, and London-based IAG is aiming to complete it by April 20.

“BMIbaby is not a very attractive asset,” said Joe Gill, an analyst at Bloxham Stockbrokers in Dublin, who follows low- cost carriers. “It’s getting flame-grilled at the moment because the market in northern England is incredibly competitive.”

BMI said March 5 that two parties were in the running to take over its discount arm, one of them an EU-based airline group operating in several countries, the other a U.K.-based company. Both parties aimed to keep BMI’s bases, it said, adding that a deal would be signed with one “in the next few weeks.”

“Lufthansa rejected a non-binding offer from us, rendering further discussions redundant,” Oncken, who founded Intro with German retail entrepreneur Hans Rudolf Wohrl, said in an e- emailed response to questions, adding that his company could resume talks with IAG after the takeover.

Like Intro, Dublin-based ACL signed an agreement allowing it to examine BMIbaby’s books, but isn’t currently considering an approach, according to the person familiar with its plans. Calls to the company weren’t returned.

BMI spokeswoman Katherine Hill said talks remain “ongoing” with potential buyers for BMIbaby, which has its main base at East Midlands airport between the English cities of Derby and Nottingham, reiterating comments from British Airways last week. Claudia Lange, a spokeswoman for the German company, referred all enquiries to BMI….

Read the full Bloomberg News story here….


By Steve Rothwell and Alex Webb
Apr 17, 2012


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