IAG to acquire bmi
International Airlines Group is to buy Lufthansa’s British unit bmi to boost growth prospects at its Heathrow hub at a time when airline profits are falling due to higher fuel costs.
The announcement came as IAG reported a 31 per cent fall in third-quarter profit, better than expected and outperforming peers, with analysts expecting a deal for bmi to help trading further.
IAG said it had reached an agreement in principle for the sale of bmi with Lufthansa with any deal subject to due diligence and regulatory clearances.
The company said it expects the purchase agreement to be signed in the coming weeks and for a transaction to be completed in the first quarter of 2012.
IAG, Europe’s second-biggest airline group by value behind Lufthansa, said operating profit in the three months to the end of September fell to 360nm euros from last year’s third-quarter profit of 528m euros.
Revenues rose 2.2 per cent to 4.49m euros, helped by a 3.5 per cent rise in passenger traffic during the period. IAG’s fuel bill rose by a quarter to 1.39bn euros during the quarter.
The company had been expected to report a third-quarter operating profit of 350m euros, according to the consensus analyst forecast supplied by IAG.
“We are confident of a higher level of profitability in the fourth quarter of this year, even after the negative impact of the high fuel price. We expect to deliver a 2011 full-year operating profit of around double the year 2010 profits,” IAG’s chief executive Willie Walsh said.
He added that the airline had seen softening demand in October, with premium and non-premium traffic up 1.9 percent – a slower rate of growth than in prior months.
Virgin, which today said it had also made a bid for BMI, said: “British Airways’ hold over Heathrow is already too dominant and we are very concerned – as the competition authorities should also be – that BA’s purchase of BMI would be disastrous for consumer choice and competition.”