It’s being reported that Lufthansa is in negotiations to sell its BMI subsidiary due to losses its incurred as a result of unrest in North Africa where BMI has a strong presence.  BMI’s real asset is slots and guess who wants them. . .

International Consolidated Airlines Group S.A

Better known as British Airways / Iberia.  Lufthansa and International Consolidated Airlines Group S.A have come to an agreement in principle and are negotiating the details now.  Virgin Atlantic was reportedly interested in this purchase as well but struggled to raise the financing to make an offer.

Concluding this deal would, on the surface, give International Consolidated Airlines Group S.A control of 53% of London Heathrow slots and I think this couldn’t be worse news.  It would mean that British Airways would effectively control the airport and with now additional capacity being added at Heathrow, I think we would see a shutout of meaningful competition. 

Yes, it’s almost certain that International Consolidated Airlines Group S.A would sell off some slots to some airline(s) such as Virgin Atlantic to make the deal palatable for regulators but the amount that would be sold off to make someone happy would pale in comparison to the hold it would have over the airport.

Europe would be wise to nix this deal in favor of other, better competition.

Filed under: Airline News by ajax