Lufthansa has brought in investment bank Morgan Stanley to advise on a possible sale process of BMI, after being unable to stem the flow of losses.
The German parent firm bought the company formerly known as British Midland International in 2009. Lufthansa cut BMI’s unprofitable routes in an attempt to bring it back to profitability. With ever-rising oil prices and the effects of political unrest in the Middle East and North Africa, however, the German giant has failed to turn it around.
BMI is Heathrow’s second largest airline, with a fleet of 47 aircraft running 2,000 scheduled and charter flights per week to 69 airports. Flights are mainly across Britain and Europe, with others to the Middle East, Central Asia and Africa.
Holding 11 per cent of all slots at Heathrow – worth £770m – and despite its poor finances, BMI is expected to attract many suitors, which could include several of its rivals, BA owner IAG has expressed interest particularly in its Heathrow assets several times, while Virgin Atlantic is said to have been reviewing the situation at BMI.
It is understood that Lufthansa is accepting separate offers for its BMI Baby subsidiary, and BMI Regional. Donington Hall, the stately property near Derby, used as BMI’s head offices is another asset.
Vagn Ove Sorensen, previous chairman at Lufthansa subsidiary Austrian Airlines, has been appointed to take the role of chairman at BMI, to manage a restructuring process. A move which suggests a potential break up of the troubled company in order to offload it.
