It seems that fortune is smiling on BMI Baby with the announcement that someone is actually interested in buying the little airline.

The low cost carrier operating a fleeting Classic Boeing 737-300′s and 737-500′s, has been sold to a new potential owner who has not disclosed who they are. Financial terms have not been disclosed either.

However, the talks are non-exclusive, so if you want a cheap airline that looses money hand over fist, this is your chance to buy who lost 120 million euros last year!

The sale will consist everything that BMI Baby has – Plane’s staff, the works. The new owner is planning to retain the bases at Birmingham Airport, East Midlands Airport and Belfast

BMI say:

“The new potential owner would continue to use the existing brand name for an interim period.”

and

(it is) “pleased with the opportunity that this transaction gives to the bmibaby business enabling it to be an independent airline.”

Intro Aviation who were mooted as a group who are interested in buying BMI Baby seem NOT to be the buyer in this case, so it will be interesting to find out who brought it in the end.

For Lufthansa, there will be a sigh of relief. With a big discount payable if BMI Baby was NOT sold, it means, it can try and extract the full remaining value out of British Midlands Airways in its sale to International Consolidated Airlines Group.

More importantly, the BMI Baby staff have a future now – which is a darn good thing.

It seems that Lufthansa is having a bit of a Business Class fare sale. There are fare sales going on ex Germany, but also from the UK too.

Those of you who are needing a starting point for Senator status this year could do well to have a look at these:

Data – Lufthansa.co.uk

With an offer like this, there are of course a bunch of terms and conditions.

• Purchase by: 24.01.2012
• Departure period: 01.07.2012-31.08.2012
• Return period: 07.07.2012-30.11.2012
• Advance Purchase Period: 7 days
• Minimum stay : 6 days or a Saturday night
• Maximum stay : 3 months
• Subject to availability especially during times of high demand

For those looking at earning codes, these should book into Booking class Z as shown by an example fare below:

(Input dates 05/07/2012 to 12/07/2012, Route London <> Hong Kong, priced at £1487.37) 

Whilst not as good as the Christmas sale fares (which brought some of these routes under £1299 return), this is reasonably good value if you need to be out in these locations – or if you’re mad and want to try for a Senator Qualification. Just on the long haul segements on this route there’s 22626 miles qualifying miles up for grabs (before any executive bonuses and the such).

Germanwings seem to be – well – spreading their wings further. The Lufthansa owned carrier will be operating the Cologne to London route on behalf of the Lufthansa.

Germanwings growth is accelerating in the UK. It has been announced they will Already they will be running to the UK:

• Stuttgart to Heathrow (Commencing February)
• Stuttgart to Manchester (Commencing July)

Cologne to London will be the 3rd route to be swapped, due to commence in March.

The changes replacing services operated by Contact Air and Lufthansa Cityline. The Cologne-London LHR route will be a swap from BMI wet lease for Lufthansa to Germanwings.

Germanwings will also continue to offer its services out of London Stansted as well.  Saying that – they are  a Low Cost Carrier. Now remember everyone when they say “Low Cost Carrier”, it means “Lower Cost – to the airline”. So if you want useful things like checked luggage, snacks and drinks onboard – it’s time to open your wallet (unless you buy their Best Seat option).

However, the good (if that’s the loosest possible use of the word good in the world) news is that Germanwings flights now qualify for Miles and More points and Status credits.

Well when this posts it’ll be midnight in the United Kingdom and the New Year will be amongst us. The times on this server are bit behind that though .

Today’s airplane art is two 747-400′s – A Lufthansa 747-400 in the foreground and a Qantas 747-400 in the background at Frankfurt-am-Main Airport.

The week and a bit extra of airplane art will be concluding on Monday before it shifts back to it’s usual Sunday slot (least of all, I’m having this nasty feeling I could well be beginning to scrape the barrel of what I have that’s reasonably new in the archive).

I’ll have to fix that in February

Ok, it’s a bit late (as I snored most of last night), but here is yesterday’s Airplane art – A Lufthansa Airbus A330-300 taxing in at Frankfurt International Airport

More later today…

The press releases for today’s big announcement today of the sale of British Midland Airways to International Consolidated Airlines Group (IAG)

First up, Lufthansa – http://presse.lufthansa.com/en/news-releases/singleview/archive/2011/december/22/article/2054.html

Following the announcement on November 4, 2011, Deutsche Lufthansa AG (Lufthansa) and International Airlines Group (IAG) have signed a binding agreement for the sale of British Midland Limited (bmi) to IAG. The price is GBP 172.5 million (approx. EUR 207 million) in cash for bmi. The price is subject to certain reductions. Both parties aim for a closing of the transaction by the end of the first quarter 2012.

After signing the agreement, Christoph Franz, CEO and Chairman of the Executive Board of Deutsche Lufthansa AG, stated, “bmi’s employees and management team have shown great motivation and unfailing commitment in dealing with the financial challenges of the past years. For this I owe them my thanks and appreciation. It was therefore especially important for us to find the solution that best provides the company and its employees with sustainable prospects for the future. This has been achieved through the sale of bmi to IAG. And as part of Lufthansa’s strategic development the sale means that our customers, shareholders and employees will benefit from a sharpened corporate profile and a stronger financial position of the Group. Both of these are necessary elements to enable sustainable, profitable growth.”

Transaction highlights:

• Sale of bmi for a gross purchase price of GBP 172.5 million (approx. EUR 207 million), subject to certain reductions
• Net of total potential reductions, the net purchase price expected to be clearly negative; however, the transaction is expected to have amortized for Lufthansa after around one year
• As part of the agreement, a British holding company of Lufthansa, is to take on bmi’s defined benefit pension scheme
• Deal remains subject in particular to competition clearance
• bmi will be accounted for as “asset held for sale / discontinued operations” for Financial Year 2011
• Closing of the transaction is aimed for the first quarter of 2012
• Transaction offers sustainable future prospects for bmi
• Lufthansa aligns airline portfolio to strategic fit and benefits from stronger earnings position

Meanwhile over at IAG http://www.iairgroup.com/phoenix.zhtml?c=240949&p=irol-rnsArticle_Print&ID=1642163&highlight=

BINDING AGREEMENT FOR BMI PURCHASE

Following the announcement on November 4, 2011, International Airlines Group (IAG) and Deutsche Lufthansa AG (Lufthansa) have today reached a binding agreement for IAG to acquire British Midland Limited (bmi). The cost is £172.5 million in cash though the price is subject to significant reductions. bmi consists of three distinct business units – bmi mainline, bmi regional and bmibaby.

Transaction highlights:

• Acquisition of bmi for £172.5million in cash
• IAG’s Heathrow slot portfolio to increase by up to 56 additional daily slot pairs
• Lufthansa to take on bmi’s defined benefit pension scheme
• Lufthansa has the option to sell bmi regional and bmibaby before completion
• Significant price reduction if Lufthansa does not opt to sell bmibaby before completion
• Deal subject to competition clearance
• Earnings per share (EPS) accretive by 2014 at the latest
• 2015 operating profit target of €1.5 billion to increase by more than €100 million with consequent increase in EPS
• Underpins goal of 12 per cent return on capital employed by 2015
• Restructuring costs spread over three years and significantly lower in total than bmi’s current annual losses

Willie Walsh, IAG chief executive, said: “Buying bmi’s mainline business gives IAG a unique opportunity to grow at Heathrow, one of our key hub airports. Using the slot portfolio more efficiently provides the option to launch new longhaul routes to key trading nations while supporting our broad domestic and shorthaul network.

“This deal is good news for the UK as we will maintain a comprehensive domestic schedule including Belfast. Our plans to expand our longhaul network would guarantee growth by making Britain better able to compete on a global scale. It will also help maximise Heathrow’s position as a world class hub airport.

“Customers will benefit from access to new destinations, more convenient schedules, enhanced frequent flyer benefits and greater investment than had been possible for loss-making bmi.

“Given the scale of bmi’s losses, there is an urgent need to restructure the business. Unfortunately, this will mean some job losses but we will secure a significant number of high quality jobs here in the UK and create similar new jobs in the future. IAG’s purchase of bmi will protect more British jobs than if the airline had been closed and had its Heathrow slots sold off. There will be restructuring costs spread over three years but these will be significantly lower in total than bmi’s current annual losses.

“bmi regional and bmibaby are not part of our plans and Lufthansa has the option to sell them before completion”.

Financing

IAG intends to finance the purchase from its own funds. £60 million of the purchase price will be paid in four instalments to Lufthansa pre-completion. This amount will be secured by Heathrow slots.

Pensions

Lufthansa has agreed to take on bmi’s defined benefit pension scheme.

Timetable and conditions

It is hoped that the transaction will be completed during Q1 2012 subject to regulatory clearance from the European Commission and other bodies. There is a termination fee of £10 million which is only payable by IAG if phase 1 EU regulatory approval is not achieved by March 31, 2012 and either party elects to terminate the sales purchase agreement.

About bmi

bmi mainline operates Airbus aircraft to destinations in the domestic UK market, Europe, CIS states, Middle East and Africa from London Heathrow. bmi regional operates an Embraer fleet and offers shorthaul flights within the UK and Europe from 7 regional airports. bmibaby operates Boeing aircraft and is a low-cost airline flying primarily out of East Midlands and Birmingham airports.

bmi reported gross assets of £284 million as at December 31, 2010 and a £153 million loss before tax on revenues of £777 million for the year 2010.

So what new things do we learn?

• BMI is loosing money hand over fist still.
• BMI’s pension scheme is still Lufthansa’s problem (operated by a LH controlled UK holding company)
• IAG gets a significant price reduction if Lufthansa fails to sell BMI Baby
• BA Brand gets a chance to launch more long-haul routes out of London Heathrow
• Belfast to retained as a destination from London
• IAG remains “London focused” with it not wanting to deal with BMI Baby – showing what BA’s attitude to the regional areas of the UK
• It’s still all down to the competition authorities.

There will be further coverage of this during the day, including an analysis later on today.

Well it seems Virgin was too late to the party with Deutsch Lufthansa AG deciding to sell it’s British Midland Airways subsidiary to … International Consolidated Airlines Group (IAG).

For IAG, the spoils of war are simple: 56 slots at Heathrow.

The cost has been revealed to be  £172.5m, and IAG/Lufthansa aim to have the deal done in the next 3 months.

The deal of course is subject to competition bodies, which Virgin will bitch about non-stop.

Whilst BMI employ over 3,600 staff, they have managed to loose £153m in 2010, which means – another restructuring of the business. And sadly for some of the staff, it’s job cut time again.

Willie Walsh – IAG Chief Executive said:

“Given the scale of BMI’s losses, there is an urgent need to restructure the business.

“Unfortunately, this will mean some job losses but we will secure a significant number of high quality jobs here in the UK and create similar new jobs in the future.”

IAG will be conducting the changes over a 3 year period.

The sale currently includes BMI Baby, but Lufthansa has the option to dispose of BMI Baby before the sale of British Midland Airways is completed. BMI Regional is already sold in its current state.  Should Lufthansa fail to sell BMI Baby before the deal is completed, IAG said the price it would pay would be subject to a “significant” reduction.

So where does this leave Virgin? Firing off an angry press release it didn’t get what it wanted

Sir Richard Branson states:

“BA is already dominant at Heathrow and their removal of BMI just tightens their stranglehold at the world’s busiest international airport.

“We will fight this monopoly every step of the way as we think it is bad for the consumer, bad for the industry and bad for Britain.”

I can only wish my best for the staff of BMI who are some of the best in the business in the air, and hope the losses that happen are minimal.

I’ll have further analysis on this during the day. But if you have a mileage pile, consider redeeming shortly….

The ongoing saga of who is buying British Midland Airways (owner of British Midland International and BMI Baby) continues to rumble on with International Consolidated Airlines Group (owner of British Airways and Iberia) seemingly wanting BMI according to Bloomberg.

IAG concedes that whilst the sales process is taking longer thanks to Virgin Atlantic Airways putting it’s money where it’s mouth is (for once), IAG Chairman Antonio Vazquez states that they will complete the transaction “sooner rather than later

Speaking at a press event, the chairman also said

“The negotiations are going well and I’m very optimistic we will be able to complete the deal.”

As we all know, BMI has turned into a cash sinkhole for Lufthansa who want shot of it as soon as possible. And if anything, the Virgin bid could be enough for Lufthansa to turn the screws on IAG for more money out of a deal – which IAG could for-fill.

Whilst a Virgin win could be better for Lufthansa to allow more Star Alliance integration and defend itself from a London attack from Heathrow, it’s interesting to to note the silence of where the money is coming from to fund this purchase from Virgin (unless there has been a massive lotto win that Virgin have been keeping quiet about).

Certainly, this isn’t over – not by a long shot. The manoeuvrings of both Virgin and IAG will fill speculation and forums for some time to come I’d wager.

The full article is at http://www.bloomberg.com/news/2011-12-20/iag-pledges-to-grab-lufthansa-s-bmi-to-beat-virgin-bid-for-u-k-airline.html

Lufthansa is having a one-day sales of business class fares from the UK. Listing up are:

• Abu Dhabi
• Beijing
• Bogotá
• Caracas
• Chennai/Madras
• Delhi
• Dubai
• Kolkata
• Mumbai/Bombay
• Sao Paulo
• Seou

All starting from £1199. Watch the T&C’s though – in particular:

• Purchase by: 14.12.2011
• Departure period: 20.12.2011-29.03.2012
• Return period: 25.12.2011-29.06.2012
• Advance Purchase Period: 0 days
• Minimum stay : a Saturday night
• Maximum stay : 3 months
• Non-refundable, no changes allowed
• Subject to availability. Not all destinations might be available at
• all times as the offer is very popular and might sell out fast

(bolding mine)

If you can take advantage of it – go for it.

Well it seems Virgin has finally found the guts to put it’s money where it’s mouth is, and has put a rival bid on the table for British Midlands Airways Ltd (also known as BMI, British Midland International) according to Bloomberg

Virgin Atlantic has been granted “due diligence” to create a bid that will trump International Airline Group’s (British Airways and Iberia) bid for the airline.

The prize with BMI is sadly not the staff, nor the aircraft, but the 8.5% of landing and take-off slots that BMI own at London Heathrow Airport. As we all know, getting slots at LHR is akin to finding hens teeth, so having a slice of the Heathrow pie like this would allow either carrier to grow as they pleased.

Lufthansa’s choice is simple: The Hard Cash of IAG, or giving Virgin a chance to defend, giving a strategic defence of Star Alliance via a 3rd party.

Virgin continues to moan about an anti-trust case against IAG if they are successful in bidding for BMI due to the amount of slots BA and Iberia operate out of LHR (operating 43% out of LHR).

Lufthansa meanwhile is aiming to offload BMI to a seller by Q1 2012 – least of all, Lufthansa would be happy to be rid of the money pit that BMI turned into.

Sadly, neither side can fight on price yet as the sale price of BMI has not been disclosed yet by Lufthansa. All Claudia Lange of Lufthansa has said is, both carriers stand an equal chance of success with their proposals.

Well, I’ll give the Virgin Group this: They’ve put their money where their mouth is - something I’ve wanted them to do from the beginning of the current round of takeover talks. Where the money is coming from for this bid – information is less than forthcoming.

Now the battle really commences…

Well I came in last night to find this sitting on my doormat from Lufthansa

Ooh What wonders lie inside it?

Well – not a lot. However, it’s nice for an airline to actually use it’s customer database to do some “Fuzzy feel good stuff” as opposed to usual hard marketing sell.

Two thumbs up Lufthansa!