Bishop to exit BMI on a high
GERMAN flag carrier Lufthansa yesterday made headway on wrapping up its acquisitions of BMI British Midland and Brussels Airlines after it addressed competition concerns voiced by the European Commission.
Lufthansa also said yesterday it had struck a deal with Sir Michael Bishop to acquire his stake of 50 per cent plus one share in BMI via holding company LHBD.
LHBD, which is 35 per cent-owned by Lufthansa, will buy the stake for around £48m on 1 July. In addition, Lufthansa will pay Bishop £175m to cancel options forcing Lufthansa to buy the stake itself.
Those two sums together are considerably less than the €400m (£339m) previously reported in European newspapers that Lufthansa had earmarked for the purchase.
The deal will help Lufthansa expand its presence at London’s Heathrow airport, where BMI controls more than 11 per cent of all the take-off and landing slots.
Lufthansa already had a 30 per cent minus one share stake in BMI, while Scandinavian airline SAS has 20 per cent.
“Like we have said before, we want to make an exit,” a spokesman for SAS said, adding the company was still in discussions with Lufthansa.
Lufthansa obtained permission from EU competition authorities to buy Brussels Airlines in a deal worth up to €250m after it agreed to let rivals fly on some of its routes.
Lufthansa will allow new entrants to operate flights from Brussels to Frankfurt, Munich, Hamburg and Zurich. The acquisition will boost Lufthansa’s network and give it more premium travellers.
Airlines around the world are looking to merge with or acquire rivals to boost scale and tap into growth regions following falling demand due to the global economic crisis.
The world’s carriers are expected to lose $9bn this year, industry body International Air Transport Association said earlier this month, nearly doubling its earlier estimate of $4.7bn
SIR MICHAEL BISHOP
BMI CHAIRMAN
It was entirely within character for Sir Michael Bishop, 66, – a fiercely competitive figure – to take German rival Lufthansa to the High Court to force it to exercise its option to buy his 50 per cent plus one share in BMI for £223m.
In the event the parties reached an out of court settlement yesterday.
But it finally looks like Bishop, facing what he has called the second worst of the four recessions he has been through in his 44 years in the industry, has opted for a quieter life.
Bishop, the son of a Cheshire factory boss, joined Mercury Airlines at 22 in 1963, which was taken over by British Midland the following year.
He rose quickly from baggage handling to become BMI’s general manager. The London investment group that owned British Midland decided to sell in 1978. Bishop raised £2.5m to buy the airline.
Bishop is also the chairman of the Trustees of the D’Oyly Carte Opera. From now on he will be devoting more time to Gilbert and Sullivan rather than aircraft load factors.