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Lufthansa To Take Over BMI
Apr 28, 2008
Lufthansa will take majority ownership of its British affiliate BMI, according to a statement made by CFO Stephan Gemkow.
“We are committed to exercising this option,” Gemkow said on Friday during a conference call with reporters. There are no ongoing discussions with BMI’s current majority owner, Michael Bishop, but Gemkow does not consider them to be necessary.
Lufthansa’s grip on BMI has been contractually settled since 1999. Lufthansa can buy the Bishop stake of 50% plus one share for GBP229 million (plus adjustment for inflation) between December 2008 and June 2009. Bishop can sell for the same price anytime between now and June 2009. He has been silent about his intentions recently and Gemkow’s statement is the first public confirmation that Lufthansa will buy BMI.
The move opens a range of strategic options for Europe’s second-largest airline. Lufthansa could use BMI to build up a third major pillar of its passenger business besides its own operations and Swiss. That pillar could also include Virgin Atlantic — the airline’s director of external affairs, Barry Humphreys, recently confirmed the carrier’s interest to merge with or take over BMI in order to turn into a true hub-and-spoke airline based at London Heathrow Airport. Also, Virgin Atlantic’s 49% owner Singapore Airlines has said it might consider selling its stake.
Virgin Atlantic and BMI combined could turn into a serious competitor for British Airways at its home base.
BMI holds about 12% of Heathrow slots that are valued by analysts in excess of US$2.6 billion, based on current market prices. Lufthansa could therefore also sell the airline for a huge profit. Along with Virgin Atlantic, BA previously said it would buy BMI if it became available.
BA’s interest in BMI could be a valuable asset for Lufthansa, which itself is highly interested in acquiring Iberia. The Spanish airline is 13% controlled by BA, but unhappy with the low level of integration with its shareholder. BA could release Iberia for Lufthansa to step in, while in return the German airline could sell BMI to BA — competition authorities permitting.
Meanwhile, Lufthansa reiterated its guidance for 2008 to exceed 2007’s operating profit of EUR1.4 billion. The optimistic outlook is based on much improved first-quarter results that included an operating profit of EUR188 million (US$294 million), up from EUR36 million a year earlier.
Source: Aviation Week
Apr 28, 2008
Lufthansa will take majority ownership of its British affiliate BMI, according to a statement made by CFO Stephan Gemkow.
“We are committed to exercising this option,” Gemkow said on Friday during a conference call with reporters. There are no ongoing discussions with BMI’s current majority owner, Michael Bishop, but Gemkow does not consider them to be necessary.
Lufthansa’s grip on BMI has been contractually settled since 1999. Lufthansa can buy the Bishop stake of 50% plus one share for GBP229 million (plus adjustment for inflation) between December 2008 and June 2009. Bishop can sell for the same price anytime between now and June 2009. He has been silent about his intentions recently and Gemkow’s statement is the first public confirmation that Lufthansa will buy BMI.
The move opens a range of strategic options for Europe’s second-largest airline. Lufthansa could use BMI to build up a third major pillar of its passenger business besides its own operations and Swiss. That pillar could also include Virgin Atlantic — the airline’s director of external affairs, Barry Humphreys, recently confirmed the carrier’s interest to merge with or take over BMI in order to turn into a true hub-and-spoke airline based at London Heathrow Airport. Also, Virgin Atlantic’s 49% owner Singapore Airlines has said it might consider selling its stake.
Virgin Atlantic and BMI combined could turn into a serious competitor for British Airways at its home base.
BMI holds about 12% of Heathrow slots that are valued by analysts in excess of US$2.6 billion, based on current market prices. Lufthansa could therefore also sell the airline for a huge profit. Along with Virgin Atlantic, BA previously said it would buy BMI if it became available.
BA’s interest in BMI could be a valuable asset for Lufthansa, which itself is highly interested in acquiring Iberia. The Spanish airline is 13% controlled by BA, but unhappy with the low level of integration with its shareholder. BA could release Iberia for Lufthansa to step in, while in return the German airline could sell BMI to BA — competition authorities permitting.
Meanwhile, Lufthansa reiterated its guidance for 2008 to exceed 2007’s operating profit of EUR1.4 billion. The optimistic outlook is based on much improved first-quarter results that included an operating profit of EUR188 million (US$294 million), up from EUR36 million a year earlier.
Source: Aviation Week
