Bloomberg News

Lufthansa’s BMI Signs Accord to Sell U.K.-Based Discount Arm

February 01, 2012

(Updates with comments from BMI in fourth paragraph and prospective bidder Intro Aviation in fifth.)

Feb. 1 (Bloomberg) -- Deutsche Lufthansa AG’s British subsidiary BMI said a deal has been reached for the sale of its bmibaby discount division to an unidentified U.K.-based company.

A term sheet has been signed and the transaction should close this quarter, Castle Donington, England-based BMI said in a statement, without disclosing financial terms. The deal isn’t exclusive and enables talks with other parties, it said.

The sale comprises 100 percent of bmibaby, including its planes, BMI said, with the buyer planning to retain staff and bases at East Midlands, Birmingham and Belfast City airports and further develop a low-fare network in the U.K. and Europe.

“The new potential owner would continue to use the existing brand name for an interim period,” BMI said, adding that it’s “pleased with the opportunity that this transaction gives to the bmibaby business enabling it to be an independent airline.”

German turnaround specialist Intro Aviation GmbH, which said last month it might bid, is not the company identified in today’s release, Sandra Pabst, a manager at the company’s headquarters in Reichenschwand, said by telephone. She declined to say whether Intro is still involved in the auction.

Lufthansa, Europe’s second-biggest airline, has been seeking a buyer for bmibaby after agreeing in December to sell BMI to British Airways parent International Consolidated Airlines Group SA for 172.5 million pounds ($272 million).

Bmibaby operates 12 Boeing Co. 737-300 aircraft and two 737-500 variants. It had a loss of about 120 million euros ($129 million) last year, according to Credit Suisse Group.

--Editor: Chris Jasper.

To contact the reporters on this story: Alex Webb in Frankfurt at awebb25@bloomberg.net; Steve Rothwell in London at srothwell@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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