The owner of British Airways said today it had agreed to buy troubled airline BMI in a move which will increase its hold on the landing slots at Heathrow airport.
International Airlines Group (IAG), which also owns Spanish carrier Iberia, has bought the airline from German carrier Lufthansa in a deal which has infuriated rivals such as Richard Branson's Virgin Atlantic.
IAG would own more than half of the landing slots at the UK's busiest airport if the deal is completed.
Virgin, which today said it had also made a bid for BMI, said: "British Airways' hold over Heathrow is already too dominant and we are very concerned - as the competition authorities should also be - that BA's purchase of BMI would be disastrous for consumer choice and competition."
IAG said the deal is still subject to a binding purchase agreement and regulatory clearance but it envisages a deal could be signed in the first quarter of 2012.
Meanwhile, International Airlines Group today posted a 26% drop in third-quarter net profits. Profits after taxation sank to €267m in the three months to September, as IAG was hit by high fuel costs. That compared with €362m the same time last year, it said in a results statement.
IAG was created in January earlier this year. The 2010 figure was on a pro-forma basis, calculated as if British Airways and Iberia had already been trading as a combined group.
Revenues at the airline increased by 2.2% in the quarter to €4.49 billion, but fuel costs soared by 23.7% on the back of soaring oil prices. Jet fuel, or kerosene, is refined from crude oil.
"Our revenue is up 2.2% in the quarter driven primarily by volume," IAG's chief executive Willie Walsh said. "However, high fuel costs continue to have a significant impact on our business. This quarter fuel costs are up 23.7%, compared to last year, while non-fuel costs are flat," he added.
"The main challenge for 2012 will be to offset increased fuel costs against a background of potentially weaker demand," he said
Separately, IAG announced that it had agreed in principle to purchase the loss-making British Midland from Germany's Lufthansa. Lufthansa acquired the British airline in 2009, but the recent crises and conflicts in the key regions of North Africa and the Middle East prevented the German carrier from steering the unit back into profit.
Walsh described the deal as "a fantastic story" and good for the British economy, adding it would welcome long-haul flights to BA and Iberia's schedules.
"We will expand our networks, particularly on long-haul which is so critically important to the UK economy. The deal will allow us to connect further to the emerging world economies."
Questioned about potential jobs losses, Mr Walsh said: "It's far too early for us to say what the impact will be."
