Sale of Bmi a threat to jobs in Scotland as subsidiaries face the axe

THE future of low-fare carrier bmibaby was clouded in uncertainty today after the owner of British Airways completed its purchase of parent company bmi in a deal that could see up to 140 jobs lost in Scotland.

International Airlines Group (IAG) warned last week that the takeover of bmi was likely to lead to up to 1,200 job losses, including posts at Edinburgh and Glasgow airports.

IAG, which owns BA and Iberia, will take on bmibaby and bmi Regional as part of its purchase agreement with Lufthansa but does not intend to keep the two businesses.

Announcing the completion of its purchase of loss-making bmi, IAG said it will run bmibaby and bmi Regional in the short term while it looks at ways to exit the businesses. Bmibaby flies out of Belfast, Birmingham and East Midlands airports, while bmi Regional offers short-haul flights from Aberdeen, East Midlands, Edinburgh, Glasgow, Leeds Bradford and Manchester.

Lufthansa had been looking to offload the two before completing the deal, but as this has not happened IAG will get a “significant reduction” on its £172.5 million purchase price.

For IAG, the BMI deal will strengthen its position on long-haul routes out of Heathrow airport. However, it angered Sir Richard Branson of Virgin Atlantic, who vowed to fight “this monopoly every step of the way”.

The deal was approved by the European Commission last month, although IAG must give up 14 pairs of daily take-off and landing slots at Heathrow as a contribution to boost competition in the sector.

It must also commit to carry connecting passengers to feed the long-haul flights of competing airlines out of Heathrow.