British Airways Beats Out Virgin Atlantic to Buy BMI

British Airways parent company IAG has won its bid for BMI from Lufthansa, meaning it gets as many as 56 more slots at Heathrow, Europe’s busiest airport, which has limited capacity. Virgin Atlantic, which had sought to buy BMI as well, is blasting the deal, saying that it will give BA’s owners more than half of the slots at Heathrow, giving BA the power to drive up fares.

BMI has been losing money and Lufthansa decided to sell it after 223 million euros ($291 million) of operating losses following a forced takeover in 2009.

IAG, formed when BA and Iberia merged, said that BMI was an opportunity it couldn’t pass up. The $271 million deal will allow BA to add routes to emerging markets such as Korea, Vietnam and Indonesia. Willie Walsh, IAG’s chief executive, said there will be job cuts. BMI employs 3,600 people. But, Walsh said, more jobs would have been lost had BMI shut down.

Heathrow is operating at 99 percent capacity.

Virgin Atlantic has vowed to fight the deal. Virgin Atlantic owner Sir Richard Branson said that the deal “screws the traveling public.”

Walsh said that BA will work with regulators to clear any anti-trust hurdles.

BA will pay less for the airline if Lufthansa fails to sell the BMI Regional and low-cost bmibaby units before the close of the deal, which should happened toward the end of the first quarter, IAG said.