Virgin Atlantic Discusses Possible Merger with bmi
Thursday, 11 December 2008: The aviation industry’s current wave of ‘merger mania’ continued this week, when Virgin Atlantic announced it was interested in purchasing bmi and was in talks with the British airline’s majority owner, Lufthansa about the future of the airline.
The news on Wednesday comes a week after British Airways and Qantas revealed they were in merger talks to create the world´s biggest airline in an industry desperate to slash costs in the global downturn.
"These discussions may or may not lead to an agreement and a further announcement will be made in due course," Virgin Atlantic said in a statement.
In October, Virgin Atlantic CEO, Steve Ridgway mentioned that a tie up with bmi would be a "very compelling opportunity" that would make his airline a stronger competitor to London Heathrow’s key player, British Airways.
Virgin believes that the combination of its long-haul operations with bmi´s predominantly short-haul business would prove very successful.
Virgin is particularly interested in bmi´s slots at Heathrow which at 12 percent is more than Virgin´s 3 percent share but still far less than BA which has over 40 percent of slots.
In October, bmi founder Michael Bishop exercised an option for Lufthansa to take control of bmi by raising its stake to about 80 percent by buying 50 percent plus one share in bmi from Bishop.
Lufthansa CFO, Stephan Gemkow said in November that it would consider selling bmi´s low-cost carrier bmibaby, although CEO Wolfgang Mayrhuber has said it is not actively looking to sell bmi assets.
In other consolidation news elsewhere in Europe, Irish budget carrier Ryanair has made a hostile offer for Aer Lingus, and is looking to woo regulators and investors.