Lufthansa, the German airline, and Sir Michael Bishop have reached an out-of-court settlement in their legal battle over the future ownership of BMI British Midland in a deal which will make the German carrier the majority owner and the second largest airline operating at London Heathrow, Europe’s busiest airport.

Sir Michael, BMI chairman, has agreed to make concessions over the price he will receive from Lufthansa for his controlling stake of 50 per cent plus one share, but at the same time the German group has been forced to pay far in excess of the current market valuation to take control of the heavily loss-making UK airline.