International Airlines Group faces a lengthy competition investigation into its contentious takeover of BMI British Midland after being told by the European Commission that its proposed deal concessions are likely to be rejected.

IAG, formed through the merger of British Airways and Spain’s Iberia, has offered to relinquish some take-off and landing slots at Heathrow airport in order to secure quick regulatory approval for its planned purchase of BMI, Lufthansa’s lossmaking UK subsidiary.

However, IAG’s lawyers have been informed that the company’s proposals are unlikely to address Brussels’ full range of competition concerns, increasing the prospect of a longer and more in-depth investigation.

IAG’s offer to relinquish some Heathrow slots extends the deadline for an initial Commission decision from March 16 to March 30. Brussels officials will seek feedback from rival airlines, including Sir Richard Branson’s Virgin Atlantic, which is strongly opposed to the deal.

IAG has offered up to £172.5m in cash for BMI. If approved, the transaction would increase IAG’s share of slots at Heathrow from 44.8 per cent to 53.5 per cent.

BMI is the second largest slot holder at Heathrow after BA. Willie Walsh, IAG chief executive, regards the BMI takeover as an important part of BA’s efforts to expand at capacity-constrained Heathrow.

Two people familiar with IAG’s concessions said the group had offered to relinquish slots at Heathrow. One person said IAG had also argued that BA could help provide rival airlines with transfer passengers.

IAG said: “We’re talking to the EU and remain confident that we will receive regulatory approval for the deal.” It declined to comment further.

Virgin is highlighting how BA, by combining with BMI, would become the sole provider of flights between Heathrow and Aberdeen, Basel, Edinburgh, Manchester and Nice.

Virgin lost out in the BMI bid battle to IAG. Sir Richard’s ­airline claims that if regulators allow the deal, travellers could face higher fares when flying from Scotland and north-west England to London’s main ­airport.

PwC, BMI’s auditors, said in January that several uncertainties surrounding the airline “may cast significant doubt over the ability of the company to continue as a going ­concern”.

BMI’s directors said the airline should have sufficient funding until March 31, by when Lufthansa hopes to complete the transaction.

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