IAG buying bmi from Lufthansa

LONDON/FRANKFURT (Reuters) - International Airlines Group (IAG) , formed by the merger of British Airways and Iberia, is still interested in buying its smaller rival bmi from German carrier Lufthansa AG to take advantage of its valuable take off and landing slots at London's Heathrow airport.''We have made no secret of our interest in bmi'sHeathrow slots,'' an IAG spokeswoman told Reuters on Monday. ''Lufthansa said a few weeks ago that they were looking at their options regarding bmi so the ball is firmly in Lufthansa's court, but there's nothing imminent happening from our side.''A source familiar with the matter said on Sunday Lufthansa had mandated banks to sound out a potential sale of loss-making bmi, adding that Morgan Stanley was one of the banks appointed, though the process was at an early stage.Bmi controls about 11 percent of the take-off and landing slots at Heathrow,the world's second-busiest airport, making it second there only to BA, which has around 42 percent of the slots. Bmi's slots were valued at 616 million pounds ($980 million) at the end of 2008, down from 770 million a year earlier.A source close to the transaction said selling bmi would be a ''mammoth task'' for Lufthansa because there was noobvious buyer for the airline.The source also said completion of anysale was unlikely until next year, but that Lufthansa's priority wasto sell bmi as a whole, including the slots.

The UK carrier will be sold in parts if Lufthansa does not find a full buyer, added the source.When Lufthansa bought half of bmi from Sir Michael Bishop in 2009,the deal drew criticism from analysts because the British carrier was seen dragging down the Germany company's earnings without offering hope for a speedy turnaround.