BA TABLES BID TO BUY RIVAL BMI

The owner of British Airways has reportedly tabled a proposal to buy airline BMI British Midland - a major user of Heathrow Airport.

BA parent International Airlines Group (IAG) is understood to be interested in acquiring the whole airline from current owner, the German flagship carrier Lufthansa.

The move, which according to Sky News is in early discussion stages, is likely to enrage BA's competitors over the dominant position it would hold at Heathrow - especially after IAG bought six pairs of take-off and landing slots from BMI last month.

IAG, which was formed when BA merged with Spanish carrier Iberia, would own more than half of take-off and landing slots at Heathrow if a complete acquisition went ahead.

Lufthansa and IAG would not comment on the speculation.

However, IAG reiterated its interest in BMI, while Lufthansa said it was considering all options for the airline, which would include a sale.

IAG chief executive Willie Walsh has expressed interest in BMI in the past and has also been sizing up an offer for TAP, the Portuguese airline.

A spokeswoman for IAG said: ``We have made no secret of our interest in BMI in the past but we will not be able to comment further.''

Lufthansa is understood to be considering a break up of the BMI group, which could involve a sale of BMI's no-frills subsidiary bmibaby, the regional division BMI Regional and possibly the group's HQ at Donington Hall near Derby.

BMI's main airline is based exclusively at Heathrow, whereas bmibaby flies from several regional locations, including Cardiff, Manchester and East Midlands.

However, Sir Richard Branson's Virgin Atlantic is also understood to be interested in BMI, to bulk up its operations at Heathrow and become the airport's second-largest airline customer.

Lufthansa started looking at selling BMI, Heathrow's second-largest airline, which flies to Europe, Middle East and Africa, after the UK airline plunged £105 million into the red in the first half of 2011.

The dire results reportedly prompted Lufthansa to appoint Morgan Stanley to oversee a sale of the business.

A spokesman for Virgin Atlantic confirmed the airline was interested in BMI and warned against an IAG bid.

He said: ``We are in ongoing discussion with BMI and remain very interested in acquiring the business.

``We are also talking to regulators about the competition ramifications of an IAG purchase of BMI due to its dominant position at London Heathrow.

``It's important regulators take note of the profound impact a BA-BMI tie up would have on the whole of the London Heathrow market.''