British Airways (IAG) parent International Consolidated Airlines Group SA agreed to sell the Scotland-based regional business of newly-acquired BMI for 8 million pounds ($13 million) to investors including the unit’s one-time head.
BMI Regional will be bought by Sector Aviation Holdings Ltd., led by Ian Woodley, ex-chief of Business Air, which helped form the regional arm after a 1996 takeover by BMI. Investors include Stephen and Peter Bond, backers of Scotland’s Loganair.
“This deal provides a future for BMI Regional and should secure around 330 jobs,” IAG Chief Executive Officer Willie Walsh said in a statement. The deal should close within two weeks following U.K. Civil Aviation Authority approval, he said.
IAG completed the purchase of BMI from Deutsche Lufthansa AG (LHA) on April 20 after agreeing to buy the business for 172.5 million pounds in December to boost its position at London’s overcrowded Heathrow airport. Lufthansa reduced the sale price after failing to unload the Regional and BMIbaby discount divisions separately, and Walsh said May 4 that the no-frills unit may be shut down in September in the absence of fresh bids.
IAG fell 1.2 percent to 163 pence in London, paring gains this year to 11 percent. Cologne, Germany-based Lufthansa rose 1.7 percent to 9.18 euros and is down 0.1 percent for the year.
BMI Regional is based at Aberdeen in northeast Scotland, where Business Air was also once located, and operates to 14 domestic and north European destinations from U.K. regional airports using a fleet of 18 Embraer SA (EMBR3) jets.
The sale includes all of the unit’s fixed assets and long- term liabilities, including owned and operating-lease aircraft, IAG said in today’s statement.
While BMI Regional was still under Lufthansa’s ownership Woodley formed a bid team for the business known as Granite City Aviation, after Aberdeen’s nickname, IAG said.
IAG said separately today that it will seek authority from investors to buy back shares representing as much as 10 percent of outstanding stock. The company’s directors have “no present intention” of exercising that right should it be granted at a meeting on June 21, according to a statement.
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