Lufthansa’s Attracts Second Bidder for Discount Division of BMI

Deutsche Lufthansa AG’s British subsidiary BMI said a second, European, bidder is in the running to buy its Bmibaby discount division, a month after disclosing that an unidentified U.K.-based company had made an offer.

A term sheet has been signed with a European Union-based airline group with operations across several countries, Castle Donington, England-based BMI said in a statement today. A definitive agreement with one of the two bidders should be sealed in the next few weeks, it said.

The latest proposal matches the first in comprising 100 percent of Bmibaby, including its planes, BMI said, with the bidder likewise planning to keep staff and the existing route network. The Bmibaby brand name would be retained for a period and its head office would remain in the East Midlands with the airline continuing to operate from its existing U.K. bases.

“Bmibaby has attracted a great level of interest and our discussions open up great future prospects for the airline and its employees,” BMI Chief Executive Officer Wolfgang Prock-Schauer said in the statement.

Intro Aviation GmbH CEO Peter Oncken couldn’t immediately be reached for comment on whether the German turnaround specialist is the new bidder. Oncken said in an interview in January that Intro has expressed an interest in BMI and would carry out due diligence to see if it could be “restructured.”

Sale Price

Bmibaby operates 12 Boeing Co. 737-300 aircraft and two 737-500 variants. It had a loss of about 120 million euros ($159 million) last year, according to Credit Suisse Group.

British Airways parent International Consolidated Airlines Group SA agreed in December to buy BMI’s main operations, based at London’s Heathrow airport, for 172.5 million pounds ($274 million), while indicating that it didn’t want the discount unit. Lufthansa, Europe’s second-biggest airline, needs to find a buyer or the sale price will be affected.

Britain’s Office of Fair Trading said separately today that it has decided not to ask the EU’s competition regulator for a U.K. review of IAG’S BMI acquisition.

The OFT said it will continue to work closely with the EU as it assesses whether the takeover would raise concerns about competition at Heathrow, especially on routes to Scotland and northwest England.