Lufthansa acquires BMI and Eurowings

31st October 2008, Comments 0 comments

Despite its financial setbacks, Lufthansa is set to expand.

Frankfurt -- Lufthansa, which has announced an earnings setback, is to take controlling stakes in British airline BMI and the smaller German airline Eurowings Luftverkehrs AG, it said Wednesday in Frankfurt.

Earlier this week, Lufthansa emerged among the last two bidders for Austrian Airlines. Wolfgang Mayrhuber, Lufthansa chief executive, said the German airline could help the Austrian unit increase sales.

High fuel prices earlier this year and a looming recession have put heavy pressure on smaller, weaker airlines in recent weeks, speeding up consolidation in the aviation industry.

Lufthansa already holds minority stakes in both Eurowings Luftverkehrs AG and BMI, which was formerly named British Midland.

In Frankfurt, Lufthansa said it had received an offer from another Eurowings Luftverkehrs AG shareholder, AK Industriebeteiligung, of 50.9 percent of the airline, which would be acquired by the end of the year.

Earlier plans to merge Eurowings Luftverkehrs AG, which mainly flies routes within Europe, with an airline run by German Holiday Company TUI failed.

Lufthansa warned Tuesday that it expects operational earnings this year to a total of just 1.1 billion euros: a figure considerably down from its past forecast of 1.4 billion euros.

It said it would cut more costs, set up plans to increase its fleet size and increase total available flights next year by 1 percent.

BMI is to be fully acquired from businessman Michael Bishop, Lufthansa said. The British airline is valuable because of its landing and takeoff slots at Heathrow Airport, which is London’s principle airport.



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