Airline Etihad ‘holds merger talks’

Abu Dhabi airline Etihad has approached bmi over a possible merger that would value the UK carrier at up to £600 million, a report has said.

Abu Dhabi airline Etihad has approached bmi over a possible merger that would value the UK carrier at up to £600 million, a report has said.

Etihad – the national carrier of the United Arab Emirate – is understood to have held initial talks with bmi and the airline’s major stakeholder Lufthansa about a deal, according to The Sunday Times.

The airline, which is backed by the Abu Dhabi royal family, is said to be keen to snap up potential bargains as the industry suffers amid soaring fuel costs and a slowdown in consumer spending.

Derby-based bmi has been hit by the pressures facing the sector, revealing in May that profits nearly halved last year, to £15.5 million from £29.7 million in 2006.

It is also thought to be in Etihad’s sights ahead of a reported option that Lufthansa has to take control of bmi later this year or early next year.

Lufthansa is said to have made a private shareholders agreement in the 1990s with bmi chairman, co-founder and majority owner Sir Michael Bishop.

A spokesman for privately-owned bmi said the airline could not comment on the merger speculation, but it is believed that Etihad made the approach in the summer.

Etihad’s chief executive James Hogan also has strong links with bmi and Sir Michael, having worked as chief operating officer from 1999 to 2002 and sat on the airline’s board.

With 11% of the take-off and landing slots at Heathrow, bmi is the airport’s second largest airline after British Airways. It flew 10.6 million passengers last year and operated 70 aircraft.

In the past 10 years, bmi has gone from a wholly domestic and short haul European carrier to one where more than half its routes are mid and long haul. The group comprises the main bmi operation as well as low-cost carrier bmibaby and UK-operator bmi regional.

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Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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