Lufthansa Seeking Fresh Capital For Bmi
Lufthansa is asking fellow shareholders in Britain's bmi to inject more capital into the carrier ahead of an agreed acquisition, according to a source close to the talks.
The German carrier agreed to take control of bmi last October after founder Sir Michael Bishop exercised an option to sell it his 50 percent plus one share stake.
Lufthansa already had a 30 percent minus one share stake, while Scandinavian airline SAS has 20 percent.
Lufthansa will be forced to pay a price for the stake agreed when the original deal was struck in 1999 -- which the source said was around GBP300 million pounds (USD$455.5 million) -- but since then the value of airlines has deteriorated.
"Lufthansa wants all shareholders to inject capital in the airline, but the other shareholders aren't playing... it's to get an effective price reduction," the source familiar with the talks said.
Royal Bank of Scotland analyst Andrew Lobbenberg said he was not surprised Lufthansa was pushing for a better deal.
"It's an opportunity to negotiate a discount to the price agreed a very long time ago," he said, adding that while bmi had an 11 percent share of much coveted slots at Heathrow these could not easily be monetized.
Lufthansa, which is also working on takeovers of Austrian Airlines and Brussels Airlines, declined to comment.
Bmi also declined to comment.
Sture Stolen, Head of SAS Investors Relations, said SAS had not been approached about an injection but said this was a matter for the two main parties.
"Our statement is that we are a 20 percent shareholder and it's really the two main shareholders who need to sort this out... If they come to us and propose a theoretical capital injection, that is something we would have to consider then."
Bmi slumped to a pre-tax loss of GBP100 million in 2008 on turnover of over GBP1 billion, having made a small profit in 2007, but analysts say its main value lies in its ownership of slots at Heathrow.
Passenger numbers fell to 10 million from 10.6 million in 2008, and the load factor was 68.4 percent.
The European Commission is expected to approve the sale of Bishop's stake to Lufthansa in the coming days.
