BA owner to win EU approval to buy bmi airline - source

BRUSSELS/LONDON Thu Mar 29, 2012 11:04am EDT

A BMI Baby aircraft takes off over a wind turbine at East Midlands Airport, central England May 10, 2011. REUTERS/Darren Staples

A BMI Baby aircraft takes off over a wind turbine at East Midlands Airport, central England May 10, 2011.

Credit: Reuters/Darren Staples

BRUSSELS/LONDON (Reuters) - British Airways owner IAG is set to be given the go-ahead by the EU to buy German group Lufthansa's British airline bmi after offering to give up additional airport slots, a person familiar with the matter said on Thursday.

IAG (ICAG.L) has reached a deal worth 172.5 million pounds to buy its smaller rival and had initially proposed to relinquish 10 slots. It increased the number to 14 slots after rivals complained the concessions were not sufficient. It was not clear at which airports the 14 slots are located.

Antoine Colombani, a spokesman for the competition unit at the European Commission, declined to comment on the case. IAG and Lufthansa also declined to comment.

The European Union executive was due to decide by Friday whether to give the deal regulatory clearance.

IAG trumped rival bidder Virgin late last year in the race to acquire loss-making bmi, which has coveted slots at London's Heathrow airport, Europe's busiest.

IAG currently has a 43.1 percent share of the take-off and landing slots at Heathrow. Together, IAG and bmi have a combined share of 53 percent of the airport's slots.

Virgin has again urged EU regulators to block the deal, saying it would leave competition in British aviation distorted.

"BA's proposed competition remedies to get this purchase cleared are woefully inadequate and will ensure that BA continues to control all of the key domestic and some international routes," Virgin founder Richard Branson wrote in a letter to the EU's commissioner of competition, Joaquin Almunia.

"I am really battling to understand why the commission seems to be bending over backwards to clear this deal at phase one rather than submitting it to the proper scrutiny intended in phase two of the clearance process."

Branson added that Virgin was prepared to re-open discussions with Lufthansa if the deal was not cleared.

IAG's next deal may be made further afield after it said on Thursday it was looking at investing in Japan Airlines' JAL.L planned initial public offering later this year.

IAG shares in London were flat at 178.2 pence, while Lufthansa shares in Frankfurt were 1.3 percent down at 10.46 euros.

(Additional reporting by Sabine Wollrab in Frankfurt; Editing by Dan Lalor and Elaine Hardcastle)

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