Airline tie-up: BA owner buys BMI from Lufthansa

IAG chief warns of job losses; Virgin opposes the deal

British Airways owner IAG has agreed to buy BMI from Lufthansa for £172.5m, with completion of the takeover predicted to take place in the first three months of next year.

While the deal remains subject to clearance by competition bodies, it will afford IAG 56 more slots at Heathrow airport once cleared.

The tie-up does not signal good news for everyone, however: IAG's chief executive Willie Walsh has announced that there will be "some job losses" due to BMI's £153m loss in the year to 2010, while Virgin- which had been in talks with Lufthansa- has said it will oppose completion of the deal.

Chairman of Virgin Group Sir Richard Branson, said in a statement: "BA is already dominant at Heathrow and their removal of BMI just tightens their stranglehold at the world's busiest international airport."

He added: "We will fight this monopoly every step of the way as we think it is bad for the consumer, bad for the industry and bad for Britain."