Bmi brand under threat following IAG deal

The bmi brand could be scrapped once the completion of its sale to British Airways parent International Airline Group (IAG) is completed.

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IAG announced today (4 November) that it has agreed a deal to buy bmi from German carrier Lufthansa.

The acquisition of bmi remains “subject to conditions including a binding purchase agreement, further due diligence and regulatory clearances”, IAG says, but it aims to complete the deal in the first quarter of 2012.

A spokeswoman for IAG says that the bmi business and brand will “initially” operate separately but that the arrangement will be reviewed to identify potential synergies “over time”.

Both carriers fly out of Heathrow and East Midlands Airport.

The agreement to buy bmi comes as IAG announced operating profit fell 31% to €363m (£313m) in the three months to 30 September, from €528m (£455m) a year earlier.

The company, also the parent to Spanish carrier Iberia, blamed the fall on rising fuel costs, up 23.7% in the quarter.

Despite the drop in profit, revenue increased 2.2% driven by a 3.5% increase in passenger numbers over the third quarter 2010.

The company has talked openly about expanding its business through acquisitions and carrier launches. It plans to launch a low cost airline under the Iberia name to compete with Ryanair.

British Airways recently unveiled a major brand campaign using its coat of arms motto “To fly. To serve” as the strapline.

Read Marketing Week columnist Wally Olins on the brand campaign.

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