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Etihad proposes bmi move

Etihad proposes bmi move Abu Dhabi-based airline Etihad has made an approach to British operator bmi about a potential merger, reports suggest.

According to The Sunday Times, Etihad executives have already approached bmi and its principle shareholder Lufthansa about a deal which would value the carrier at £600 million.

Etihad is the national operator of the United Arab Emirates and is also backed by the incredibly wealthy Abu Dhabi Royal Family.

The carrier seems keen to secure any potential bargain acquisitions as the industry consolidates due to high fuel costs and tight financial conditions.

Derby-based carrier bmi is seen as a potential soft target because its profits have dropped from £29.7 million in 2006 to £15.5 million last year.

Equally, this situation is being fuelled by the fact that Lufthansa reportedly has an option to complete a takeover of bmi towards the end of this year or in early 2009.

This stems from an agreement that is believed to have been sealed between chairman and co-founder Sir Michael Bishop with the German carrier in the 1990s.

It is understood that Etihad made a move for bmi in the summer and the Press Association reports that its chief executive James Hogan still holds strong links with Sir Michael after working as bmi chief operating officer from 1999 to 2002.

However, Etihad could face potential competition from Virgin Atlantic after the Telegraph recently reported that the airline has hired Credit Suisse to oversee a potential deal for the airline.


Airline News posted on 15 September 2008

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