British Airways and Iberia owner IAG will struggle to sell two loss-making subsidiaries it inherited through the acquisition of Lufthansa’s UK unit bmi, IAG’s chief executive Willie Walsh said on Monday.
IAG last year agreed a GBP£172.5 million (USD$277.6 million) deal to buy bmi but last week said it had received a discount for taking on bmi’s loss-making low-cost and regional divisions.
Walsh said IAG was in talks with potential buyers but that a sale was far from certain.
“I’m not confident (about a sale), no. These are airlines that Lufthansa struggled to sell but we are going to make an effort to sell them,” Walsh told reporters at London’s Heathrow airport.
“We’ve made clear from the very beginning that regional and bmibaby don’t form part of IAG’s plans.”
Bmi comprises three under-performing businesses: a traditional airline serving Europe, the Middle East and Africa; bmi regional, serving the UK; and low-cost unit bmibaby.
IAG said bmi’s mainline operation would be integrated into British Airways, putting some 1,200 jobs at risk, while bmibaby and regional would be sold off or shut down.
Walsh said prized Heathrow take-off and landing slots that came with the acquisition of bmi would help IAG expand further into the Asian market, but warned that integrating the business into British Airways would take time.
“Bmi is a huge loss making company. If you look at the losses that bmi has had, a lot of work is going to need to be done to restructure that business,” Walsh said.