European carriers keep consolidating

Lufthansa, which recently acquired a 45 percent stake in Belgian carrier Brussels Airlines, along with an option to buy the rest, is adding another company to its growing European airline empire. Lufthansa raised its stake in British carrier bmi, gaining a total equity of 80 percent by buying bmi founder Michael Bishop’s 50 percent stake in the airline; Lufthansa had already owned about 30 percent. The biggest value in bmi lies in is control of some 12 percent of the takeoff and landing slots at London’s congested Heathrow Airport, Europe’s busiest connecting point. Press reports from Europe estimate the value of those slots at some $1 billion. Virgin Atlantic has also had its eye on bmi, in an effort to bolster its position at LHR against arch-rival British Airways, and following the Lufthansa news, Virgin executives floated the idea of some kind of three-way partnership among Virgin, bmi and Lufthansa -- although there was no immediate indication that the German carrier is interested. Meanwhile, Lufthansa is also said to have its eye on a possible equity stake in, or acquisition of, Austrian Airlines, which is shopping for a buyer or new investor; and it has been mentioned as a possible investor in SAS and/or Alitalia, which is still struggling with a government-organized rescue plan to keep it flying.