Lufthansa Keeps Open Mind On Virgin/BMI
December 11, 2008: 01:27 PM ET
CHICAGO -(Dow Jones)- Deutsche Lufthansa AG (LHA.XE) said Thursday that it is not in serious talks with Virgin Atlantic Airways Ltd. about potential cooperation over British Midland Airways Ltd., or bmi, in which the German airline is in the process of buying a majority stake.
But Lufthansa said it maintains an open mind about potential cooperation with Virgin Atlantic.
The German flag carrier also said it had the capacity to absorb more acquisitions and strategic stakes on top of the various ones it has made in Europe and the U.S. in recent months.
"From a management point of view, we can do much more," Wolfgang Mayrhuber, Lufthansa's chairman and chief executive, said at an industry event in Chicago.
Virgin Atlantic said Wednesday that it had held talks with Lufthansa about the future of bmi, which controls a number of slots at London's Heathrow Airport.
Expressions of interest in some sort of cooperation or tie-up between bmi and Virgin Atlantic have not led to serious negotiations, said Klaus Walther, Lufthansa's senior vice president corporate communications.
"We want to find out what [Virgin] wants," noted Walther. He said it would be "logical" to integrate bmi into the Lufthansa group, adding that "there are other options."
Lufthansa is set to lift its stake in bmi, which focuses on short- and medium- haul flights in Europe, from 30% minus one share to 80% next month.
Europe's second-largest carrier by traffic after Air France-KLM SA (3112.FR), Lufthansa recently has expanded through the acquisition of Swiss International Airlines and a 45% stake in Brussels Airlines, with a pending deal to take a 41.6% share in Austrian Airlines (AUA.VI). It has a 19% stake in JetBlue Airways Corp. (JBLU), a low-fare U.S. carrier.
Lufthansa has also been linked with taking a stake in SAS Scandinavian Airline Systems, and is keeping an eye on the restructuring of Italian flag carrier Alitalia (AZA.MI).
Mayrhuber said Lufthansa's model eschews outright mergers: "Our concept is a modular one. It's like a planetary system that works together."
He said complete integration brings "dis-synergies." Lufthansa prefers an approach he described as "one kitchen, several restaurants".
Nigel Turner, bmi's chief executive, declined to comment on the prospect of any deal with Virgin Atlantic.
-By Doug Cameron, Dow Jones Newswires; 312-750-4135;
[email protected]
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12-11-08 1327ET
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