Quote: "Leaving bmi as a "stand alone" company within the IAG group rather than integration with BA might well be a workable remedy."
There is no reason why BA and BD have to be merged. Obviously it would be a business decision, but unlike BA's take over of Danair, Brymon, BCAL, etc., in the past, this situation is different, it is IAG buying BD, not BA buying BD.
Keeping BA and BD separate (while amalgamating back office functions) avoids seniority issues with some categories of staff (e. g. pilots). It would be neccessary to have some price differential/competition on overlap routes particularly domestic to convince the regulatory authorities. CAI and DME are not so critical because there are other carriers on these routes apart from BA and BD.
Quote: "I am not suggesting that the present version of bmi carry on business as usual, but a restructured slimmed down bmi operating the contentious routes (ie those that a "competition " case could be made for) could help IAG argue that there is still some form of competition for BA at LHR."
Maybe BD would become a domestic feeder airliner for BA, or perhaps a short haul "express" type carrier.
Possible route swaps, for example, BA does all the DME flights, 4 B744s/day with first class to mop up the oligarch business. BD gets CAI.
Much is possible depending on the business case and happy regulators.