British Airways to shut down BMIBaby, 450 jobs losses

British Airways parent IAG said the discount arm of the BMI business bought from Deutsche Lufthansa AG will close this weekend with 450 job losses after no buyer could be found for a unit that doesn’t fit with its operations.

“After a review of options for BMIbaby and following formal consultation with union and employee representatives, the business will be closed, with the last flight departing Sept. 9,” IAG, as International Consolidated Airlines Group SA is known, said today in a statement on its August traffic figures.

London-based IAG bought BMI in April and said in May that talks had begun on closing BMIbaby at some point this month after no bids for the unwanted arm were forthcoming. The unit competed with Ryanair Holdings Plc and Jet2.com at its East Midlands hub, and overlapped with Ryanair in Birmingham. Both rivals, together with carriers including EasyJet Plc, also have bases in cities as little as 50 miles to the north.

All employees who are losing their jobs will be able to apply for any vacancies at British Airways, BMIbaby spokeswoman Naomi Bustin said separately. The carrier operated 14 Boeing Co. 737 aircraft, flying more than 700 services a week in the peak season to 23 European destinations, according to its website.

German turnaround specialist Intro Aviation GmbH, which had expressed an interest in BMIbaby, ended talks after Cologne- based Lufthansa rejected a non-binding offer, Managing Director Peter Oncken said in April. Charter carrier ACL also dropped plans to make a bid, a person familiar with the matter has said.

Reduced Price

IAG completed the acquisition of BMI on April 20 to boost its position at London’s overcrowded Heathrow airport. Lufthansa reduced the agreed price of 172.5 million pounds ($274 million) by an undisclosed amount after failing to first offload BMIbaby and BMI Regional, an asset IAG later sold to Sector Aviation Holdings Ltd. for 8 million pounds in a deal announced May 10.

IAG’s passenger traffic rose 5 percent last month, the carrier said today, with premium travel increasing almost 13 percent and economy up 3.9 percent.

The market remains unchanged since the company’s last financial statement on Aug. 3, it said, with trading “firm” at Heathrow and the Iberia unit’s Madrid base hurt by “weak economic conditions,” with short-haul traffic most affected.

–Editors: Chad Thomas, Chris Reiter.

To contact the reporter on this story: Chris Jasper in London at [email protected]

To contact the editor responsible for this story: Chad Thomas at [email protected]