London – Lufthansa said it’s going to pay Michael Bishop 175 million pounds ($288 million) so that Bishop doesn’t exercise a put option requiring the German airline to buy Britain’s BMI.
BMI predominately flies between the U.K. and other European destinations.
In connection with the agreement, Lufthansa will have a holding company to take on Bishop’s 50% plus one share stake in BMI for another 48 million pounds. Lufthansa will fully consolidate that holding if it gets necessary traffic rights.
Separately, the European Commission approved Lufthansa’s 65 million euro acquisition of a 45% stake in Brussels Airlines in return for giving up landing slots.
Lufthansa now owns Swiss International, is looking to buy the Austrian government’s 42% stake in Austrian Airlines and holds a stake in JetBlue Airways.
The deal making comes on the heels of Lufthansa’s warning from late Friday, when the company said that it was looking to “avert an operating loss” rather than post a “distinctively positive” result.
Lufthansa cited weaker demand and rising fuel prices as it looked to further chop costs.
Moody’s cut its outlook on Lufthansa’s debt to negative from stable.
“We expect that rising fuel costs will slow the recovery in earnings, while noting that Lufthansa and other airlines have had some success in passing these on to consumers in the past,” the rating agency said.