Lufthansa and IAG sign agreement for the sale of BMI

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Deutsche Lufthansa AG (Lufthansa) and International Airlines Group (IAG) have today signed a binding purchase agreement for the sale of British Midland Ltd. (bmi) to IAG.

The gross purchase price is 172.5 m GBP (approx. 207 m EUR) in cash. After agreed price reductions the net purchase price is expected to be significantly negative. With the transaction Lufthansa is disassociating from a sustainably loss-making subsidiary. As part of the agreement, a British holding company of Lufthansa will take on bmi’s defined pension benefit scheme. The closing of the transaction is planned for the first quarter of 2012 and remains in particular subject to approval by the antitrust authorities.

Deutsche Lufthansa AG 22.12.11

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Lufthansa and IAG sign purchase agreement for the sale of British Midland Ltd.

Sale provides sustainable future prospects for bmi / Lufthansa to benefit from stronger financial position

Following the announcement on November 4, 2011, Deutsche Lufthansa AG (Lufthansa) and International Airlines Group (IAG) have signed a binding agreement for the sale of British Midland Limited (bmi) to IAG. The price is GBP 172.5 million (approx. EUR 207 million) in cash for bmi. The price is subject to certain reductions. Both parties aim for a closing of the transaction by the end of the first quarter 2012.

After signing the agreement, Christoph Franz, CEO and Chairman of the Executive Board of Deutsche Lufthansa AG, stated, “bmi’s employees and management team have shown great motivation and unfailing commitment in dealing with the financial challenges of the past years. For this I owe them my thanks and appreciation. It was therefore especially important for us to find the solution that best provides the company and its employees with sustainable prospects for the future. This has been achieved through the sale of bmi to IAG. And as part of Lufthansa’s strategic development the sale means that our customers, shareholders and employees will benefit from a sharpened corporate profile and a stronger financial position of the Group. Both of these are necessary elements to enable sustainable, profitable growth.”

Transaction highlights:

• Sale of bmi for a gross purchase price of GBP 172.5 million (approx. EUR 207 million), subject to certain reductions
• Net of total potential reductions, the net purchase price expected to be clearly negative; however, the transaction is expected to have amortized for Lufthansa after around one year
• As part of the agreement, a British holding company of Lufthansa, is to take on bmi’s defined benefit pension scheme
• Deal remains subject in particular to competition clearance
• bmi will be accounted for as “asset held for sale / discontinued operations” for Financial Year 2011
• Closing of the transaction is aimed for the first quarter of 2012
• Transaction offers sustainable future prospects for bmi
• Lufthansa aligns airline portfolio to strategic fit and benefits from stronger earnings position

Lufthansa 22.12.11