GERMANY’S flagship airline Lufthansa is to take control of a UK carrier for the first time, after agreeing to buy a majority stake in British Midland (bmi) in a deal costing £223m, it was revealed yesterday.

Bmi – which in March cancelled its service from Durham Tees Valley Airport to Heathrow – owns about 11 per cent of take-off and landing slots at Heathrow, and Lufthansa’s move gives it access to the lucrative berths at Europe’s biggest airport.

Lufthansa already owned a stake of slightly less than 30 per cent in bmi but the deal was made possible by an outof- court settlement with bmi’s majority shareholder Sir Michael Bishop.

When the airline first became a shareholder in bmi in 1999, it agreed an option with Sir Michael to buy his stake – reportedly for about £300m.

Sir Michael enforced the buy-out option last year, but valuations in the airline industry have slumped and bmi sank to losses of nearly £100m last year.

After months of wrangling over the price, he has agreed to cancel the option in return for a £175m payment.

Lufthansa will now pay a further £48m on top of this for Sir Michael’s stake, taking its ownership up to 80 per cent when the firm has completed traffic rights negotiations with the countries to which bmi flies.

Sir Michael said: “I am pleased that we have settled this dispute. Our agreement resolves the uncertainty over the ownership of bmi, which should be of considerable benefit to the company and its 4,500 employees.”

Lufthansa said it was expanding its interests in an airline with important strategic assets.

“In recent years, however, bmi has experienced increasing financial challenges.

“These have been strongly exacerbated by the sharp rise in fuel prices in the past year and the ongoing global economic crisis,” a statement from the German firm added.

Across its full mainline and regional network, bmi operates about 1,800 flights a week, to locations including Antigua, Baku, Cairo, Las Vegas and Tel Aviv as well as UK airports such as Norwich, Glasgow, and Belfast.