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Tuesday, November 9, 1999 Published at 08:55 GMT

Business: The Company File

Lufthansa buys stake in British Midland

British Midland's Heathrow slots are highly sought-after

German airline Lufthansa has confirmed that it has bought a 20% stake in British Midland.

Lufthansa reached agreement over the weekend with Scandinavian carrier SAS, which held 40% of the UK airline.

The deal will allow British Midland to join the Star Alliance of airlines, led by Lufthansa.

This will give the alliance access to the hugely lucrative take-off and landing slots at London's Heathrow airport held by British Midland.

The company's 200 Heathrow slots have been seen as one of the its most important assets by a number of possible buyers who have been running the rule over the airline in recent weeks.

Deal criticised

KLM, Air France and Virgin are all believed to have made approaches.

Lufthansa paid £91.4m for its stake in British Midland, the UK's second-largest airline.

The UK airline confirmed last month that it was in exclusive talks with Lufthansa.

A tie-up between the two companies has been condemned by British Airways as "anti-competitive".

BA said last month that if Lufthansa bought a stake in British Midland and acquired its Heathrow slots it would "decimate" competition on London-Frankfurt and London-Scandinavia routes."

BA said it was concerned that its attempted tie-up with American Airlines was blocked by competition authorities while the British Midland deal was apparently being "nodded through".

It said it would lodge a protest with the European Commission if the Lufthansa/British Midland deal went through.

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