Virgin Atlantic Makes Rival Bid for British Midland

PARIS - The German flag carrier Lufthansa confirmed Monday that it had received a rival bid from Virgin Atlantic Airways for British Midland, ratcheting up a contest with British Airways' parent for access to the money-losing carrier's coveted take-off and landing slots at Heathrow Airport.

The move comes barely a month after International Airlines Group, which owns British Airways and the Spanish carrier Iberia, announced that it had reached a preliminary agreement with Lufthansa to buy British midland, widely known as BMI, for an undisclosed sum.

"We are now talking to both to I.A.G. and Virgin," said Aage Duenhaupt, a Lufthansa spokesman in Frankfurt. "We expect those talks will continue over the next months, with hopefully a decision to be made within the first quarter of next year."

Virgin Atlantic, which is owned by Richard Branson's Virgin Group and Singapore Airlines, also confirmed that negotiations were ongoing "on the next stage of the purchase," but did not disclose further details.

I.A.G. has been eager to expand its already large presence at Heathrow, agreeing to buy six take-off and landing slots there from BMI in September. That deal increased the company's control at the airport, Europe's busiest, to 45 percent.

BMI, the second-largest carrier at Heathrow, controls 9 percent of the slots the airport, which is also operating at maximum capacity after plans to build a third runway were abandoned last year. Virgin Atlantic controls just 3 percent of Heathrow's slots. In a statement, the airline said an I.A.G. takeover of BMI would be "disastrous for consumer choice."

Analysts have predicted that competition regulators would be unlikely to accept I.A.G.'s owning more than 50 percent of Heathrow slots, so the group is expected to sell some of them to a competitor to get the transaction approved.

It was not immediately clear whether Virgin Atlantic's bid was still being supported by financing from the Abu Dhabi carrier Etihad Airways, which had earlier considered a joint bid for B.M.I. Spokespeople for both airlines declined to comment on Monday.

Mr. Duenhaupt of Lufthansa said that the German carrier's discussions were taking place with Virgin representatives, but he was unaware if Etihad still had a role in that bid.

A report in the Times newspaper said Virgin Atlantic had offered about 50 million, or $77.7 million, for BMI. The report, which cited unnamed bankers familiar with the transaction, said that offer was about half the value of the proposal from I.A.G., as Virgin expected to confront fewer regulatory hurdles to a deal.

Both Virgin Atlantic and I.A.G. declined to comment on the report.

BMI comprises three business units: a traditional carrier serving Europe, the Middle East and Africa; BMI Regional, which serves Britain; and bmibaby, a low-cost carrier. Neither I.A.G. nor Virgin Atlantic has expressed interest in either BMI Regional or bmibaby, according to people with knowledge of the discussions.

BMI said in October that it was in ''advanced discussions'' to sell BMI Regional to a British investment group, which it did not identify, by the end of this year. The fate of the low-cost business remains unclear.

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