Leading UK duo take top roles on Lufthansa's BMI approach as airline activity hots up

Freshfields Bruckhaus Deringer and Ashurst have landed lead roles in Lufthansa's bid to take a controlling stake in UK airline BMI, in a deal valued at a reported €400m (£314m).

Freshfields won an instruction from the German national airline, which announced last week that it is to take a further 50% stake in BMI. London-based corporate partner Sundeep Kapila led the team for the magic circle firm.

The firm has advised Lufthansa regularly in the past, including on the establishment of a freight airline with DHL Express in 2007.

Ashurst was instructed by regular client BMI, with London corporate head Roger Finbow and corporate partner Gavin Gordon at the helm. The firm has been advising BMI since 1999, when it won its first instruction signing it up to the airline network Star Alliance, which includes Air Canada and Lufthansa, among others.

Lufthansa already owns 30% of BMI, which it acquired in 1999. The remaining 20% of the airline is owned by Scandinavian Airlines; however, it is thought that Lufthansa could bid for this stake as well.

The deal reflects the troubled state of the airline industry at present, with a number of companies going into administration in recent months.

In June, CMS Cameron McKenna took the lead advising the administrators Begbies Traynor on the collapse of business class airline Silverjet. The deal also generated roles for Lovells advising the Bahraini investors owning two of Silverjet's three aircraft, as well as Baker & McKenzie advising Luton Airport Authority, where Silverjet housed its planes.

Meanwhile in September, Freshfields took the lead for administrator Kroll on the administration of airline tour operator XL Leisure Group. The magic circle law firm is also acting for Iceland's Straumur, XL's main lender. Jones Day was brought in for XL.

Finbow said: "We are at a point in the economic cycle that means that, in general, planes are running empty and the more that can be done to reduce costs the better."

BMI is Heathrow's second-largest airline after British Airways, last year flying approximately 10.6 million passengers, with profits of £15.5m.