British Airways' parent company International Airlines Group (IAG) has agreed a £172.5m deal for BMI from Lufthansa, in a move that could see hundreds of jobs being lost.
BMI made a £153m loss before tax in 2010, against revenues of £777m. The airline employs around 3,600 staff, and IAG said that some cuts were inevitable.
"Given the scale of bmi's losses, there is an urgent need to restructure the business. Unfortunately, this will mean some job losses but we will secure a significant number of high quality jobs here in the UK and create similar new jobs in the future," Willie Walsh, IAG's chief executive, said in a press release.
"IAG's purchase of bmi will protect more British jobs than if the airline had been closed and had its Heathrow slots sold off. There will be restructuring costs spread over three years but these will be significantly lower in total than bmi's current annual losses."
The sale also puts IAG in a dominant position in London Heathrow airport, with more than 50% of the take off and landing slots owned by the company's airlines BA, Iberia and now BMI.
Walsh suggested that the acquisition of 56 additional slots through the merger would allow the company to free up additional routes by trimming duplicate services.
"Buying bmi's mainline business gives IAG a unique opportunity to grow at Heathrow, one of our key hub airports. Using the slot portfolio more efficiently provides the option to launch new longhaul routes to key trading nations while supporting our broad domestic and shorthaul network," he said.