The in principle agreement between British Airways and Iberia owner International Airlines Group (IAG) to acquire British Midland from Lufthansa would allow British Airways to increase its number of seats out of prized and slot-restricted London Heathrow airport by 20% to 40% under a range of scenarios. Oneworld's share of traffic at London Heathrow could potentially increase from 47% to 60%.

With such dominating control of capacity from British Airways and oneworld, it is little wonder Virgin Atlantic is trying to secure a deal with Lufthansa for British Midland and its valuable 9% share of Heathrow slots. A Virgin Atlantic acquisition of British Midland, even if British Airways is close to signing the deal, would add to Virgin's bargaining power as it seeks to form or join an alliance to remain competitive.

A short statement from IAG on 4-Nov-2011 about the in principle agreement it hopes to finalise in coming weeks ends Lufthansa's long quest to shed itself of under-performing acquisition British Midland.