British Midland plc announces that it has acquired control of the Heathrow-based BA franchise airline British Mediterranean (BMED). British Midland is the group holding company of bmi and has subscribed to approximately 30 million pounds of new shares in BMED.

bmi's chairman Sir Michael Bishop, chief executive officer Nigel Turner and deputy chief executive officer Tim Bye have been appointed to the BMED board with immediate effect. David Richardson will retain his position as chief executive reporting directly to Nigel Turner. All existing non-executive directors of BMED have resigned their positions.

Nigel Turner, chief executive officer of the bmi group, said "Bringing BMED into the bmi group creates a business with a turnover in excess of 1 billion pounds with substantial growth opportunities. The acquisition enables the bmi group to accelerate its strategy of expansion into medium-haul markets. BMED operates to 17 destinations in 16 countries and has no overlap with any current bmi route. Many of these destinations have restricted access to the market due to existing bi-lateral agreements. Synergies include BMED's Heathrow base and the fact that it operates IAE-engined Airbus A320 and 321 aircraft in a two class configuration.

"BMED has a first class workforce and they will be welcomed into the bmi group and we look forward to working with them to rebuild the business after some difficult times over the past few months. In the short term we plan for the business to continue to operate as it does today with no immediate changes to network or structure. A comprehensive review of the business will take place over the next 30 days."

An agreement has been reached with British Airways that will see the franchise agreement and any other commercial agreements that exist with them continuing for a transitionary period until the end of the summer 2007 timetable.