£223 million for Bishop as Lufthansa lands bmi at last

Lufthansa and Sir Michael Bishop, chief executive of bmi, have settled a long-running multi-million-pound legal dispute, meaning the German flag carrier will finally take over Britain's number three airline.

In a two-stage deal, Lufthansa has paid Bishop £175 million to cancel a put option he had with the Germans that would have forced them to pay about £350 million for his 51% stake.

Bishop will then sell his stake to an intermediate company, 35%-owned by Lufthansa, for £48 million.

That means he will collect £223 million on the deal, which he originally struck in 1999 when airlines were worth considerably more than today.

Bishop said: "I am pleased that we have settled this dispute. Our agreement resolves the uncertainty over the ownership of bmi, which should be of considerable benefit to the company and its 4500 employees."

The case came to the High Court in May but was adjourned while lawyers thrashed out today's settlement.

Lufthansa will take over the intermediate company once all the regulatory hurdles have been overcome, giving it 100% ownership of bmi.

Bmi lost almost £100 million last year and faces a tough 2009. But it is the second-biggest holder of Heathrow take-off and landing slots. Lufthansa is the third-biggest.