The creation of a second large hub-and-spoke carrier based at London's Heathrow Airport is becoming more realistic after BMF's majority shareholder, Michael Bishop, exercised a put option to sell his stake to Lufthansa. Bishop's departure could be the first step toward a long-discussed merger of BMI with fellow Heathrow airline Virgin Atlantic. Such a deal has been the most important strategic goal for Virgin in recent years, as it tries to get more feed for its Heathrow long-haul services. But Bishop had tried to build BMI's own long-haul network, with limited success. The European carrier consolidation is occurring as Delta Air Lines and Northwest Airlines have received approval to form the world's largest airline (see p. 30). Whether or not British Airways will get a stronger competitor at its most crucial base largely depends on two questions: What exactly does Lufthansa have in mind for the new subsidiary, and would Singapore Airlines, Virgin Atlantic's 49% shareholder, support any deal?
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