German airline Lufthansa has bought a controlling stake in UK carrier bmi.

Lufthansa already had a 30 per cent stake in bmi, formerly British Midland, and the firm is understood to be buying a further 50 per cent stake for around £318 million.

The stake belongs to bmi chairman Sir Michael Bishop, who built the airline to a position where it has become one of Europe's leading carriers.

The remaining 20 per cent is owned by Scandinavian Airlines.

Bmi also includes the budget airline bmibaby as well as a UK regional subsidiary.

The deal, which is expected to go through within the next three months, will make Lufthansa the second-biggest carrier behind British Airways at Heathrow airport in west London.

Analysts say the move will enable Lufthansa to challenge BA on the profitable transatlantic routes to the United States.

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