German airline Lufthansa has strengthened its position at the UK's biggest airport by taking control of Britain's second-biggest airline.
Lufthansa announced it was adding to its 30% stake of Bmi (formerly British Midland) by buying Bmi chairman Sir Michael Bishop's 50% stake in the airline for around £318 million.
Lufthansa has also lowered its full-year profit forecasts as a result of the economic slowdown and higher fuel costs.
The company said it now anticipated operating profits of 1.1 billion euros (£0.9bn) against an earlier forecast of 1.4 billion euros (£1.1bn).
The airline reported operating profits of 279 million euros (£221.8m) for the third quarter to the end of September, down from 599 million euros in the same period last year, while net profits fell to 149 million (£118.4m) euros from 586 million euros.
With an 80% share in Bmi, Lufthansa will take over Bmi and become the second-biggest carrier at Heathrow behind British Airways.
Another major Heathrow carrier - Sir Richard Branson's airline Virgin Atlantic - immediately increased speculation about the shape of things to come at Heathrow by suggesting that Lufthansa and Virgin combine their short-haul and long-haul networks.
Virgin and BA also both paid tribute to Sir Michael who built British Midland up in the 1960s and who is one of the most respected and best-liked figures in UK aviation history.
Lufthansa said that it hoped the deal with Bmi, which includes the carrier's low-fare operation Bmibaby and Bmi regional services, will be concluded within the next three months.
The remaining 20% of Bmi is in the hand of Scandinavian carrier SAS. It is not known yet whether Lufthansa will acquire this stake.
Lufthansa now becomes an even bigger figure at Heathrow where BA is attempting to form an alliance with American Airlines in a move bitterly opposed by Virgin Atlantic.
Steve Ridgway, chief executive of Virgin Atlantic, said: "Michael Bishop is one of the icons of UK aviation. He has been a considerable force in championing the cause of the consumer and, along with Virgin Atlantic, has helped to provide much-needed competition to BA, and choice for consumers.
"Now we are about to enter the next phase of bmi's future and a turning point in aviation. Everyone has speculated that it would make sense for Virgin Atlantic and Bmi to combine their long-haul and short-haul networks.
"There is now a major opportunity to do that and create a new and even more effective competitor to BA. I am sure that Lufthansa realise the future opportunities and this could be a really good example of the right industry consolidation.
"It would be good for consumers, for UK plc and European aviation's competitiveness."
Bmi can trace its origins back to 1938, although the airline name British Midland did not start until 1964, becoming Bmi British Midland in 2001 and later just Bmi.
Last year the airline carried 10.6 million passengers and currently flies to 51 destinations using a fleet of 51 planes.
This compares with Lufthansa statistics that show the German carried flew 83.1 million passengers last year and currently operates to 209 destinations with a fleet of 276 planes.
Bmi has 4,300 employees and last year had a turnover of £1,023 million.
BA chief executive Willie Walsh added: "Sir Michael Bishop has done a great job for British aviation and is highly respected for all that he has achieved. We hope that he will continue to play a key role in the industry."
There are currently more than 500 weekly Lufthansa flights to eight German cities from airports in the UK and Ireland. As well as Heathrow, it uses London City, Birmingham, Bristol, Manchester, Newcastle, Edinburgh and Dublin.