The owner of British Airways today said it had reached a binding agreement to buy troubled airline BMI for £172.5m in a move that will boost its stranglehold at Heathrow airport.

International Airlines Group (IAG), which also owns Spanish carrier Iberia, will acquire up to 56 additional taking off and landing slots at Britain’s biggest airport once it acquires loss-making BMI from German operator Lufthansa.

Willie Walsh, IAG chief executive, warned BMI job losses were on the horizon as the new owner will restructure the business after the deal is completed, which IAG hopes will go through in the first three months of next year, subject to regulatory approval.

Elsewhere, Lufthansa has the option to sell its business units BMI regional and low-fare carrier BMI baby before completion - and the price will be reduced if Lufthansa does not opt to sell the latter.