German airline Lufthansa is taking over control of UK carrier bmi.
Lufthansa already had a 30% stake in bmi (formerly British Midland) and the German carrier is understood to be buying a further 50% stake for around £318 million.
The deal will make Lufthansa the second-biggest carrier behind British Airways at Heathrow airport in west London.
The 50% stake being bought by Lufthansa belongs to bmi chairman Sir Michael Bishop, who built the airline to a position where it has become one of Europe's leading carriers.
Bmi also includes the no-frills bmibaby as well as a UK regional subsidiary.
It is expected that the Lufthansa deal will go through within the next three months.
The Lufthansa-bmi deal considerably strengthens the German carrier's position at Heathrow, where BA is attempting to form an alliance with American Airlines in a move bitterly opposed by another major Heathrow player - Sir Richard Branson's airline 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."
