With 9 percent of the take-off and landing slots, bmi is the second-largest carrier at Heathrow, Europe's busiest airport. A deal offers IAG the opportunity to grow at Heathrow, which is operating at full capacity after plans to build a third runway were scrapped.

IAG shares were down 4 percent at 161.1 pence by 8:35 a.m. British time, valuing the business at around £2.1 billion.

IAG's BA is the largest carrier at Heathrow with a 43.1 percent share of the slots - ahead of Virgin in fifth with 3.1 percent - and has most to gain if it can snap up bmi slots.

Walsh said he was confident the bmi deal would be cleared by regulators because IAG's holding at Heathrow is small compared with rivals at other European hubs - Lufthansa holds two-thirds of the slots at Frankfurt, while Air France-KLM has 59 percent at Charles de Gaulle in

Paris and 57 percent at Amsterdam's Schiphol.