THE airline that delivered a major blow to Durham Tees Valley Airport two years ago has been put up for sale amid soaring losses.

BMI British Midland went £105m into the red in the first half of 2011, prompting German parent Lufthansa to appoint investment bank Morgan Stanley to explore options for disposing of the carrier. The share price of Lufthansa, whose value has fallen by a quarter since June, dropped further following the announcement.

Durham Tees Valley Airport has struggled to bounce back after BMI made the shock decision to pull its three daily flights to Heathrow in 2009. The move sparked a multi-million-pound damages claim by the airport's parent company Peel Airports.

BMI is Heathrows second largest airline, with a fleet of 47 aircraft running 2,000 scheduled and charter flights per week to 69 airports. Flights are mainly across Britain and Europe, with others to the Middle East, Central Asia and Africa.

Despite the losses, which work out at £38 per passenger, the sale of BMI is expected to attract plenty of interest as it controls 10 per cent of the take-off and landing slots at Heathrow, a portfolio it valued at £770m in 2008.

International Airline Group, the owner of British Airways and Iberia, has already expressed its interest, but is unlikely to gain regulatory approval for a deal that would give it control of more than half the slots at the UKs largest airport. Middle East airlines such as Abu Dhabis Etihad are expected to be among the interested parties. Lufthansa will also consider breaking up the group, which could involve a sale of BMIs no-frills subsidiary BMI Baby, the regional division BMI Regional and possibly the groups headquarters at Donington Hall near Derby.

The German group took full control of BMI two years ago but attempts to improve its performance have been hit by steep rises in the cost of aviation fuel and also the recent uprisings in North Africa and the Middle East, which have badly affected demand for flights to the region.

BMI said it is discussing the options for its future with Lufthansa but no decision had been taken.

The German airline announced at the end of last week that Vagn Ove Sorensen has taken over as BMI chairman, transferring from Lufthansa subsidiary Austrian Airlines where he held a similar role. A spokesman said: "Mr Sorensen's experience with corporate restructuring is of particular importance and value at this critical period."