British Airways is considering a £1 billion bid for its rival British carrier bmi, The Times has learnt.

Sir Michael Bishop, the chairman and a 50 per cent shareholder of bmi, is understood to have received a number of approaches from airlines looking to buy his stake.

Sir Michael, 65, is holding out and refusing to sell, but potential bidders have told The Times that they believe he will sell this year.

BA is understood to be monitoring the situation closely and would consider a bid if and when Sir Michael sells.

The airline is understood to have raised the issue with him already.

Lufthansa, the German airline, will have first say in any sale of bmi as it holds 30 per cent and has an option to buy out Sir Michael.

However, Lufthansa is understood to be one of three final bidders for Alitalia, the Italian flag carrier, and is also said to be interested in Iberia, of Spain.

It is not thought to want to extend its holding in bmi, which would open the way for another bidder.

BA is an obvious suitor, as bmi would be a strategically vital addition after last week’s “open skies” ruling.

The liberalisation of air travel between Europe and the United States agreed by transport ministers last week will enable any carrier to operate out of Heathrow.

At present, only BA, Virgin Atlantic, United Airlines and American Airlines can fly the lucrative Heathrow-to-New York route.

BA has 40 per cent of Heathrow slots. Acquiring bmi would give it 53 per cent.

Competitors would struggle to acquire other slots, which would allow BA to maintain its stranglehold on transatlantic travel.

Open skies could also allow BA to overcome competition concerns because any European airline can offer services within and to the UK.

BA hopes to consolidate its position at Heathrow ahead of open skies, part of which involves moving all its operations to Terminal 5, which will open in a year’s time.

Bmi’s Heathrow slots are also attracting interest from other potential bidders.

Private equity groups and Middle Eastern carriers such as Etihad and Emirates are thought to be eyeing the British carrier.

These bidders may break up the airline, keeping the Heathrow slots and then selling the rest.

About a third of bmi’s slots could be used for transatlantic flights and these are likely to fetch about £10 million each.

Other slots at less favourable times would cost in the region of £5 million.

However, Sir Michael may refuse to sell if he thinks that bmi will be broken up.

He joined in 1964 and was instrumental in turning it into a viable competitor to BA in the British market.

BA refused to comment and bmi said that it planned to be an acquirer rather than acquired.

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