Low-cost airline bmibaby is set to be sold.

Castle Donington airline group BMI, which owns the business, announced yesterday that it had signed a preliminary deal and that the sale would include all staff, aircraft and routes operated by bmibaby.

It comes weeks after BMI itself was sold to International Airlines Group (IAG) by German owner Lufthansa in a £172.5 million deal.

IAG has asked Lufthansa to sell bmibaby and sister airline BMI Regional before the larger takeover is completed at the end of March.

Bmibaby has 14 aircraft and employs 450 people, including 80 at its head office at Donington Hall, which it shares with BMI.

It operates 32 routes from East Midlands Airport, as well as flights from Birmingham and Belfast airports.

The budget airline said its new owner plans to further develop the airline in the UK and Europe, but would keep its head office in the Midlands.

A bmibaby spokeswoman said she was unable to name the company involved in the deal or give any more details at this stage.

It is hoped that the sale can be completed by the end of next month.

She said the preliminary agreement allowed BMI to continue discussions with other potential buyers.

IAG, which owns British Airways, is mainly interested in BMI's 56 landing slots at Heathrow Airport, the world's busiest airport.