British Airways owner IAG announced a deal to buy German rival Lufthansa's UK unit bmi for 172.5 million pounds in cash, and said jobs would go as part of an urgently-needed restructuring of the loss-making carrier.

Lufthansa has the option of selling the airline's 'bmi regional' and 'bmibaby' units before the deal completes, and IAG will pay a significantly lower price if those businesses are offloaded, IAG said Thursday, unveiling details of a deal agreed in principle in November.

Given the scale of bmi's losses, there is an urgent need to restructure the business, IAG chief executive Willie Walsh said in a statement.

Unfortunately this will mean some job losses but we will secure a significant number of high quality jobs here in the UK.

IAG shares closed at 145.1 pence Wednesday, valuing the business at about 2.7 billion pounds.

(Reporting by Myles Neligan; Editing by Sudip Kar-Gupta)