BA Buys More Slots at Heathrow
By Lilly Vitorovich, Kaveri Niththyan, The Wall Street Journal | Sep. 23, 2011
British Airways has acquired six daily takeoff and landing slots at London's Heathrow Airport from British Midland International for an undisclosed sum, bolstering its position at the world's busiest international passenger airport.
British Airways' parent International Consolidated Airlines Group SA will own 45% of takeoff and landing slots at Heathrow Airport after the purchase, up from 44%, an IAG spokeswoman said Friday.
A person familiar with the matter said the sale isn't part of a wider strategy at bmi for a piecemeal selloff of bmi. Its parent, Deutsche Lufthansa AG, on Tuesday issued a profit warning and said it would restructure or sell unprofitable businesses such as Austrian Airlines or bmi.
Much of the attraction of bmi to potential buyers is its status as the second-biggest holder of slots at Heathrow after IAG. The airline was put up for sale by Lufthansa earlier this month. The German carrier could be forced to revisit the idea of selling more slots if no interest emerges in buying bmi, one person said.
A spokesman for Lufthansa on Friday said the sale of slots to BA would have no impact on bmi's network. He declined to comment on the price of the sale.
The slots weren't being used by bmi, the person said. Bmi already loans out a proportion of its slots to other airlines owned by Lufthansa.
IAG said the new slots will be used by British Airways from late October, with the airline looking to expand both its long-haul and short-haul networks at the airport, IAG said in a brief statement.
The acquisition is positive and part of the airline's long-term strategy, said Investec Securities analyst Andrew Fitchie. But he added the timing of the deal isn't ideal given the difficult trading environment and wider issues surrounding bmi.
The bigger issue is what happens to the rest of bmi, "which has potential implications for BA," Mr. Fitchie said.
IAG has approved British Airways' acquisition, but a company spokeswoman declined to comment on the price. Bmi wasn't immediately available to comment.
IAG shares were recently up flat at 142 pence, while Lufthansa's shares in Germany were up EUR0.08, or 0.9%, EUR9.35.