IAG casts keen eye over bmi’s slots at Heathrow

“We have made no secret of our interest in bmi’s Heathrow slots,” a spokeswoman for IAG, formed by the merger of British Airways and Iberia, said.

“Lufthansa said a few weeks ago that they were looking at their options regarding bmi, so the ball is firmly in Lufthansa’s court, but there’s nothing imminent happening from our side.”

A source familiar with the matter said that Lufthansa had mandated banks to sound out a potential sale of bmi, adding that Morgan Stanley was one of the banks appointed, though the process was at an early stage.

Lufthansa board member Stefan Lauer said earlier this month that Lufthansa was making all efforts to turn bmi around but that one of the options being explored was to find a partner.

A Lufthansa spokeswoman yesterday referred back to Lauer’s comments, saying the situation had not changed since then.

Bmi controls about 11 per cent of the take-off and landing slots at Heathrow, the world’s second-busiest airport, making it second there only to BA, which has around 42 per cent of the slots. Bmi’s slots were valued at £616m at the end of 2008, down from £770m a year earlier.

A source close to the transaction said selling bmi would be a “mammoth task” for Lufthansa because there was no obvious buyer for the airline.

The source also said completion of any sale was unlikely until next year, but that Lufthansa’s priority was to sell bmi as a whole, including the slots. The UK carrier will be sold in parts if Lufthansa does not find a full buyer, added the source.

When Lufthansa bought half of bmi from Sir Michael Bishop in 2009, the deal drew criticism from analysts because the British carrier was seen dragging down the Germany company’s earnings without offering hope for a speedy turnaround. Bmi’s £124.5m 2010 net loss compared with a profit of £948.6m at Lufthansa.

“The idea could well be to break it (bmi) up, but Lufthansa really needs to find an exit from bmi one way or another, because it’s hitting profits and dragging the group down,” said Stephen Furlong, an analyst at Davy Stockbrokers.