Aer Lingus eyes bmi Heathrow slots

Aer Lingus (EI) sees an opportunity in Lufthansa’s divestment of British Midland International (bmi) to expand its slot portfolio at London Heathrow [LHR], EI CEO Christoph Mueller told. 

“We are after slots [at LHR] in the wake of the proposed acquisition of bmi by IAG or bmi going into receivership,” Mueller said. EI operates 27 daily take-off and landing slots at LHR, of which it owns 23.  

“London Heathrow has a huge catchment area and we want to pull more transfer traffic to our long haul. We have limited growth opportunities in Ireland but we can compensate the weakness of the Irish market by increasing our transfer. Our transfer traffic is growing and long haul is doing very well,” he said. EI’s long-haul routes for years recorded major losses but now contributes to the overall profitability of the company, Mueller said.

The sale of bmi to International Consolidated Airlines Group (IAG) is under review by the European Commission, which is expected to announce March 30 if it will approve the deal or open a more in-depth Phase II investigation. IAG initially offered to surrender 10 daily slot pairs at LHR to address the European Union’s (EU) anti-trust concerns and later added an additional four pairs, according to an insider, who added that IAG offered to give up slots on routes from LHR to Edinburgh, Aberdeen, Cairo and Riyadh, among others.

IAG and LH are keen to avoid a lengthy Phase II investigation, which would easily add six months to the acquisition process and put the continuation of bmi at risk. Both groups have been vocal to stress the possible loss of 4,800 jobs if the takeover is blocked. Bmi reportedan operating loss of €199 million ($264.3 million) in 2011 and is short of liquidity to continue operations, the Financial Times reported last month based on a report by the company’s auditors.

Observers, however, are not sure if 14 slot pairs will be sufficient to obtain regulatory approval from the EU, which is more difficult in approving national airline mergers than cross-border tie-ups. It prohibited the take-over of EI by Ryanair and blocked the proposed merger of Aegean Airlines and Olympic Airways. 

Mueller also said he is confident EI will remain profitable in 2012. It posted a €49.1 million operating profit in 2011 and €52.2 million in 2010 . “We will be profitable, that is safe to say. By how much will depend of the fuel prices,” he said. “The performance of our short-haul business routes and long-haul business class is very strong,” he said, citing a booming Irish export industry. On EI’s transatlantic routes, its business-class cabin “is always sold out before economy class,” he confirmed.

In contrast, leisure routes remain under pressure as the Irish consumer is “on safe mode,” he said. “We reduced our exposure on these routes already last year and we will continue to do so this year. We’re focusing more and more on the non-Irish consumer and shifted out ticket sales, from 55% outbound and 45% inbound to 45% outbound and 55% inbound.”

Article Source : ATW Daily News