Bidding war for BMI's take-off and landing slots at Heathrow expected

Published on Wednesday 11 November 2009 20:52

A BIDDING war for control of some of Heathrow's prized take-off and landing slots is expected to erupt as loss-making airline British Midland (BMI) confirmed it is in "significantly advanced negotiations" with airlines in a bid to raise funds.

Its latest accounts, filed with Companies House, show a gaping hole in the Derby-based group's balance sheet with the need for 190 million in additional funding to see it through to the end of October 2010.

Germany's Lufthansa, which took control of BMI this year, has pledged 95m to that target. Analysts now say Air France, KLM and Virgin Atlantic will all be eager to get their hands on potentially lucrative take-off and landing spaces from one of the world's busiest airports.

One analyst said: "British Airways has started operating a service from Paris to New York and Air France/KLM will want to do the same thing from Heathrow. I suspect Virgin will be interested as well."

BMI has 11 per cent of the landing slots at Heathrow. Slots have traded for tens of millions of pounds in the past. Early last year US carrier Continental bought four sets of prime Heathrow slots for a record 26.25m per pair. But prices have fallen in the recession and BMI has been forced to cut the value of its slots by 20 per cent to around 616m, from 770m at the end of 2007.

Last night a spokesman for BMI refused to comment on any sale but in accounts signed off on 23 October, a statement said "negotiations are significantly advanced with several airline groups" to sell the slots.

The airline revealed that its pre-tax losses were 155.6m, compared with a profit of 15.5m the year before. The loss is over 50 per cent higher than the 99.7m BMI had claimed it lost in 2008. The airline said that the discrepancy was caused by audit adjustments.

The news comes just days after BMI's new chief executive, Wolfgang Prock-Schauer, announced a "restructuring exercise" at both Aberdeen-based BMI Regional and BMI's main operations.

The BMIbaby fleet is to be reduced by nearly a third, from 17 to 12 aircraft next year. A total of 54 pilots and 82 cabin crew at Birmingham, Manchester and Cardiff airports are "at risk of redundancy", along with 22 management and support positions.

Aviation expert David Wragg said: "The real problem with BMI is that BMI Regional and BMIbaby both need a complete revamp. Neither of them has got a fleet that is cost-effective in fuel terms. BMI Regional is operating aircraft that many of the big American airlines have actually dropped because they are too expensive to run."

The BMI group has 517 staff in Scotland, including 151 at its BMI Regional head office in Aberdeen. BMI flies from Edinburgh, Glasgow and Aberdeen to Heathrow, while BMI Regional includes links to Leeds, Manchester and Norwich.