Scandinavian Airlines raises $60 million from Heathrow slot sale
Feb 4, 2015 Victoria Moores
Airlines (SAS) has sold one of its 21 London Heathrow Airport slot pairs to an unnamed “major international carrier” for $60 million.
“The intention is to keep the seat capacity to/from London Heathrow through the use of larger aircraft on remaining departures. Furthermore, SAS will consider the use of other airports in the London-region,” SAS said in a statement. SAS currently flies from Heathrow to Copenhagen, Gothenburg, Oslo, Stockholm and Stavanger.
SAS has 21 slot pairs at capacity-restricted London Heathrow, making it the airport’s fifth largest carrier by number of departures. After the transfer, which takes effect on March 29, SAS’ holding will be slimmed to 20 daily pairs.
“The transaction will generate a positive earnings impact of the equivalent of $60 million for SAS to be accounted for during the second quarter of the fiscal year 2014/2015 with a corresponding cash effect during the fiscal year 2014/2015,” SAS said.
Over recent months, Virgin Atlantic has said it was looking to lease out two of its Heathrow slot pairs, while now-defunct Cyprus Airways missed out on a deal to sell some of its slots to Qatar Airways.
Cyprus Airways quits London Heathrow Airport
The cash-strapped national carrier, which has faced financial problems for several years, has sold the daytime slot for $31 million.
It will move its Larnaca-London service to Stansted Airport from Sept. 14. In March, Cyprus sold its evening Heathrow slot pair to Middle East Airlines (MEA).
In a filing with the Cyprus Stock Exchange at the time, it said it had received 6.3 million ($8.6 million) for the earlier sale. Heathrow is heavily slot-constrained, which makes slots there valuable. The MEA sale came after an earlier planned deal with Qatar Airways fell through. In its stock exchange filing announcing the new slot sale, Cyprus said it would ensure a very important revenue of $31 million, which will enhance the liquidity of the company for 2015. It would also satisfy a key condition of the airlines current restructuring plan, which calls for the sale of the Heathrow slot pairs.
The Larnaca-Heathrow service is not performing well and moving to Stansted will allow Cyprus to vary the frequency and timing of the service to try to improve the situation, according to the filing. The European Commission is currently investigating past injections of around 100 million to the carrier, which is 93.67% owned by the Cypriot government.
IAG keeps 42 pairs of slots at Heathrow out of the 56 acquired from bmi
BA’s parent company, IAG, has to give up 14 pairs of daily take-off and landing slots at Heathrow, in order for its take-over of bmi to be approved. BA gains 56 pairs of slots per day, so without the 14, is gaining 42 pairs, which will be used to expand BA’s operations at Heathrow with new destinations and more schedules. Seven of the relinquished Heathrow slots must be sold to operators providing flights to Edinburgh and Aberdeen. IAG must also provide competitors with access to seats on its UK and European services, allowing airlines such as Virgin to book journeys for passengers who wish to transfer on to its long-haul flights. Completion of the sale of bmi by Lufthansa is anticipated to take place around 20 April. Walsh said IAG would operate bmi’s published schedule in the short-term but soon expand IAG’s long-haul network, announcing new destinations in Asia.