IAG will do whatever they can to secure the Heathrow slots. Latest gossip I hear is that the 777 fleet at LGW will move over to LHR and the bmi 319/320/321 will go to Gatwick to replace the 737-400 fleet. Would be handy if they had a deal approved by the EC though.
It is looking like a car boot sale at Lufthansa these days.
Wonder if IAG will snap up that one as well?
Lufthansa Considers Selling Austrian Airlines
FRANKFURT (WSJ)-Deutsche Lufthansa AG LHA.XE -3.47%on Thursday said it would consider selling its Austrian Airlines unit if it can't turn the struggling carrier around amid a wide-ranging plan to cut costs to combat high fuel prices and sluggish growth in Europe.
"It isn't possible to say when Austrian Airlines will break even," Chief Executive Christoph Franz said. "We will stick with Austrian Airlines until we no longer see prospect for profit," Mr. Franz said. "We still see this prospect," he said, though the business is in a critical condition and needs drastic restructuring.
Lufthansa has agreed to sell loss-making U.K. unit British Midland Ltd.-known as bmi-to British Airways IAG.LN -0.81%and Iberia parent International Consolidated Airlines Group. It said Thursday it has signed a letter of intent to dispose of its 25% stake small Chinese unit Jade Cargo to China's Unitop.
"We have to respond to the change in our industry with flexible structures that enable us to remain Europe's number one [carrier] in the future," said Franz.
The German airlines group, which carried 100 million passengers for the first time in 2011, said it would increase capacity by less than initially planned this year as well as reduce purchasing, administrative, and payroll costs as part of a €1.5 billion ($1.95 billion) three-year savings plan.
Despite the cost-saving initiatives, Lufthansa said it expects a sharp decline in operating profit in 2012, depending on market conditions, to around €500 million, which the airline described as "the mid three-digit million euro range," down from €820 million in 2011.
Last year's operating profit fell nearly 20% as a 26% rise in the carrier's fuel bill to €6.28 billion offset a 8.6% rise in revenue to €28.73 billion.
"Although the operating profit for 2011 is generally pleasing in itself, the operating margin is not," Mr. Franz said. Last year's operating margin was 3.4%. Lufthansa has previously said it would generate a margin of 8% in the longer term.
Lufthansa said it would limit passenger capacity growth in 2012 to 2% on the year compared with 3% previously as part of various measures to reduce costs. They include centralizing procurement, better coordinating flight plans within the group and trimming administrative and management staff. Lufthansa announced a hiring freeze last week.
The German flag carrier, like Franco-Dutch airline Air France-KLM AF.FR -1.46%and northern European carriers SAS AB SAS.SK 0.00%and Finnair Oyj, FIA1S.HE +1.30%are struggling with difficult market conditions, among them soaring fuel prices and fierce competition from no-frills airlines on short-haul routes and Middle Eastern airlines making inroads in European and intercontinental traffic. Europe's sovereign debt crisis and political upheaval in North Africa and the Middle East have slowed growth in air traffic.
Lufthansa said the planned sale of bmi should enable the group to swing back into the black this year after a €13 million net loss in 2011. The group, which announced preliminary earnings figures March 7, reported net profit of €1.13 billion in 2010.
Lufthansa said bmi made a €155 million after-tax loss in 2011. Austrian Airlines recorded an operating loss of €62 million in 2011. Jade reported a net loss of €38 million.
Lufthansa shares fell on the Frankfurt stock exchange as the severity of the problems at Austrian Airlines took investors by surprise, traders said. The stock was down 1.1% at €10.40 around 1 p.m. GMT. Lufthansa shares have declined around 19% over the past 12 months, underperforming the German blue chip stock index DAX over this period. The DAX was up 0.3% Thursday.