German Air Traffic Deal Faces New Headwinds
A German state-backed takeover of a £200m stake in Britain's air traffic control operator was thrown into doubt on Thursday after a number of airlines raised potentially fatal objections to the deal.
Sky News understands that Deutsche Flugsicherung (DFS) could be thwarted in its efforts to buy into National Air Traffic Services (NATS) despite tabling the highest offer for the shareholding.
The stake is being sold by four members of a consortium called The Airline Group, which holds a 42% stake in the part-privatised air traffic control operator.
The grouping consists of seven carriers, four of which - Lufthansa, Thomas Cook, Tui, Virgin Atlantic - have decided to reduce their interests to close to zero.
Three other airlines - British Airways, easyJet and Monarch - intend to hold on to their shares, which are each worth in the region of £50m.
Sky News revealed on Wednesday that DFS had lodged the highest bid for the sellers' stake, but sources said that at least one of the non-selling airlines had on Thursday expressed a formal opposition to a deal with DFS and was instead backing a deal with Universities Superannuation Scheme (USS), the UK's second-biggest private sector pension fund.
The objections to a transaction with the German company prompted speculation that USS could gain preferred bidder status within days, although one source said the situation was "still fluid".
The precise details of the shareholder agreement between the members of The Airline Group are unclear, but insiders say they do have the right to veto a change of membership, which is what the proposed deal would involve.
The USS offer is understood to have been significantly lower than that of DFS, but includes fewer conditions relating to future ownership and governance changes.
The stance of the non-selling airlines risks opening a rift with the other carriers, which are trying to raise as much cash as possible from their NATS holdings.
Some members of The Airline Group have expressed reservations in the past about the sale of a stake to another air traffic control operator because of the potential for them to increase airline charges.
NATS and easyJet declined to comment, while British Airways could not be reached for comment.
A spokesman for the Department for Transport said: "The sale of shares by some of the airlines in the Airline Group is a process being undertaken by the selling airlines.
"We are continuing to monitor the ongoing share sale process and will not comment on any of the parties involved in the process."