International Consolidated Airlines Group (LON:IAG) shares shot higher after the British Airways owner confirmed reports that it would buy the London Gatwick runway slots of collapsed airline Monarch.
“IAG can confirm that it is in the process of completing the acquisition of Monarch’s slot portfolio at Gatwick,” the company said in a statement.
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“These slots will be used by the group’s airlines, primarily British Airways, enabling them to grow their presence at the airport and launch new destinations and add extra frequencies.”
Shares rose 1.24% to 611p in morning trading.
IAG, which also owns Vueling and Iberia, did not disclose how much it has paid for the slots but they are believed to be worth about £50mln.
At the start of the summer schedules in late March 2018, IAG will have just over one fifth of the slots at Gatwick –Britain’s second busiest airport after Heathrow.
"Based on press reports and schedules database information, we believe the deal covers around 20 daily slot pairs," said Liberum analyst Gerald Khoo.
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"IAG has indicated that British Airways is to operate the majority slots. However, there is a clear opportunity to swap slots between IAG airlines in the long term."
Khoo noted that IAG has had to make numerous slots available to rivals to satisfy competition authority requirements for the acquisition of Aer Lingus in 2015.
Monarch collapsed in October, leading to 1,858 workers being made redundant and the flights and holidays of about 860,000 customers being cancelled.
The airline’s administrators KPMG won an appeal last Wednesday to have the right to sell its slots at Gatwick and Luton airports. The court ruling was criticised by industry bodies such as the International Air Transport Association (IATA).