Government has no idea on airports, says IAG chief Willie Walsh

Willie Walsh's IAG is the largest airline group at Heathrow. Photograph: Micha Theiner/Rex Features
Willie Walsh, the boss of International Airlines Group, has said he will not be engaging in the coalition's long-awaited consultation on the future of Britain's airports because the government "has no idea what it is talking about".

The overdue draft aviation policy is expected to be published this summer along with a call for evidence on hub airport capacity. Walsh and others, notably the airport operator BAA, have long argued that a hub airport – one sufficiently large to allow connecting passengers to fill long-haul routes – is crucial and that Heathrow, Britain's only hub, is no longer big enough to allow flights to new destinations. As the owner of British Airways and Spain's Iberia, IAG is the largest airline group at Heathrow.

Walsh said: "When I hear the government talking about an intelligent use of capacity at Heathrow – they have no idea what they are talking about. This is the government that cancelled the third runway. They don't know what they are talking about. I've no confidence that this government will able to meet the challenge."

Walsh questioned whether the consultation would be "real", saying: "If they close off options before they start, I don't see the merit in engaging with it."

The coalition has ruled out a third Heathrow runway, and last week the transport secretary, Justine Greening, said "mixed mode" – allowing takeoffs and landings on the same runway – would also not be considered. However, Greening said the government would look at other, unspecified ways of maximising Heathrow's capacity.

George Osborne, the chancellor, has said the government will explore all options for maintaining Britain's airport hub capacity with the exception of a third runway at Heathrow.

Walsh said: "We need to be honest and mature – if you're going to have a consultation, to say you're eliminating options before you start doesn't seem mature or really serious."

Greening has promised a fast process and said she will set out a timeline for action as part of the call for evidence on hub airports, which she hoped would be "a more informed debate with a little less heat and more light".

Walsh said: "They've been giving that answer for two years – there isn't any credibility in this government. They should turn round and say: 'You know what, we don't know what we're doing.' Then we'd know where they stand."

Walsh, who is taking a delegation of businessmen to China this weekend to explore export opportunities, said the lack of airport capacity in the UK was harming British business. "China isn't just about Beijing and Shanghai but growth opportunities in cities most people don't know the names of. You can fly to them from Paris and Amsterdam and even Helsinki, and yet we're trying to convince ourselves that this is an opportunity for the UK. It's not, because we can't connect. Longer-term it's going to have real consequences for the UK."

On Friday IAG announced an operating loss of €249m (£200m) for the first quarter of 2012, compared with a €102m loss for the same period last year. Walsh said the "underlying performance was pretty good" but there had been a massive increase in the fuel bill, up 25% to €1.4bn.

He admitted that Iberia's operating performance was poor, but said long-term the Spanish airline would not drag down its merged partner British Airways. "Long-term, the economic situation in Spain will be difficult but will improve, and the restructuring we're doing ourselves in Iberia will benefit the business."

Walsh said arbitration should mean no imminent repeat of strikes by Iberia pilots that hit IAG profits. He anticipated that a restructured bmi, whose purchase by IAG from Lufthansa was cleared last month, would be profitable by 2014. "We've got a big job to do – the scale of losses were huge. But we know what we need to do."

He held out little hope for bmibaby, however, despite ongoing talks and the sale of the other bmi airline, bmi Regional, this week. "We're talking to people and actively seeking a buyer, but I'm not confident of our ability to sell," Walsh said. The airline faces closure by September.