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BAA opts to sell Edinburgh airport for £500m and keep Glasgow

BAA is putting Edinburgh Airport up for sale with an estimated price tag of about
£500m.  They chose Edinburgh instead of Glasgow, as it would fetch a higher price,
is performing better and would be easier to sell. Bidders include GIP (owns Gatwick),
Manchester Airports Group, Borealis Infrastructure, and Macquarie. BAA is now
starting sale preparations and expects to formally approach the market in the
New Year in order to agreeing a sale by Summer 2012.


20.10.2011 (Independent)

By Tom Bawden

 BAA is putting Edinburgh Airport up for sale with an estimated price tag of about
£500m after the Competition Commission forced it to choose between its operations
in Glasgow and the Scottish capital.

The operator of six UK airports, including Heathrow and Stansted, decided to
sell Edinburgh because it would fetch a higher price than Glasgow.

John Strickland, an aviation analyst at JLS Consulting, said: “Edinburgh airport
is performing much better than Glasgow, so it will be easier to sell in a difficult
market. Edinburgh is more appealing because it has more high-paying business customers.”

“Edinburgh is the jewel in the crown in Scotland,” added Douglas McNeill, an
analyst at Charles Stanley, who said the airport could potential attract interest
from a range of bidders.

These include Global Infrastructure Partners, a fund set up by General Electric
and Credit Suisse, which bought Gatwick from BAA in 2009 in the first of a series
of disposals ordered by the Competition Commission.

Manchester Airport, which bid unsuccessfully for Gatwick; Borealis Infrastructure,
part of the consortium running the High Speed 1 rail link to the Channel Tunnel;,
and Australia’s Macquarie are among the other potential bidders, Mr McNeill said.

Colin Matthews, BAA’s chief executive, said: “Choosing which airport to sell
has been a difficult decision. Edinburgh Airport has shown itself to be a strong
and resilient asset throughout the economic downturn.

“In an uncertain market, we expect it to be an attractive asset to prospective
buyers. Glasgow Airport has great opportunities for future growth and development.”

In the first nine months of the year, the number of passengers at Edinburgh jumped
by 9.5 per cent to 7.28 million, compared with a 5.7 per cent rise to 5.3 million
at Glasgow, according to BAA.

It said it would formally put Edinburgh Airport up for sale in the new year and
expected to agree a sale by next summer.

The Competition Commission has also ruled that BAA should sell Stansted although
the airport operator is disputing that decision. BAA also challenged the Competition
Commission’s original decision in 2009 that it should sell either Edinburgh or
Glasgow, but the watchdog confirmed that ruling in July.

To complicate matters further, the commission initially said the sale of either
Edinburgh or Glasgow should be preceded by the disposal of Stansted. However,
this month, it changed the divestment schedule, saying BAA should sell Edinburgh
or Glasgow first.

http://www.independent.co.uk/news/business/news/baa-opts-to-sell-edinburgh-airport-for-163500m-and-keep-glasgow-2373085.html

see also

BBC   19.10.2011

BAA to sell Edinburgh Airport over competition rules

Related Stories

Edinburgh Airport is to be sold by operator BAA after it was told by competition
regulators to let go of one of its Scottish hubs.

BAA is now beginning preparations for a sale and expects to formally approach
the market in the New Year with a view to agreeing a sale by Summer 2012.

The organisation’s chief executive Colin Matthews said they would be “very sorry
to see it leave BAA”.

The firm will keep Aberdeen Airport and Glasgow Airport.

BAA, of which Spanish company Ferrovial is a major shareholder, operates six
UK airports including Heathrow and Southampton.

After a long inquiry, which has led to numerous legal challenges, the Competition
Commission found that BAA’s ownership of UK airports was anti-competitive and
ordered the company to sell Gatwick, Stansted and one of either Glasgow or Edinburgh.

Gatwick has already been sold to an American concern and BAA is still disputing
the Stansted decision.

‘Difficult decision’

Mr Matthews said: “Edinburgh is a great airport with a great team and a great
future and we will be very sorry to see it leave BAA.

“We remain committed to Scotland and we will continue our long-term investment
to improve passenger and airline experience at Aberdeen and Glasgow, as well as
at Edinburgh until the sale is complete.

“Choosing which airport to sell has been a difficult decision.

“Edinburgh Airport has shown itself to be a strong and resilient asset throughout
the economic downturn.

“Passenger numbers at Edinburgh have grown by more than 6% over the past year
and in an uncertain market we expect it to be an attractive asset to prospective
buyers.

“Glasgow Airport has great opportunities for future growth and development and
we think BAA is well-placed to build on its recent success. Both airports are
of national importance and have a bright future.”

Jim O’Sullivan, managing director of Edinburgh Airport, said: “Today’s announcement
brings the clarification that many had been calling for and although we will be
sorry to leave BAA, we do so in the knowledge we’re in an extremely strong and
healthy position.

“Not only has Edinburgh Airport benefited from considerable investment in recent
years but we have an excellent team in place which has been the driving force
behind our success to date.

“We will now begin preparing for the sale process, but irrespective of who may
own it, the team at Edinburgh Airport will undoubtedly continue to deliver for
its passengers, the city and Scotland as a whole.”

Amanda McMillan, managing director of Glasgow Airport, said: “Clearly we welcome
today’s announcement as it marks the end of what has been a prolonged period of
uncertainty.

“Now a final decision has been reached we can concentrate our efforts on ensuring
Glasgow Airport, as part of BAA, continues to deliver for its passengers, the
city and Scotland as a whole.”

Tom Buchanan, Edinburgh City Council’s economic development convenor, said: “It’s
vital to the city, to the region and to the country as a whole that Edinburgh
has an excellent international airport, building on its performance of recent
years and developing more new, direct services to key destinations.

“The question of ownership is not one for the council but we clearly have a very
strong interest in the airport’s success.

“So, we look forward to working with any new operator in ensuring that the airport
continues to play its essential role as a transport hub and as a major contributor
to Scotland’s economy.”

Edinburgh Airport is Scotland’s largest airport with about 9.2m passengers predicted
to pass through it this year and with over 100,000 flights.

Edinburgh directly employs 485 staff and supports 7,500 jobs across Scotland.

BAA made a £42m investment in 2010 in Edinburgh Airport’s departure lounge and
security hall.

http://www.bbc.co.uk/news/uk-scotland-edinburgh-east-fife-15367555

 

 

Analysis

 

 

BAA didn’t want to sell airports, but it’s being forced to, and it’s much more
concerned about finding a buyer for Stansted than about the loss of Glasgow or
Edinburgh.

Forced to sell one of the central belt airports, Edinburgh has been performing
much better and can command a better price. Glasgow has long-haul strengths, but
it has found the downturn tougher, it has fewer lucrative business passengers,
and it’s in a less attractive location for ground transport. It would secure less
cash for BAA, and it might have been harder to find a buyer.

Will passengers notice any difference? The two airports will step up their competition
to attract airlines – the very reason they’re being told to split.

They will also want to market themselves in each other’s core market, with Edinburgh
well placed to reach westward and brand itself as “central Scotland’s airport”.

 

see also

 

BAA ordered to sell Glasgow or Edinburgh airport before selling Stansted

BAA has been told by the Competition Commission that it must sell either Edinburgh or Glasgow before it sells Stansted. Earlier this year it had said BAA should sell Stansted first, but BAA appealed which has caused delay. So now the sale of one of the Scottish airports must be brought forward, and will begin soon, as it will take longer for Stansted to be sorted out. BAA says it is now clearer than ever “that Heathrow & Stansted serve different markets.”   7.10.2011  More …..