BAA to put Stansted up for sale

22.2.2009   (Sunday Times)


BAA is to stage a dramatic about-turn by selling Stansted, the Essex airport
that handles 23m passengers a year and is the centre for no-frills airlines in

The move will finally end BAA’s domination of London airports.  It has owned
and operated the London trio of Heathow, Gatwick and Stansted since it was created
40 years ago as a government agency.

The airports group, majority-owned by Spain’s Ferrovial, has to date fought to
keep hold of Stansted, despite recommendations from competition watchdogs that
it should sell.

Senior BAA executives have pledged to fight the Competition Commission in the
courts rather than give up the Essex hub.  It is understood, however, that the
Spanish infrastructure group is now prepared to drop its objections.

The Competition Commission will make its final decision on airport ownership
early next month, and is expected to order BAA to give up Gatwick – which it is
already selling – Stansted, and one of its two large Scottish airports.

BAA is not expected to oppose the demand.

The company last night declined to comment, saying any such decision was a matter
for its board.

However, industry insiders say they have been expecting a climbdown ever since
the government controversially decided to support the construction of a third
runway at Heathrow.

"There was no point in [BAA] going on fighting the Competition Commission.    It
has won on the bigger point of expanding Heathrow," said one airline executive.

The sale of Stansted may also generate some welcome cash for Ferrovial, which
like many infrastructure companies is struggling with debts taken on during rapid
expansion in recent years.

Analysts have in recent months questioned whether Ferrovial can meet its repayment
schedule for debt taken on during the purchase of BAA, for which it paid £10.1
billion three years ago.

Meanwhile, BAA is in the final throes of the Gatwick auction, having told the
remaining bidders to submit their final offers by March 30.

Three groups are still in the hunt – a team led by Global Infrastructure Partners,
another led by Citigroup’s infrastructure fund, and a third comprising the Canadian
fund Borealis and Manchester airport. They will be vetted by the Competition Commission
in the first week of March.

Bidders will have to satisfy the commission of their financing, operational expertise
and independence from BAA – and that they do not own a competing airport.

BAA executives remain confident they can secure a price in excess of Gatwick’s
notional "par" value £1.7 billion, which is the value regulators put on its assets.