Michael O’Leary’s shadow hangs over sale of Stansted

19.3.2009   (Times)

by David Robertson

Potential bidders for Stansted are emerging before a decision by the Competition
Commission on Thursday that will lead to the break-up of BAA’s airport monopoly.

However, a hurdle has appeared at Stansted in the form of Ryanair, Europe’s largest
budget airline.

The commission is expected to say that BAA’s control of Heathrow, Gatwick, Stansted,
Glasgow, Edinburgh and Aberdeen has been bad for passengers and airlines. It will
demand that Gatwick, Stansted and either Glasgow or Edinburgh are sold to restore

Gatwick has already been put up for sale by BAA and possible bidders are eyeing
Stansted and the Scottish airports — but, in the case of Stansted, potential bidders have expressed concern about buying an airport where the leading
customer is Michael O’Leary, Ryanair’s notoriously antagonistic chief executive.


"We would be wary of dealing with O’Leary," one said. "I’m sure that will be
reflected in the price eventually."

Ryanair is Stansted’s largest customer, accounting for about 60 per cent of flights.
Mr O’Leary is known among airport operators for demanding concessions and punishing
those that put up charges by grounding aircraft.

Among the possible bidders for BAA’s airports are Balfour Beatty; Manchester
Airports Group; infrastructure funds, including that run by 3i, the private equity
group; Lysander Group, a consortium that includes Citigroup; and Hochtief, the
German infrastructure group. Mr O’Leary has jokingly suggested that Ryanair could
buy Stansted.

The Competition Commission had indicated that it would expect BAA to dispose
of its airports this year, but the operator may be given an extension in the difficult
economic environment.

A lack of financing has hampered some bidders in their attempts to buy Gatwick
and the commission may allow BAA to hold on to Stansted for two or three years.

However, the sale of the Scottish airport could be agreed much more quickly as
it is likely to fetch about £350 million compared with up to £1 billion for Stansted.  
BAA is widely expected to pick Glasgow to sell.    "There will be many more players looking at Glasgow [rather than Edinburgh]
because it is more affordable," a likely bidder said.