GIP to put London City airport up for sale this year – might raise £2 billion?

London City airport is to be put up for sale by GIP by the end of the year, who want to capitalise on the rising global demand for air travel.  GIP owns 75%, with Oaktree Capital owning the remainder, but both have agreed to the sale. GIP also has the main stake in Gatwick airport, and Edinburgh but say they are not selling these now.  It is thought the airport might fetch as much as £2bn, which the FT says would be a multiple of over 60 times the company’s EBITDA in 2014. GIP bought the airport for about £750m in 2006 from Dermot Desmond; he had paid £23.5m for it in 1995 from Mowlem. The airport is trying to get planning consent for work to increase the annual number of passengers to 6 million per year by 2023, (4.1 million in 2014) but this has been blocked by Boris, due to noise. London City is appealing against this and may hear the outcome next year. City airport has already been granted permission to increase ATMs from 70,000 to 120,000 per year. It is widely believed that GIP would sell Gatwick soon, after the government makes a decision on if/where there might be a new runway. Last month, GIP said it would be prepared to give a legally binding promise that it will not sell out for a quick profit if the government decides to opt for a runway at Gatwick. 



London City Airport could fetch £2bn after being ‘put up for sale’

Global Infrastructure Partners wants to sell the airport in the next few months, according to reports

5.8.2015 (Telegraph)

By Andy Trotman

London City Airport could fetch £2bn after being put up for sale by US investment firm Global Infrastructure Partners (GIP), according to reports.

The owners of the international airport, located in the Royal Docks in Newham, are currently hiring advisers with a view to selling the site within the next few months.

“The market demand for quality airports is very high,” Michael McGhee, director for transport at GIP, told the Financial Times.

GIP owns the majority of London City Airport, holding a 75pc stake, but Oaktree Capital, which owns the other 25pc, has agreed to the sale, the FT claimed.

GIP also owns 42pc of Gatwick Airport and Edinburgh Airport but is not believed to looking to sell those assets.

The firm did not return calls for comment.

GIP bought London City Airport in 2006 for around £750m from Irish businessman Dermot Desmond.

The airport, which was developed by engineering company Mowlem in 1986, boasts a single 1,500 metre runway and due to its proximity to the City, mainly serves business travellers. It handles planes that fly to European destinations such as Amsterdam, Dublin, Madrid and Florence.

It welcomed a record 3.6m passengers last year, up 8pc on 2013.

However, expansion could be difficult. London Mayor Boris Johnson cited noise concerns when he blocked planning permission to increase the size of the site to accomodate 6m passengers. The airport is awaiting the result of an appeal against that decision.
It is the 15th busiest airport in the UK.




London’s City airport up for sale


A £2bn price tag would represent a multiple of just over 60 times the company’s earnings before interest, tax, depreciation and amortisation in 2014 — although people familiar with the business noted that the airport’s adjusted earnings that year were significantly higher.

GIP bought the airport for an estimated £750m in 2006 from Dermot Desmond, the Irish financier, who paid just £23.5m for London City in 1995 from Mowlem, the UK construction group.

However, the airport’s value could be limited by its battle to get planning permission for a £200m development that would increase the number of passengers the airport handles to 6m by 2023. It won planning permission from Newham council in February, which was then blocked by Boris Johnson, the mayor of London, the following month over noise concerns. London City is appealing against the mayor’s decision and expects to hear the outcome next year.

Permission would enable it to extend the terminal as well as construct a new taxiway, aircraft stands and arrivals building. It would also help open up the airport to new destinations, such as the Gulf, the Middle East, Russia, north Africa and the US east coast. The airport has already been granted permission to increase the number of flight movements from 70,000 to 120,000 a year.


Last month, GIP said it would be prepared to give a legally binding promise that it will not sell out for a quick profit if the government decides to opt for expansion at Gatwick over Heathrow, which was recommended by the Airport Commission in July.

Full FT article at



London City Airport challenges Boris’ decision to block its expansion plans, over ‘noise ghetto’ fears

Boris Johnson blocked London City Airport’s expansion plans in late March, as he said it would create a “noise ghetto” for people living under the flight path. Now, as expected, London City Airport has appealed to the Secretary of State for Communities and Local Government, Greg Clark, against the decision. On March 26th Boris ordered Newham council to reject the plans on the grounds of noise disturbance and because the airport was intended for business rather than leisure. Under the plans, take-offs and landings were expected to increase from 70,000 a year to 111,000,with passenger numbers doubling to 6 million by 2023. It would also be able to accommodate larger planes, (and be more profitable). This coupled with the airport’s plans to use new PBN technology to create a much narrower and concentrated flight corridor over Wanstead, Leytonstone and Leyton had prompted fears that noise could become an issue. The airport says it is appealing because of the jobs it creates, and its economic impact. The decision by Greg Clark could take 5 months.

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Boris turns down London City Airport expansion plans on noise grounds

Boris Johnstone, the Mayor of London, has refused London City Airport’s plan to expand on noise grounds. In a letter he has instructed Newham Council, who had approved the application, to refuse it. The Mayor says the application does not “adequately mitigate and manage its adverse noise impacts.” Newham’s decision was always dependent on the Mayor’s approval. London City Airport wanted permission to build new taxiways to permit larger planes to use the airport. It also wanted more car parking spaces. The decision will be a bitter blow to the airport as it will now no longer be able to bring in the larger planes it wanted to serve new destinations. John Stewart, chair of HACAN East, which campaigned against the expansion plans, said “The airport is paying the price for being so cavalier about noise. Quite simply, Boris did not believe its claims that it was dealing adequately with noise. We salute his decision”. The decision appears to be final, and it is unclear whether London City Airport can appeal to the Secretary of State. They may do so.

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London City Airport expansion plan gets go-ahead but campaigners say it will create ‘noise ghettos and misery’

Newham Council has granted planning approval London City Airport’s plans for an extended terminal, a new taxi-way and additional parking stands for larger aircraft. A new six-storey four-star hotel with up to 260 bedrooms will also be built on site. The expansion will increase the number of take-offs and landings at the airport from 70,000 a year to 111,000 and will almost double the number of passengers to 6 million a year by 2023. The number of aircraft stands will increase from 18 to 25, and the newer, larger planes they will accommodate will expand the airport’s reach from destinations in western Europe to Russia and North Africa. It has been described as a boost for London’s aviation capacity, while the arguments for and against a new runway at Heathrow or Gatwick (or neither) continue. There are claims for a large number of jobs, and Newham believes many will be for their residents – and there are claims of huge economic benefit for the local and UK economy. The expansion involves the tripling of the size of the terminal to 51,800 ft square and will see the number of flights increase from 38 to 45 during peak morning and evening rush hour times. Building work, subject to final planning approval being given by Boris, is expected to start by the end of 2015, with the first new aircraft seen on the runway in 2016.

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