Top Gatwick bosses stand to make personal fortunes if airport price raised by 2nd runway
The Sunday Times has found that several of Gatwick’s senior bosses are signed up to a bonus scheme that should pay out handsomely if the airport is sold. In small print in Gatwick’s 2011 accounts the bonuses of “certain members” of its board are directly linked to the amount GIP gets from sale of the airport. It has long been suspected that Stewart Wingate, Nick Dunn (and others?) would stand to gain significantly, themselves, if they could raise the value of the airport by getting a 2nd runway. Now the disclosure has proved it. The cap on how much they could make is not revealed. Gatwick lent the executives £2.8m to buy into the share scheme, with the interest-free loans repayable once they sell their shares. GIP owns 42% of the airport, with much of the rest held by investors from Abu Dhabi, California, Korea and Australia. Gatwick have been doing all they can to block a Heathrow runway, to get their own. They are also doing all they can to increase the maximum number of flights per hour through flight path changes – again to raise the airport’s price. GIP bought Gatwick for £1.5 billion in 2009, and has just sold London City airport for almost x3 what they paid for it – and almost x32 its annual underlying profits.
Comment from a Kent resident – sufferer from increased, unacceptable Gatwick noise
“GIP is thought to have done very well indeed from its sale of London City airport, with a record 32 x multiple of earnings for an airport. GIP is licking its lips at the prospect of flogging Gatwick. Many have long believed that GIP intends to sell Gatwick well before any work to build a 2nd runway started.
“The reality appears to be that with a 2nd Gatwick runway, GIP could turn a profit of billions. It only paid £1.5 billion for the airport in 2009. But if they don’t get a second runway but flog the airport with capacity for 55/60 movements per hour (as ‘recommended’ by the Bo Redeborn and Graham Lake, “Arrivals Review”) it could still make a profit of hundreds of millions. Either way Stewart Wingate, Nick Dunn and others, make millions and innumerable areas within 30 or more miles from the airport are permanently destroyed, by the plane noise nuisance. Longer term – it’s game over for many communities.
“How about calling for GIP to commit to owning Gatwick for x years if it were to be granted a 2nd runway? That would change things because Gatwick’s plan has more holes than an Alabama road sign and there is no way it will deliver on infrastructure – or, ask for a ‘windfall tax’ to be imposed on foreign hedge funds speculating on vital UK infrastructure?
“People need to rubbish Gatwick’s sham Arrivals Review, which just crystallises Gatwick’s world record throughput. Gatwick needs to be slammed for its shameless land grab. Everything else is shuffling deck chairs on the Titanic.”
Gatwick links bosses’ bonuses to airport sale
Airport lends senior executives £2.8m to buy shares that could bring bonanza with sell-off
GATWICK’S bosses have signed up to a bonus scheme that should pay out handsomely when the West Sussex airport is sold.
In the small print of Gatwick’s annual accounts, the bonuses of “certain members” of its board are directly linked to the amount received from a sale
The government is currently wrestling with whether to back expansion at Gatwick or Heathrow. The Sussex airport’s value is likely to soar if it wins approval for a second runway.
The disclosure will fuel controversy because it indicates, for the first time, that management are likely to gain personally from expansion.
Gatwick was bought from BAA in 2009 for £1.5bn by the private equity giant Global Infrastructure Partners (GIP) and a consortium of investors.
GIP last week sold London City airport in Docklands for £2.3bn — about 32 times its annual underlying profits — setting a record for an airport. It was bought in a fiercely contested auction by a consortium of three Canadian investors and Kuwait’s sovereign wealth fund. GIP bought the airport in 2006 for about £750m.
The share scheme for Gatwick executives was set up in 2011 and rewards them on the basis of the “internal rate of return achieved by the company’s controlling shareholder from acquisition to sale of their investment in the company”. As well as performance and profits, that rate of return hinges on the “level of any future sale”. It is capped at an undisclosed level.
Gatwick lent the executives £2.8m to buy into the scheme, with the interest-free loans repayable once they sell their shares. The company declined to say which of its executives are in the scheme, but they are likely to include chief executive Stewart Wingate and finance director Nick Dunn, appointed in 2009 and 2010, respectively.
GIP last year insisted it had no plans to sell up immediately if it won planning permission for the runway. It owns 42% of the airport, with much of the rest held by investors from Abu Dhabi, California, Korea and Australia.
Gatwick has grown strongly since its 2009 takeover, handling 40.3m passengers last year compared with 32m in 2009. It has continued an advertising offensive to promote a second runway even though Sir Howard Davies’s Airports Commission last summer called Heathrow the “clear and unanimous” choice for another runway in southeast England. The government has deferred a decision until at least the summer.
Former British Airways pilot Jock Lowe, whose plan to extend a Heathrow runway is also being weighed up by the government, said: “The real motive of the owners and management at Gatwick is to stop Heathrow expanding — and then, having got permission to expand themselves, sell Gatwick to the highest bidder.”
Heathrow said its executives do not have an incentive scheme tied to the sale of the airport or runway expansion. Gatwick declined to comment.
Anger at revelation that Gatwick bosses to personally profit (millions of £s) if 2nd runway allowed
The Gatwick Area Conservation Campaign (GACC) has expressed anger at the revelation in the Sunday Times that Gatwick bosses are set to benefit personally by several million pounds if permission is given for a 2nd runway. GACC says a 2nd runway would bring misery to tens of thousands of people. There would be three times as many people affected by serious amounts of aircraft noise, and new flight paths over peaceful areas. About 50,000 people would suffer from worse air quality. A new runway would mean traffic jams on motorways and local roads, overcrowding on the trains and an influx of new workers with a need to build 40,000 new houses on green fields. But with all these negative impacts on ordinary people, Gatwick bosses would walk away with huge bonuses. GACC chairman, Brendon Sewill, commented: “Until now Gatwick Airport Ltd have tried to persuade the public that a 2nd runway would be in the national interest. Now the cat is out of the bag! There is no real need for a new runway at Gatwick.” GACC will be investigating how far these new bonus payments will be subject to the normal full 45% rate of income tax. Despite making large profits, Gatwick Airport has paid no corporation tax since being bought by GIP due to tax fiddles similar to those operated by Starbucks or Google.