Bidders line up to pounce on British Airports

[Pieter C. 5]

Bidders Line Up To Pounce On British Airports

 

August 18, 2008

UK airports operator BAA is set to attract interest from a string of companies keen to buy one or more of its airports if, as expected, it is ordered by regulators to divest any.

 

Britain's Competition Commission is expected this week to call for the Spanish-owned company to sell one or more of its seven airports -- with London's Gatwick the most likely to go on the block.

 

Germany's Fraport and construction group Hochtief both declared interest on Monday, while London City Airport co-owner Global Infrastructure Partners, Australia's Macquarie and Manchester Airports Group are also expected to take part in any bidding process.

 

BAA, bought by Spain's Ferrovial for just over GBP10 billion pounds (USD$18.68 billion) in 2006, owns the three main London airports -- Heathrow, Gatwick and Stansted -- as well as Edinburgh and Glasgow in Scotland.

 

The competition regulator laid the ground for a break-up of the monopoly with the publication of a preliminary study in April, which said that under a single owner there was no competition among some airports.

 

Some press reports have put the value of Gatwick at around GBP3 billion (USD$5.6 billion), although Collins Stewart analyst Andrew Fitchie said he found that valuation "quite incredible".

 

"This... is out of line with the fundamental economics facing the aviation industry today and the deteriorating credit and economic environment," he said in a note.

 

Fraport is interested in principle in BAA airports and is reviewing whether taking a stake in one would make sense, a spokesman for the German airport operator said on Monday.

 

German construction group Hochtief also expressed interest. "If an airport in Britain is for sale we would take a look at it," a spokeswoman said, adding London's Gatwick airport would be interesting.

 

An industry source said it would also make sense for Macquarie to participate in any auction, as it already owns airports including Bristol in the UK.

 

"Macquarie is a major investor in the airport sector globally, so logically it would be interested in BAA," the source said.

 

A Macquarie spokeswoman declined to comment.

 

Manchester Airports Group, which owns four airports in the north of England including Manchester, has kept its options open regarding a bid.

 

"The group is interested in acquiring assets that will add value for our shareholders," chief executive Geoff Muirhead told the Manchester Evening News earlier this year. A source familiar with the matter added that nothing had changed since he gave the statement.

 

And Global Infrastructure Partners (GIP), the GE-Credit Suisse investment fund, declared an interest in recent months to trade publication "Infrastructure News".

 

The company is part-owner with insurer American International Group of London City Airport -- a key link to London's financial areas.

 

A GIP spokesman declined to comment further, while BAA also declined comment.

 

(Reuters)

 

[Ken M. 0]

I reckon the Spaniards will dispose of London Gatwick & Glasgow.

 

Glasgow is crying out for a new owner.

 

A lot of business related European traffic has gone to Edinburgh in recent years.

Glasgow needs direct services to major European cities.

Much as I love flying KLM and transfering at Amsterdam Schiphol, I'd prefer to fly direct.

Edited August 19, 2008 by Ken M.

[KK Lee 5]

 

Breaking up monopoly is always good for consumers.

 

 

 

 

[Pieter C. 5]

UK Airport Operator BAA Must Sell 3 Airports

 

August 20, 2008

Spanish builder Ferrovial must sell three of the seven British airports it bought for GBP10 billion pounds (USD$18.5 billion) two years ago under a tougher-than-expected ruling on Wednesday.

 

Two of its three busy London airports, Heathrow, Gatwick and Stansted, plus one in Scotland, will have to go, said the UK Competition Commission, which wants to attract new owners to create more competition and improve the lot of air passengers.

 

Ferrovial has come under fire from British politicians and airline bosses for delays and poor service at Heathrow and Gatwick in the past two years, culminating in the bungled opening of Heathrow's Terminal 5 in March.

 

The ruling will be subject to a consultation process, but is likely to be rubber-stamped by the Commission in a final report due early next year.

 

It comes just two days after Ferrovial finalized refinancing of some GBP13.3 billion (USD$24.8 billion), most of it money used to buy the airports in June 2006.

 

"There are significant competition problems arising from BAA's common ownership of seven UK airports. This is evident from... its lack of responsiveness to the needs of its airline customers and a lack of initiative in planning capacity," inquiry chairman Christopher Clarke said in a statement.

 

The Commission also criticized Britain's planning process, which is crucial to long-running proposals to expand Heathrow and Gatwick, its government policy and regulation under the Civil Aviation Authority (CAA).

 

Airlines including British Airways and easyJet had called for tighter regulation, with analysts suggesting being the setting of targets for delays.

 

BAA responded to the ruling by saying the call for airport sales could delay the building of new runways.

 

"By calling not just for a fundamental restructure of BAA but also for a review of the Government's Air Transport White Paper, the Commission risks delaying that delivery of new runways and making better customer service less, not more, likely," BAA chief executive Colin Matthews said.

 

But Irish low-cost airline Ryanair hailed the break-up, saying it would lead to new capacity and better service for passengers.

 

"We are delighted by the decision, which we have been calling for years," Ryanair director of legal and regulatory affairs Jim Callaghan said.

 

The report was widely expected to recommend a break-up after a preliminary study in April found that under a single owner there was no competition among some of its airports.

 

However, it was anticipated that two airports at most would be put up for sale.

 

BAA, formed in 1965, owns the London trio of airports, three in Scotland, and Southampton.

 

London's five airports include Luton, owned by Spain's Abertis, and London City, bought by American International Group and other investors in 2006.

 

Germany's Fraport and construction group Hochtief both reiterated an interest on Wednesday, and London City Airport co-owner Global Infrastructure Partners, Australia's Macquarie and Manchester Airports Group are also expected to play a part.

 

Macquarie owns a string of airport interests worldwide including Bristol in the UK, although earlier on Wednesday its airports fund said it would reduce its stakes in Brussels and Copenhagen airports to cut debt and added it would not be chasing any upcoming airport privatizations.

 

(Reuters)

 

British Airways Wants Better Airport Regulation

 

August 20, 2008

British Airways said on Wednesday that tougher regulation at Britain's airports was a bigger issue than their ownership following a Competition Commission ruling to break up operator BAA.

 

"We think the ownership structure is secondary -- the focus should be on strengthening the regulatory system," a spokeswoman said.

 

"That is the way to create the capacity which is most needed -- especially at Heathrow," she added. The British carrier supports the introduction of a license system which would help to measure an operator's performance and impose sanctions if targets were are not hit.

 

The Competition Commission said earlier on Wednesday that BAA, owned by Spain's Ferrovial, should sell two of its three London airports and one of either Edinburgh or Glasgow.

 

It also criticized the regulatory regime under the Civil Aviation Authority (CAA), which will also come under review.

 

(Reuters)

 

EasyJet Says New UK Airport Ownership Will Not Help

 

August 20, 2008

Low cost UK carrier easyJet said on Wednesday a change of ownership at Britain's airports would not help passengers or improve efficiency, and instead called for better regulation.

 

"Airports are individual monopolies. Selling a monopoly to a new owner will not help protect the consumer or improve efficiency. Airports need better regulation," chief executive Andy Harrison said.

 

He said he backed the break-up of BAA, which has been instructed to sell three of its seven airports, but added it was less important than an overhaul of the regulatory system.

 

"A break-up of BAA is a step forward, but it is the bronze medal at the consumer protection Olympics. A gold medal would be a better, more effective regulator," he added.

 

The Competition Commission said earlier on Wednesday that BAA, owned by Spain's Ferrovial, should sell two of its three London airports and one of either Edinburgh or Glasgow.

 

It also criticised the regulatory regime under the Civil Aviation Authority (CAA), which will also come under review.

 

(Reuters)

 

 

 

[Pieter C. 5]

UK CC Says BAA Could Sell Airports In 2009

 

August 20, 2008

British airports operator BAA could sell three airports including two in London during 2009, Chairman of the Competition Commission inquiry into the company Christopher Clarke told reporters.

 

"The precise timing will be conditioned by a program consultation," he said, but added that six months after the Commission's final report is due in March 2009 was a reasonable timeframe.

 

"During the privatization process whole industries were sold in a relatively short space of time - and that was far more complex than three airports. It's not complicated, " he added.

 

The Competition Commission said earlier on Wednesday that BAA, owned by Spain's Ferrovial, should sell three airports as its monopoly was affecting airlines and passengers.

 

(Reuters)

 

[Pieter C. 5]

Branson Eyes London Gatwick Airport

 

September 1, 2008

Richard Branson, the billionaire owner of Virgin Atlantic Airways, would be interested in bidding for London's Gatwick Airport if it were put up for sale, but only if other partners could be brought in.

 

"We would be interested in possibly buying Gatwick, but only as part of a consortium," Paul Charles, communications director for Virgin Atlantic said.

 

"We would not do it alone," Charles said, adding that it was still early days and the UK Competition Commission still had to release its final report on Britain's airports industry.

 

Charles added that Virgin Atlantic would bring its strong customer service record to any consortium interested in buying Gatwick, Britain's second-biggest airport.

 

The Virgin Atlantic director was responding to a report in the Daily Telegraph newspaper that said Branson was planning to bid for Gatwick with an offer that could cost more than GBP2 billion pounds (USD$3.6 billion).

 

"We are open to being courted by anyone who is interested in bidding," the newspaper quoted Branson, president of Britain's number 2 long-haul airline, as saying.

 

Branson has already held talks with potential bidders, he said, thought to include funds backed by the Dubai royal family, the Telegraph said.

 

Gatwick is owned by Ferrovial's airport unit BAA.

 

The UK Competition Commission ruled earlier this month that Ferrovial must sell three of seven British airports, including two of three London airports -- Gatwick, Heathrow and Stansted.

 

The plan by Branson, which adds his name to a string of prospective buyers, is at an early stage as Gatwick is not yet formally up for sale, and a final report from the Competition Commission is not expected until next year.

 

(Reuters)