Ferrovial scores important victory on future airport sales

The Spanish owner of BAA saw its case against the forced sale of more UK airports strengthened yesterday by a court decision that effectively allows it to keep all its UK airports for the foreseeable future. The UK regulator which recommended BAA’s breakup will appeal the decision to another court but could be forced to again review BAA’s position in the market.

Time is on Ferrovial’s side as the UK’s Competition Appeal Tribunal (CAT) ruled yesterday that subsidiary BAA would not have to go ahead with the sale of two of its UK airports, overturning an earlier recommendation from the Competition Commission (CC) to breakup BAA.

CAT conceded last December that there was potential for bias in the antitrust body’s earlier recommendation to force BAA to sell Gatwick, Stansted and either Glasgow or Edinburgh airports, since the CC had a panel member who was a strategic adviser to one of the consortia that wanted to buy Gatwick. It confirmed its position yesterday by denying an appeal lodged by the CC.
The CC has already said it will appeal CAT’s decision to another tribunal – the Court of Appeal. But should all appeals be exhausted, it will have to go back to the drawing board and form a new team to again evaluate BAA’s position in the UK airport sector and issue new recommendations.

For Ferrovial, this latest victory buys it valuable time and offers the potential to put further airport sales indefinitely on hold. The CC ruled last March, after a two-year investigation, that BAA would have to sell two of its London airports and one of its Scottish airports.

Michael O’Leary, the head of budget airline Ryanair and a supporter of the CC’s decision to breakup BAA, gave an indication yesterday of the impact of CAT’s ruling:

“Today’s decision, which appears to be based on a legal technicality (or irrelevancy), will now delay the much needed introduction of competition and consumer choice at Stansted by at least two years,” he said in a statement.

Ferrovial chief executive Iñigo Meirás said during its results presentation for 2009 that the company was willing to consider a Stansted sale in 2011. But he is likely to be thankful for any delays introduced to the sales process, as they increase Ferrovial’s chances of getting a good price and avoiding the £277 million (€311 million; $423 million) it had to write down for Gatwick.

BAA sold Gatwick to Global Infrastructure Partners late last October for £1.51 billion, a discount from its £1.8 billion regulated asset value and a far cry from the £3 billion analysts said it could have fetched before air travel took a turn for the worse.