The British Airports Authority (BAA), a British airport operator owned by an affiliate of Spanish construction and infrastructure firm Grupo Ferrovial, has announced plans to sell Gatwick Airport – the UK’s second largest airport and the sixth largest in Europe.
Colin Matthews, BAA’s chief executive, said in a statement that “the decision to sell was not taken lightly”, but that it constituted a “realistic” response to the Competition Commission’s provisional findings, with which the BAA disagreed.
Gatwick Airport: for sale
The announcement came less than a month after the UK’s Competition Commission published preliminary plans to order the company to sell two of its three London airports, as well as either Edinburgh or Glasgow airport. The Competition Commission said it was concerned about BAA’s dominance in the market. It also came on the last day that Ferrovial could respond to the commission’s preliminary findings.
Regulators have previously valued the airport at £1.8bn ($3.2 billion, €1.3 billion), but analysts believe that a sale of the airport could fetch as much as £3 billion.
The airport handles more than 35 million passengers per year and 134,000 tonnes of air cargo, according to figures released by Ferrovial.
Several parties are said to be interested in bidding for the airport, including Virgin Atlantic Airways, the Manchester Airports Group, Frankfurt airport operator Fraport and German infrastructure builder Hotchief, according to press reports.
Significantly, Macquarie Airports – an Australian Stock Exchange-listed fund that ranks among the world’s largest private owners of airports – will likely be absent from the bidding given its recent announcement that it will concentrate on deleveraging and boosting revenue from its existing assets instead of bidding on new airports.
However, even if BAA manages to secure a bid in the higher range of analyst expectations, much of the proceeds will likely go towards paying down its existing debt, which it recently refinanced on £13.7 billion.
Earlier this month Ferrovial announced that it had reached an agreement to sell a 100 percent interest in George Best Belfast City Airport to ABN Amro Global Infrastructure Fund for £132.5 million. Belfast City Airport was owned directly by Ferrovial, not BAA.
Ferrovial said the Belfast deal was part of its strategy to focus its UK airport business on the British Airports Authority (BAA), which it acquired in 2006 for £10.23 billion as part of a consortium that included Caisse de Dépôt et placement du Québec and Baker Street Investment. BAA owns seven airports in the UK and has a 65 percent stake in Naples Airport in Italy.