Business | Aviation
Regulator asks BAA to sell three UK airports
Britain's antitrust regulator told Ferrovial to sell London's Stansted and Scotland's Edinburgh airports as well as London Gatwick to break its stranglehold on key British airports but the company said it doubted the move would aid competition.
- Reuters
- Published: 23:27 December 17, 2008
London/Madrid: Britain's antitrust regulator told Ferrovial to sell London's Stansted and Scotland's Edinburgh airports as well as London Gatwick to break its stranglehold on key British airports but the company said it doubted the move would aid competition.
The Competition Commission said yesterday it would stick to its earlier ruling that debt-laden Ferrovial should sell three of its seven British airports to end BAA's long-standing monopoly, despite Ferrovial's pre-emptive move to sell Gatwick, which it put up for auction in September.
BAA, bought by Ferrovial for over £10 billion (Dh57 billion) in 2006, said it disagreed with the ruling and that no evidence had been given to show that selling Stansted or Edinburgh would improve competition.
"We remain concerned that its proposed remedies may actually delay the introduction of new runway capacity," BAA Chief Executive Colin Matthews said in a statement, referring to government proposals to build a new runway at Stansted.
The airports operator - which would be entitled to appeal the ruling following the publication of the Commission's final report, which is due by March 29 - said it was continuing to make its case to the regulator.
Legal action
When asked whether it would consider legal action over and above the appeal, a spokesman said it "was not ruling out anything".
Debt-laden Ferrovial said in October it had hired HSBC and Royal Bank of Scotland to advise on the sale of Gatwick, Britain's second biggest airport serving around 35 million passengers a year.
The move has drawn interest from a string of parties, suggesting there would also be moves for Stansted and Edinburgh if, as expected, the sale is formally ordered in the Commission's final report next year. Portuguese broker BPI values Gatwick at 1.939 billion euros (Dh9.98 billion), Stansted at 1.365 billion euros and Scottish airports at 1.386 billion each, implying total proceeds of 3.9 billion euros.
Ferrovial's debt-pile stood at 28.6 billion euros at end September.
"It's favourable for them [Ferrovial] in terms of reducing debt levels. There's demand in the market for airport assets, there are several interested parties, I think they could make sales at good prices without having to resort to firesales," said Jose Lizan, fund manager at Nordkapp Inversiones and a holder of Ferrovial shares. But BPI was less confident Ferrovial would benefit from the disposals.
"The disposals would have to be done in a harsh market context which could depress offers from potential interested parties which may be facing difficulties in getting financing," it said.
Prospective bidders
The Commission said in its statement that Stansted and Gatwick should be sold to different owners, while it remained open to views on whether Glasgow should be sold rather than Edinburgh in Scotland.
An independent trustee will oversee the process.
Germany's Fraport and Hochtief, Britain's Manchester Airport Group and the Virgin Atlantic airline, as well as infrastructure funds, have all said they would consider a bid for Gatwick.
Recent newspaper reports have said several consortia are forming to make bids of up to £2 billion, with first round offers due in the new year.
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