Another London airport up for sale
One of the few remaining privately owned large airports in the UK, London Southend, is for sale. Regional Airports Limited (RAL), which owns London Southend and Biggin Hill airports, has already received expressions of interest from a number of parties. According to RAL, the airport presents a “unique strategic opportunity to develop a major regional airport serving the Thames Gateway, London and the broader Southeast of England region”.
RAL acquired the business of the airport from Southend Borough Council (SBC) in 1994, and following a short period in which it completed a financial turnaround of the business, has traded profitably.
Southend, once the third busiest London airport, had seen its prospects impacted by repeated proposals for a major new London airport in the Thames Estuary area. With the firm commitment in the Government’s 2003 White Paper not to proceed with any new greenfield airport, but to focus on developing existing London airports, Southend can “once again emerge as a significant London gateway”, according to RAL.
The White Paper suggested that Southend airport could provide capacity for 2 million passengers p/a by 2030 – a milestone RAL hopes to achieve 13 years earlier, in 2017.
The airport is located 49 minutes by train from Liverpool Street in the City of London or 42 minutes from Stratford, the site of the 2012 Olympic Games. There are development plans in place worth GBP35 million for the airport's own railway station by 2009, a new passenger terminal by 2012, a hotel and a car park, as well as a number of hangars. Furthermore, there are plans to extend the runway from 1,600 m to 1,800 m by 2011 to serve up to 150-seat capacity aircraft, such as the A319.
London City Airport was sold in Dec-06 for GBP750 million to a consortium comprising American International Group, the US insurance and financial services group, and Global Infrasructure Partners (GIP), a JV between Credit Suisse and General Electric’s GE Infrastructure fund. Irish billionaire, Dermot Desmond, acquired London City for GBP23.5 million in 1995 from construction group, Mowlem. London City is targeting 3 million passengers for 2008, up from 2.8 million in 2007.
An estimated price tag for London Southend has not been disclosed, although if the London City example is anything to go by, bidding could be intense. The sale will act as a barometer of investor sentiment in infrastructure assets, amid the ongoing credit crunch and fears of a global recession, and could provide some direction on airport valuations in the months ahead.