Shares in Spain’s Ferrovial, investor in UK-based BAA, dipped 2.7% yesterday, as BAA released its response the new British Government’s "Coalition Agreement".
BAA revealed London Heathrow Airport will cease work on the planning application for a third runway. The company also plans to stop buying properties in Sipson, after a period of notice. In line with assurances given to local residents in 2009, BAA will continue to consider buying properties which have been issued with a bond under its long-term property market support (PMSB) scheme until 22-Jun-2010. The airport did not disclose how much it has already invested on the project, with the previous government having approved plans to construct a new runway and terminal at Heathrow in Jan-2009.
BAA CEO, Colin Matthews, stated the operator recognises the importance of government policy and with the intentions made “clear”, it is no longer appropriate for it to acquire the properties. However, in recognising that Heathrow plays an important role for the UK and supports thousands of jobs”, BAA continues to believe that new capacity would "strengthen the UK's trading links with the global markets” on which the UK economy and BAA’s competitiveness depend.
Meanwhile, London Stansted Airport also announced plans to withdraw its application to build a second runway at the airport. The airport also plans to withdraw, with immediate effect, the provision for assisted relocation within the home-owner support scheme introduced at Stansted in 2004. However, in line with assurances given to local residents, the airport will proceed with the purchase of eligible properties currently going through the process, where it can be demonstrated that the owner is marketing or has marketed the property, and has not been able to agree a sale. BAA had already invested GBP190 million on the project.
London Stansted Airport Managing Director, David Johnston, stated the operator would continue to “work hard” to bring in new business, provide jobs and travel opportunities. Mr Johnston added the operator continues to “believe that new airport capacity is needed in the Southeast of England, to strengthen the UK's international trading links”.
Selected airports daily share price movements (% change): 24-May-2010