BAA announces sale of Gatwick Airport to Global Infrastructure Partners
UK's BAA agreed (21-Oct-2009) to sell its 100% interest in London Gatwick Airport to an entity controlled by Global Infrastructure Partners (GIP) for GBP1.51 billion. GBP55 million of the sale price is conditional on future traffic performance and the buyer's future capital structure. Proceeds will be used to primarily repay part of BAA's existing debt. The sale is subject to EU merger regulation clearance and other regulatory requirements. Completion of the sale is scheduled for Dec-2009. [more]
- GIP is also reportedly interested in purchasing one of BAA’s Scottish airports the airport management company may be forced to sell off (Dow Jones, 21-Oct-2009). The company stated it has no plans to bid for London Stansted Airport, as it would go against the UK Competition Commission's terms for the sale, which state the sale must not create new competition concerns. GIP stated it plans to upgrade and modernise Gatwick into a “customer-driven airport” (AFP/telegraph.co.uk, 21-Oct-2009);
- Ferrovial stated it expects to book a GBP129 million loss from the sale;
- The Competition Commission stated it was not against GIP’s ownership of both Gatwick and London City airports;
- The EU welcomed the sale (BBC News, 21-Oct-2009);
- Ryanair welcomed (21-Oct-2009) the sale as the "first step in the break up of the BAA airport monopoly, and restoring competition and customer service to the airport sector in London". Ryanair added it presented its case to the Competition Appeal Tribunal calling for the further break up of the BAA monopoly and the early sale of London Stansted Airport and one of the BAA’s Scottish airports, as recommended by the Competition Commission; [more - Ryanair]
- Ryanair also called (21-Oct-2009) for the break up of the Irish Government's Dublin Airport Authority (DAA) monopoly, following the breaking up of the BAA monopoly. The LCC urged the government to sell Cork and Shannon and construct a competing LCCT at Dublin Airport. According to the carrier, the DAA’s high costs and its "policy of ignoring its customers’ wishes" will result in 3 million passengers being lost at Dublin and 1 million passengers being lost between Cork and Shannon airports. [more]
- easyJet welcomed the sale, but stated it remains cautious of the current "ineffective regulatory system for airports" (The Financial Times/Travel Mole, 21-Oct-2009);
- Flybe and Virgin Atlantic also welcomed the sale (Abtn.co.uk, 21-Oct-2009).
BAA: "BAA is changing and today's announcement marks a new beginning for both Gatwick and BAA...BAA will focus on improving Heathrow and our other airports," Colin Matthews, CEO. Source: BAA, 21-Oct-2009.
GIP: "We will upgrade and modernise Gatwick Airport to transform the experience for both business and leisure passengers. We plan to work closely with the airlines to improve performance, as we have done successfully at London City Airport,” Michael McGhee, Partner. Source: AFP, 21-Oct-2009.
easyJet: “Regardless of who owns Gatwick, it is still a monopoly. Therefore it is vital that Gatwick is properly regulated to protect airline passengers from the new owners exploiting their market power. It is vital that the Government’s review of airport regulation produces a tougher and more effective system than the current discredited one which has contributed so much to the poor sate of London’s airports,” Andy Harrison, CEO. Source: Travel Mole, 21-Oct-2009.
Flybe: "Over the years, the airport's mission has changed and this sale represents a real opportunity for the new owners to strengthen Gatwick's position as the champion of short-haul and European flying. GIP would be making a fatal mistake if they try and chase trophy airlines promising glamorous long-haul destinations. That's not the future - Gatwick's growth lies with efficient, environmentally sensitive, well-managed and stable airlines like Flybe. Everyone knows that BAA's charges were some of the most expensive in the industry and Flybe looks forward to Gatwick shedding that reputation and engaging early with its major customers to create a sustainable, economically realistic future," Mike Rutter, CEO. Source: Abtn.co.uk, 21-Oct-2009.
Ryanair: “It is vital for the future of Britain’s air transport and tourism industries that the high cost, inefficient BAA monopoly be broken up as recommended by the Competition Commission report. The Competition Commission’s extensive investigation has revealed that the airport monopoly has been bad for competition and bad for consumers...The future of British air transport and tourism depends on the growth of low fare air travel to/from the London airports. Regional airports all over the UK are now lowering costs to attract more low fare routes and tourists. The BAA monopoly couldn’t care less, because they are rewarded by the CAA regardless of whether traffic rises or falls," Michael O'Leary, CEO. Source: Ryanair, 21-Oct-2009.
Virgin Atlantic: "For years, the airport has suffered from a lack of investment and the new owner now needs to work closely with the airline users to turn Gatwick into a world-class facility. We don't want to see the creation of another BAA and hope GIP listen carefully to the views of airlines about future development," Paul Charles, Director of Communications. Source: Dow Jones, 21-Oct-2009.