Britain's biggest airport operator BAA sold Gatwick Airport to Global Infrastructure Partners (GIP), owners of London City Airport, for £1.5 billion to repay part of its' existing debt.
GIP is paying £1.455m in cash for Gatwick, plus further payment of up to £55m. BAA hoped for a higher price of £1.8 billion, but the recession and the downturn in the airline traffic drove the price down.
The deal should be completed y December if details, including EU merger regulation clearance, are finalized. Remember, BAA has been ordered by the Competition Commission to sell Gatwick, Stansted and either Glasgow or Edinburgh airports by 2011.
Gatwick is the busiest single-runway airport in the world. It handles over 32.2 million passengers in the year to September, Market Watch informs. During the first half of the year, Gatwick earned £68.7 million before interest, tax, depreciation and amortization, on revenue of £217 million.
BAA will use the money from the sale to reduce its debt of £9.7 billion, BBC news reports. However, BAA's most important investee is London's Heathrow. "Terminal 2 is being rebuilt and ... this debt essentially come from the building of Terminal 5" is said in the source.
BAA will use the money from the sale to reduce its debt of £9.7 billion, BBC news reports. However, BAA's most important investee is London's Heathrow. "Terminal 2 is being rebuilt and ... this debt essentially come from the building of Terminal 5" is said in the source.
Already the owners of London City Airport, GIP, an infrastructure fund backed by Credit Suisse and General Electric, saw off a rival bidding group which included Manchester Aiports Group and Borealis, a Canadian fund. The observers believed the deal could lead to better service at the airport, because as it turned out recently the competition between airlines is enormous, but very little between airports.
According to GIP, they will modernize and upgrade the airport pointing out their success in operating London City Airport. Moreover, the group aims to work closely with the airlines themselves to provide best performance. This statement was welcomed by the airlines, but it also heightened the expectations of high-standard operating at Gatwick.
In the meantime, Times Online focuses the reader's attention on the fact the world's busiest single-runway airport is a record that its new owners would love to lose. The acquiring group cannot imagine expansion without a second runway, which, in my opinion, will damage the airport's reputation even more.
However, I believe that the authorities won't let to build a new runway before the new owners fulfill their promises and sort out all the mess in the airport. At the moment Gatwick cannot offer as many connecting flights as Heathrow, which makes the last more preferable y the passengers. Moreover, it should get back the looking and feeling of a passenger-friendly airport, because many people complain about the staff coldness and the awful parking. So there is a lot to improve and sort out besides legal issues, that's why I wish the future owners patience and good luck.
P.S. A little note - when I started reading the articles, it took me some time to figure our whether the airport has been sold already or was just in the process of negotiations. Thanks to Daily Telegraph i managed to sort it out. All other articles gave too many excessive details and created a mess. However, to understand the legal issues I highly recommend the Business week story that is more into the Competition Commission investigation and the reasons for BAA to sell three of its airports.
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