BAA agrees Gatwick sale
21.10.09
BAA has agreed to sell Gatwick Airport to Global Infrastructure Partners (GIP), an investment fund joint venture between Credit Suisse and GE, for a fee of £1.51bn. Most of the purchase price will be raised from major banks including HSBC, RBS, Credit Suisse and JP Morgan. The sale proceeds will be used by BAA to repay part of its existing debt.
Colin Matthews, BAA chief executive, said: ‘BAA is changing and today's announcement marks a new beginning for both Gatwick and BAA. We wish Gatwick well for the future and are confident that the airport will flourish under new ownership.’ He added that BAA would now focus on improving Heathrow and its other airports.
BAA was bought by Spain's Ferrovial for £10.2bn plus debt in 2006. The sale of Gatwick, which is subject to approval by the European Union, is due to be completed in December. Investment fund GIP already owns London City Airport.
The sale is expected to prompt a series of developments at the airport. It has been seen as the poor relation to Heathrow, but GIP is understood to want to attract holidaymakers rather than businessmen as part of its strategy for the airport, the Times reports. They hope Gatwick can gain business from international airlines offering package holidays and destinations in far-flung locations while keeping low-cost airlines such as easyJet that fly to European destinations.
GIP is not expected to try to challenge Heathrow’s dominance as the UK’s principal gateway. However, analysts told the Times that the investment fund may seek to expand the number of flights able to use Gatwick by pushing for a second runway. Gatwick is already the busiest single-runway airport in the world.
Although an injunction prevents Gatwick from adding a second runway until 2019 a new owner might seek to accelerate a planning application to take advantage of growth opportunities the moment that ban ends. A new Government and an act of Parliament could overrule the injunction, although this looks unlikely. GIP will have to give guarantees to the Competition Commission that it will invest in Gatwick before regulatory approval is given for the sale.
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