Gatwick worth ‘just £1.3bn’
23.03.09
A report commissioned by three of Gatwick Airport’s biggest airlines suggests that the hub could be worth as little as £1.33bn – far below the £2bn-plus BAA initially wanted. The study, by economic consultancy Frontier Economics, was carried out on behalf of easyJet, Virgin Atlantic and tour operator TUI Travel. It concludes that Gatwick is worth between £1.33bn and £1.73bn. Gatwick has a regulatory asset base of £1.6bn.
The report was presented in December, and since then, Gatwick’s passenger traffic has continued to fall, down 14.4 percent year-on-year last month, while the credit crunch is making it tough for bidders to raise finance. BAA has already been forced to give the three remaining Gatwick bidders another month to arrange finance for their bids. In the report Frontier notes that 'the development of competition' in the London airports market 'would make the low valuation scenario... the more likely outcome'.
The airline groups commissioned the report to strengthen their hand with any new owner. Toby Nicol, easyJet spokesman, told the newspaper that there were two main reasons: 'First, we are open to a long-term deal with any new owner on landing charges. Second, we are determined that we are not going to get into a Ferrovial-type situation, where a bidder overpays for Gatwick and then tries to get it back by raising charges or cutting investment.'
Although Gatwick’s maximum charges are set by the CAA, Mr Nicol said a new owner could offer a discount to some airlines in return for guarantees over the number of flights they would operate from the airport. This would help bidders evaluate their bids.
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