AIG makes big loss on London City Airport sale
01.10.08
AIG, the struggling American insurer, looks to have suffered a heavy loss after it sold its entire stake in London City Airport to its joint venture partner for £250 million — two-thirds of the price it paid, according to press reports.
It had been reported at the weekend that AIG, which is battling to sell assets to help repay an $85 billion loan from the US Federal Reserve, had sold half of its 50 percent stake in the airport to Global Infrastructure Partners (GIP) for £250m, which would have represented a profit. However, it now appears that AIG sold all of its stake for the amount – leaving GIP as the airport’s sole shareholder and AIG with a significant loss.
The deal came less than two years after AIG and GIP, an investment fund owned by Credit Suisse, the Swiss-American banking group, and General Electric, the US conglomerate, bought London City for £750m. Since then the pair have invested substantial sums in the business, helping to send passenger numbers soaring and almost doubling pre-tax profits last year.
Selling the stake, for a reported £250m, implies that AIG will have to book a loss on the sale of as much as £125m. Neither AIG nor GIP would confirm details of the deal.
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