AA, the largest airport group on the planet, is contemplating selling one of its triumvirate of London airports. The announcement was made at a press conference involving the Spanish Ferrovial group, which owns BAA. "The possibility of selling one London airport is included in the structure'' of a projected refinancing initiative, said Ferrovial's Finance Director - Nicolas Villen.
BAA was purchased by Ferrovial in 2006. Within the UK, it manages seven airports, including Londons Gatwick, Heathrow and Stansted. At present, BAA is facing investigations relating to its fees, levels of service provided and plans for future investment. Spearheaded by the Civil Aviation Authority and the Competition Competition, the probes could force BAA to deconstruct its London airport network and sell one of the three hubs under its control.
According to London-based analyst Robert Cullemore: "Ferrovial might ultimately favour a breakup if five separately owned London airports mean an end to CAA price regulation". He added that, should London Heathrow be sold, it would gain the ability to increase its own charges as a measure to better manage the overcrowding currently affecting it.
In response to the announcement, Ferrovial shares shed 3.4 per cent, to rest at 57.75 euros. Shares have so far lost a total of 21 per cent in 2007, giving Ferrovial a current market value of 8.2 billion euros.
The Spanish firm is now in the final segment of refinancing up to 9 billion pounds of debt acquired, of which around 50 per cent was added when it acquired BAA. As per Mr Villen: "We don't have an imperative to finance now. We feel quite comfortable with our levels of debt, which we have because we're funding many large, long-term projects.''
London Heathrow is the busiest airport in Europe. Its flight capacity is currently just 1 per cent off being full, with 68 million passengers per annum using facilities created to cope with a maximum of 45 million. Since 2003, landing charges at Heathrow have been gone up by inflation+6.5 per cent, however, they remain 33 per cent lower than those at JFK Airport.
According to the Competition Commission, Heathrow's comparatively low landing charges could be contributing to the current overcrowding.
Source - Airport International's European Reporter
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