BAA ordered to sell Stansted and one Scottish airport

• Competition Commission orders sell-off • Either Glasgow or Edinburgh must go • BAA says it may seek judicial review • Falling passenger numbers could weigh on price BAA must sell Stansted airport and either Glasgow or Edinburgh airport, the Competition Commission has ruled, in a move that has brought threats of a judicial review from the Heathrow owner. The commission brushed aside arguments from BAA that the original order for a break-up in 2009 has been rendered irrelevant by a shift in the political landscape. Under this earlier ruling BAA had been told to sell off some of its largest airports because, in the commission’s view, it was holding back the development of new runways in south-east England. However, the coalition government’s embargo on airport expansion has annulled the commission’s position, the airport group claimed. The commission gave that stance short shrift on Tuesday morning as it demanded that BAA sell Stansted first, followed by either Glasgow or Edinburgh. Noting improvements at Gatwick, which BAA sold for £1.5bn to a US investment fund two years ago , one of the commission’s senior officials said passengers and airlines would benefit from further competition in the south-east. “The introduction of new ownership at Gatwick, whilst too recent for us to draw any firm conclusions, has given a foretaste of the benefits competition can bring,” said Peter Freeman. “We think that these benefits will be all the greater once Stansted, Gatwick and Heathrow are all in competition with each other.” BAA accused the commission of ignoring political developments and said it is considering a judicial review, despite having won an earlier appeal at a tribunal only to have the decision overturned in the supreme court. Colin Matthews, BAA chief executive, said: “We are dismayed that the Competition Commission’s final decision still requires BAA to sell Stansted and either Glasgow or Edinburgh airport. The Competition Commission has not recognised that the world and BAA have changed. This decision would damage our company which is investing strongly in UK jobs and growth. We have a responsibility to protect our shareholders’ investment and we will now consider a judicial review of the Competition Commission’s decision.” Spanish conglomerate Ferrovial is the majority shareholder in BAA, having led a consortium that paid more than £10bn for the business, loading the company with a multi-billion pound debt burden that was partly alleviated by the sale of Gatwick. BAA also faces the prospect of putting Stansted and possibly Glasgow on the block at a time when both assets are in a state of decline. Stansted saw passenger numbers fall 7% to 18.6 million last year as Ryanair and easyJet, its biggest customers, grounded planes in the winter or took them elsewhere, while Glasgow suffered the biggest dip of any BAA asset as traffic declined by 9.6% to 6.5 million people. It is understood that BAA’s board has yet to formally consider which Scottish airport to sell, although Glasgow is thought to be the more likely candidate because Edinburgh has the stronger growth prospects and more profitable passengers. Price will also be an issue for BAA, which was at least able to avoid a firesale of Gatwick because it sold the airport voluntarily ahead of a final commission ruling. Even then, BAA took a £277m hit on the sale after admitting that 2009 was “not a good year” in which to be selling Britain’s second largest airport. Stansted and Glasgow’s passenger statistics are expected to weigh on BAA’s attempts to secure a premium for those assets, analysts warned. “Surely they need a judicial review, just to buy time,” said one analyst, speaking on condition of anonymity. “It is a dreadful time to sell those airports, worse than 2009. You keep thinking that the downward momentum in traffic numbers will slow down, but it doesn’t.” BAA Travel & leisure Dan Milmo guardian.co.uk

Posted by on July 19, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.