Source: China Daily Author: 02/26/2009
Subject Concerned: Government Opinion Airport
BAA Ltd, the world's biggest airport operator, said it's pressing ahead with plans to sell London's Gatwick airport by Jul. 1, even after the recession and credit crunch prompted some potential bidders to drop out.
The disposal of Gatwick, Britain's second-busiest airport, is "progressing on schedule," BAA said in a statement on Feb. 26. The unit of builder Grupo Ferrovial SA posted a 1.95-billion-pound (US$2.8 billion) loss for 2008 after its tax bill soared.
BAA offered Gatwick for sale in September after the UK Competition Commission indicated the company's seven British airports should be split. Groups led by 3i Infrastructure Plc and a Deutsche Bank AG fund have withdrawn from the auction, people familiar with the situation said this month, while German builder Hochtief AG dropped out in January and other potential bidders say they're struggling to raise funds. BAA said on Feb. 25 that it's seeking final offers by Mar. 31. A sale would also help reduce net debt that totaled 12.1-billion-pound as of December.
"They seem to have some interested parties for Gatwick," said Douglas McNeill, an analyst at Blue Oar Securities in London. "Even if the Competition Commission weren't forcing a sale BAA might have considered it anyway in order to get their debt burden down."
The regulator will publish its final findings next month and the report is likely to require BAA to dispose of "a number of its airports," the company said. A forced sale of London Stansted might prompt an appeal. BAA is also lobbying to be allowed to choose between selling airports in Edinburgh and Glasgow, Scotland.
BAA's full-year loss compared with net income of 86 million pounds in 2007. Tax expenses jumped after the abolition of allowances for industrial buildings resulted in a 1.1-billion-pound charge, the London-based company said on Feb. 25. Revenue advanced 14.5 percent to 2.13 billion pounds.
Tariff Boost
Operating profit slid to 23 million pounds from 476 million pounds, clipped by the revaluation of investment properties, BAA said. Underlying earnings and cash flow should increase this year, buoyed by an increase in the tariffs the company charges for using its airports and a more benign cost environment.
"The business performing is in line with my expectations," said McNeill. It's on a sounder financial footing than previously but it still has more work to do."
Traffic at BAA's airports, which include London Heathrow, Europe's busiest, fell 2.8 percent last year as the recession damped demand for air travel.
"BAA performed strongly in 2008, although its performance was affected by a drop in passengers," chief executive officer Colin Matthews said in the statement. "2009 will be a challenging year."