Stansted sale could attract bid from long-time critic Ryanair

By PERRY GOURLEY
Published on 21/08/2012 00:00

STANSTED airport is likely to attract interest from the owner of Manchester airport and budget airline Ryanair after BAA yesterday threw in the towel on its legal challenge over a forced sale.

The £1 billion-plus disposal is also likely to appeal to overseas buyers, with South Korea’s state-owned Incheon airport group – which lost out in a bid to buy Edinburgh airport as part of a JP Morgan-led consortium – seen as one of the key players.

BAA, owned by the Spanish group Ferrovial, yesterday admitted it was giving up its long legal battle with the Competition Commission (CC) which wants to break the company’s dominant position in the UK. The company had recently lost a Court of Appeal ruling over the disposal and said it would now proceed with the sale of the Essex airport.

BAA had argued that Stansted is not a direct competitor of Heathrow or Gatwick as it mainly serves low-cost carriers operating leisure flights.

A statement from the company said: “We still believe that the CC ruling fails to recognise that Stansted and Heathrow serve different markets.”

Manchester Airports Group (MAG) has made no secret of its interest in Stansted and has already lined up funding for an expected swoop. Earlier this month Australia’s Industry Funds Management (IFM) agreed to buy a 35 per cent stake in MAG if the group wins the battle to buy Stansted.

Banking sources said MAG, which also operates Britain’s Bournemouth and East Midlands airports, is likely to face competition from the infrastructure arms of US banks, as well as investors in and owners of airports in Asia.

“The frontrunner here seems to be MAG and its new Australian partner,” said an infrastructure banker who declined to be named.

“Infrastructure funds like JP Morgan Asset Management and Morgan Stanley Infrastructure are very likely to look at it because they have the money and the expertise to run this kind of asset.”

BAA has invited banks including Bank of America Merrill Lynch, Deutsche Bank and Morgan Stanley to pitch ideas on how to handle the sale, the banker said.

Last month Ryanair’s chief financial officer, Howard Millar, said the carrier was interested in taking a 25 per cent stake in Stansted and it is thought the company has already held talks about putting together a consortium to bid for the airport. Ryanair, a long-term critic of the running of Stansted, welcomed BAA’s decision and a spokesman said: “The sale of Stansted into separate ownership will lead to more competition, lower passenger charges, improved passenger services and the roll out of additional and much needed traffic growth at competitive prices in Stansted.”

The CC’s ruling that London’s three main airports need to be owned by separate companies means Global Infrastructure Partners (GIP), which bought Scotland’s Edinburgh airport earlier this year for £807m and also owns Gatwick and London City, is not in a position to bid. Scottish transport tycoon Sir Brian Souter, who had also expressed interest in Edinburgh airport, is not thought to be interested in Stansted.

The BAA decision ends a process which began in March 2007 when the Office of Fair Trading referred airport services to the CC.