London airport sale factored into BAA refinancing plan
21 September 2007
The Grupo Ferrovial SA-owned BAA Ltd, the world's biggest airport operator, has factored the sale of one of its three London airports into its refinancing plans, in case regulators force the company to reduce its virtual monopoly of airports serving the UK's capital city.
BAA was acquired by construction company Ferrovial last year, for $20 billion. It controls seven UK airports, including London's Stansted, Gatwick and Heathrow, Europe's busiest hubs.
Ferrovial, Spain's second-biggest construction company, is facing a probe into its fees, service levels and investment plans, by the UK's competition commission and civil aviation authority. It may well be forced to give up one of its London hubs. A split of BAA's assets and subsequent deregulation would allow Heathrow to raise charges and use pricing as a tool to control demand and overcrowding.
The company is in the last phase of refinancing as much as £9 billion ($18 billion) of BAA debt, half of which relates to the acquisition. A sale of bonds with maturities of 30 to 40 years is included in the plans. The builder is presently making its final presentations to credit-rating companies.
It aims to complete the BAA financing by the year's end, but it's unlikely the process will be finished until the second quarter of 2008, Merrill Lynch & Co said on Monday 17 September.
London Heathrow, Europe's busiest airport, is running at 99 percent of its government-sanctioned flight capacity and handling 68 million passengers annually, in buildings designed for 45 million.
Landing charges are a third lower than at New York's John F Kennedy airport, even after being increased by inflation-plus-6.5-per-cent annually for the past four years. Lower charges may be one reason for overcrowding, the competition commission has said.