Is BAA selling airports or buying time? Most probably, both


The financial City of Madrid on Monday unanimously recommended investors to support Ferrovial's strategy on its UK operator BAA deals: adjourning forced divesting until the markets set better conditions.

While the British Competition Commission has accepted a reversal in sale plans, so BAA will begin by offering one of the two airports it owns in Scotland (Glasgow and Edinburgh) instead of Stansted, the regulator maintains its decision regarding Stansted's auction. The Spanish group has appealed against it and a final ruling is expected by December. If Ferrovial sees revoked its petition, there will be a further 18-month lapse in which to sell the Essex-Greater London's airport whose potential price tag is estimated to indicate at least £1.064bn taking on board the exposure to low-cost airlines and limited possibilities for expansion.

At Banesto, analysts say that [not their emphasis]

“Although Ferrovial still needs to sell, in any case, we think the situation has improved since the commission first published its verdict. It is relevant to know which airport will be on offer: Glasgow, with better growth perspectives, or Edinburgh, which registers more passengers and higher profitability rates.

“Once more, through all these procedures and formalities, Ferrovial has bought time to leave behind the direst moments of the credit crunch.”

Ahorro Corporación Financiera agrees:

The sale of a Scottish airport will let BAA keep postponing the sale of Stansted, while the Competition Commission decides whether the appeal is admitted. We anticipate more delays.”

BAA will still operate five airports after the Scottish transaction (Heathrow, Stansted, Southampton, Aberdeen and the other airport in Scotland).

Ferrovial is on its way to strengthen its financial structure, then, according to Renta 4, adding the latest negotiation with two investing funds managed by Alinda Capital Partners, which will pay Ferrovial £280mn/€325mn in exchange of a 5.88% stake in Ferrovial's parent company FGP Topco Ltd. The Spanish firm will be indirect holder of 49.99% shares in BAA, the rest being in the hands of Britannia Airport Partners LP (26.48%) and GIC (17.65%).


About the Author

Victor Jimenez
London contributor at, reporting about the City and the Eurozone economies. He regularly writes for Spanish newspaper group Prensa Ibérica--some of his features include shared work with journalists of The Daily Telegraph and the BBC.