It would be the first sale under a government plan to pressure local authorities into selling their stakes in regional airports.
The airport's management, whose rival offer included a share ownership plan for the 450 staff, have privately conceded defeat. 'We are disappointed,' said one manager. 'Basically, National Express has first refusal, and unless it finds any black holes it's their airport.' The management would obviously know if there were problems in the accounts, he added.
The Department of Transport says privatisation will increase profits and improve efficiency, though a few councils are resisting, leading some people to believe legislation will be needed to force sales.
East Midlands Airport, home to British Midland, is owned by the county councils of Derbyshire, Nottinghamshire and Leicestershire. The Government has stopped regional airports borrowing to finance expansion, but has told them they can retain all the cash from sales. A Nottinghamshire councillor said they were not driven into the disposal by financial shortages, but admitted that it made sense to get into the marketplace first. However, the board of the airport is split, with one member claiming that a private owner would ignore the airport's role in regional development.
During its flotation, National Express made no secret of its plan to expand, raising about pounds 15m for the purpose, but most observers thought the likely diversification was into rail services.
Adam Mills, National Express finance director, said no contracts had been signed and he refused to talk about price, though he did say negotiations were advanced. 'There are a lot of similarities between running a coach company and an airport. Both involve moving passengers. The target company has good management and we can provide the entrepreneurial skills.'
Mr Mills said the fastest growth area in his company was coach services to airports. National Express runs Speedlink, which operates between Heathrow, Gatwick and Luton airports. The Airport Coach Services division made a profit of pounds 740,000, though other operations took total pre-tax profits to pounds 6.8m, well above that forecast in the flotation prospectus. Mr Mills said the intention was to expand air services at East Midlands, but he would not be more specific.
Lockheed, the American aerospace group, and a consortium called Regional Airports also bid for East Midlands, which served 1.2 million passengers last year and made a pounds 5m profit. About 65 per cent of flights were chartered services, with the rest scheduled.
Luton Airport would have been the first to go under the Government's plan, but the sale was aborted because of a change in the council's political colours. Aldergrove airport in Belfast, the largest in Northern Ireland, is expected to fetch up to pounds 40m when sold next year.
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