BAA cuts its debt pile with sale of Gatwick for £1.5bn

London City owner GIP promises to invest in modernising airport

The airports operator BAA confirmed yesterday it will sell Gatwick airport to Global Infrastructure Partners, the private equity firm that already owns London's City airport.

A Competition Commission investigation is likely to find in favour of the deal, with the £1.51bn takeover set to be signed in December. About £55m of the sale price will be contingent on the number of passengers using the airport.

Michael McGhee, a GIP partner, said that people using the UK's second busiest airport could expect improvements. "We will upgrade and modernise Gatwick airport to transform the experience for both business and leisure passengers.

"We plan to work closely with the airlines to improve performance, as we have done successfully at London City." Mr McGhee said the deal would be funded with a mixture of debt and equity, but debt would make up no more than 50 per cent of the purchase price. Earlier this week, GIP secured a £1.125bn loan from a group of 12 banks, which Mr McGhee says will partly be used to pay for the airport, and partly for capital expenditure at Gatwick.

"We have no exit plans at this stage," he added. "When we do come to sell Gatwick it is likely to be through selling it to another infrastructure fund, or possibly via a public listing."

BAA, which has a huge £9.6bn pile stemming from its 2006 takeover by the Spanish infrastructure group Ferrovial, will use the proceeds to pay down a £1bn bank facility that matures next year. A spokesman stressed that BAA was not forced to sell Gatwick.

However, industry experts said that £1.51bn was a long way short of what BAA had initially wanted for Gatwick.

"BAA said that it was looking for about £2.5bn when it first entered into negotiations about Gatwick, but almost everyone in the industry agreed that was vastly overpriced," said Chris Yates, an aviation analyst. "The price agreed today is about the most the market would take. There is an awful lot of work that GIP now needs to do to bring Gatwick up to world-class standards." GIP declared itself happy with the price.

There were also calls yesterday from union representatives at Unite for immediate talks over jobs at the airport.

BAA was ordered by the Competition Commission to sell Gatwick, as well as Stansted and either Glasgow or Edinburgh airports, in March. The group's three-day appeal against the decision ended yesterday, with a ruling expected early next year.

BAA argues that the original order was "riven" with apparent bias, with a member of the inquiry panel also apparently advising a potential bidder for Gatwick. The group also claims the two-year deadline imposed on BAA to sell the airports is unfair as the recession will dampen any purchase price.

News
people
News
people And here is why...
News
peopleStella McCartney apologises over controversial Instagram picture
Life and Style
Laid bare: the Good2Go app ensures people have a chance to make their intentions clear about having sex
techCould Good2Go end disputes about sexual consent - without being a passion-killer?
PROMOTED VIDEO
Arts and Entertainment
Richard Burr remains the baker to beat on the Great British Bake Off
tvRichard remains the baker to beat as Chetna begins to flake
News
i100
Sport
footballArsenal 4 Galatasaray 1: Wenger celebrates 18th anniversary in style
Arts and Entertainment
Amazon has added a cautionary warning to Tom and Jerry cartoons on its streaming service
tv
News
people
News
The village was originally named Llansanffraid-ym-Mechain after the Celtic female Saint Brigit, but the name was changed 150 years ago to Llansantffraid – a decision which suggests the incorrect gender of the saint
newsWelsh town changes its name, but can you spot the difference?
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Kristen Scott Thomas in Electra at the Old Vic
theatreReview: Kristin Scott Thomas is magnificent in a five-star performance of ‘Electra’
Life and Style
Couples who boast about their relationship have been condemned as the most annoying Facebook users
tech
Arts and Entertainment
Hayley Williams performs with Paramore in New York
musicParamore singer says 'Steal Your Girl' is itself stolen from a New Found Glory hit
News
i100
Life and Style
The spring/summer 2015 Louis Vuitton show for Paris Fashion Week
fashion
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

Day In a Page

Italian couples fake UK divorce scam on an ‘industrial scale’

Welcome to Maidenhead, the divorce capital of... Italy

A look at the the legal tourists who exploited our liberal dissolution rules
Time to stop running: At the start of Yom Kippur and with anti-Semitism flourishing, one Jew can no longer ignore his identity

Time to stop running

At the start of Yom Kippur and with anti-Semitism flourishing, one Jew can no longer ignore his identity
Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

The vintage series has often been criticised for racial stereotyping
An app for the amorous: Could Good2Go end disputes about sexual consent - without being a passion-killer?

An app for the amorous

Could Good2Go end disputes about sexual consent - without being a passion-killer?
Llansanffraid is now Llansantffraid. Welsh town changes its name, but can you spot the difference?

Llansanffraid is now Llansantffraid

Welsh town changes its name, but can you spot the difference?
Charlotte Riley: At the peak of her powers

Charlotte Riley: At the peak of her powers

After a few early missteps with Chekhov, her acting career has taken her to Hollywood. Next up is a role in the BBC’s gangster drama ‘Peaky Blinders’
She's having a laugh: Britain's female comedians have never had it so good

She's having a laugh

Britain's female comedians have never had it so good, says stand-up Natalie Haynes
Sistine Chapel to ‘sing’ with new LED lights designed to bring Michelangelo’s masterpiece out of the shadows

Let there be light

Sistine Chapel to ‘sing’ with new LEDs designed to bring Michelangelo’s masterpiece out of the shadows
Great British Bake Off, semi-final, review: Richard remains the baker to beat

Tensions rise in Bake Off's pastry week

Richard remains the baker to beat as Chetna begins to flake
Paris Fashion Week, spring/summer 2015: Time travel fashion at Louis Vuitton in Paris

A look to the future

It's time travel fashion at Louis Vuitton in Paris
The 10 best bedspreads

The 10 best bedspreads

Before you up the tog count on your duvet, add an extra layer and a room-changing piece to your bed this autumn
Stuart Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

This deal gives England a head-start to prepare for 2019 World Cup, says Chris Hewett
Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

The children orphaned by Ebola...

... then rejected by surviving relatives over fear of infection
Pride: Are censors pandering to homophobia?

Are censors pandering to homophobia?

US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
The magic of roundabouts

Lords of the rings

Just who are the Roundabout Appreciation Society?