BAA opts to sell Edinburgh airport for £500m and keep Glasgow
Thursday 20 October 2011
BAA is putting Edinburgh Airport up for sale with an estimated price tag of about £500m after the Competition Commission forced it to choose between its operations in Glasgow and the Scottish capital.
The operator of six UK airports, including Heathrow and Stansted, decided to sell Edinburgh because it would fetch a higher price than Glasgow.
John Strickland, an aviation analyst at JLS Consulting, said: "Edinburgh airport is performing much better than Glasgow, so it will be easier to sell in a difficult market. Edinburgh is more appealing because it has more high-paying business customers."
"Edinburgh is the jewel in the crown in Scotland," added Douglas McNeill, an analyst at Charles Stanley, who said the airport could potential attract interest from a range of bidders.
These include Global Infrastructure Partners, a fund set up by General Electric and Credit Suisse, which bought Gatwick from BAA in 2009 in the first of a series of disposals ordered by the Competition Commission.
Manchester Airport, which bid unsuccessfully for Gatwick; Borealis Infrastructure, part of the consortium running the High Speed 1 rail link to the Channel Tunnel;, and Australia's Macquarie are among the other potential bidders, Mr McNeill said.
Colin Matthews, BAA's chief executive, said: "Choosing which airport to sell has been a difficult decision. Edinburgh Airport has shown itself to be a strong and resilient asset throughout the economic downturn.
"In an uncertain market, we expect it to be an attractive asset to prospective buyers. Glasgow Airport has great opportunities for future growth and development."
In the first nine months of the year, the number of passengers at Edinburgh jumped by 9.5 per cent to 7.28 million, compared with a 5.7 per cent rise to 5.3 million at Glasgow, according to BAA.
It said it would formally put Edinburgh Airport up for sale in the new year and expected to agree a sale by next summer.
The Competition Commission has also ruled that BAA should sell Stansted although the airport operator is disputing that decision. BAA also challenged the Competition Commission's original decision in 2009 that it should sell either Edinburgh or Glasgow, but the watchdog confirmed that ruling in July.
To complicate matters further, the commission initially said the sale of either Edinburgh or Glasgow should be preceded by the disposal of Stansted. However, this month, it changed the divestment schedule, saying BAA should sell Edinburgh or Glasgow first.
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