London City airport launches bid for Essex neighbour

London City airport has made a surprise bid in the £100m auction of rival Southend airport.

The sale is taking place amid a civil war in the aviation industry, with airlines, unions and politicians fighting over whether the airport holdings of the market-leading operator BAA should be broken up.

City's bid was unexpected, as its management had thought the airport's core business passenger base would not want to go to Southend in Essex.

However, Richard Gooding, City airport's chief executive, said: "There is a shortage of airports in the South-east, and Southend therefore presents an opportunity."

A source close to Regional Airports, Southend's owner, insisted that City was one of the more logical suitors, given that the two airports are within an hour's train journey of each other. City has been backed by its owners, AIG, the insurance giant, and Global Infrastructure Partners, a joint venture between GE Infrastructure and Credit Suisse.

More than 40 parties were sent information memorandums on Southend last month. Dawnay Day, the owner of Oxford airport; Cognetas, the private equity group; and Macquarie, the Australian bank, are all thought to be interested.

Regional Airports is expected to reinvest at least £35m from the sale into upgrading Biggin Hill, the company's private jet facility in Kent.

If politicians get their way, this will not be the only major UK airport sale in the next two years. Yesterday, the Transport Select Committee clashed with Unite, the biggest civil aviation union, over the future of BAA's airports. The committee threw its weight behind the campaign to force Grupo Ferrovial, BAA's owner, to sell at least one of its South-east airports, which include Heathrow, Stansted and Gatwick.