Staff member
Jan 12, 2009
GIP joins Gatwick bid

Global Infrastructure Partners (GIP) has joined the bidding for London Gatwick Airport, The Times has reported.

The owner of London City Airport, which is funded by Credit Suisse and General Electric, is believed to be preparing a £2 million offer for the BAA-controlled airport.

First round bids for the UK's second largest airport are due by January 19 as BAA is eager to dispose of Gatwick before the Competition Commission forces the Ferrovial-owned group to disband its monopoly of London-based transport hubs.

In addition, BAA currently owns and operates Aberdeen Airport, Edinburgh Airport, Glasgow Airport, London Stansted, Southampton Airport and London Heathrow Airport.

Other consortiums expected to bid include Citigroup, Vancouver Airports, Hochtief AirPort and the financial institution John Hancock.

In 2007, Gatwick flew 35 million passengers to more than 200 destinations, making it the UK's busiest airport after Heathrow.

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BAA May Fail to Match Gatwick Estimate as Bids Fade

BAA Ltd., the world’s biggest airport operator, is struggling to raise the 2 billion pounds ($2.9 billion) it’s seeking for London’s Gatwick terminal as the number of bidders dwindles and financing dries up.

A group led by 3i Infrastructure Plc withdrew from the auction, two people familiar with the situation said yesterday. German builder Hochtief AG was taken off a shortlist last month and executives from Citi Infrastructure Investors and Global Infrastructure Partners say a lack of funds is hampering bids.

“Expectations have been high, but they reflect prices people were paying in a bull market,” said Andrew Fitchie, an analyst at Collins Stewart in London with a “sell” rating on BAA’s owner, Spanish builder Grupo Ferrovial SA. “Asset values have corrected and 2 billion pounds seems a stretch.”

BAA may have to accept a lower price as it is forced to sell Gatwick under pressure from the U.K. antitrust regulator just as the credit crunch crimps lending and the global recession slows demand for air travel. BAA still anticipates raising a “significant premium” over Gatwick’s paper value of 1.64 billion pounds, spokesman Malcolm Robertson said yesterday.

Passenger numbers at Gatwick, Britain’s busiest airport after London Heathrow, fell 11 percent in January, BAA said Feb. 10, with the decline exacerbated by an “Open Skies” agreement between the U.S. and the European Union that prompted some carriers to switch to Heathrow.

Tough Times

“These are very difficult times and raising money is very hard,” said Howard Wheeldon, senior strategist at BGC Partners in London. “The price of about 2 billion pounds is justified because you have to buy this asset for the long-term, but we are living in a very different world.”

Toby Moore, an external spokesman for London-based 3i, didn’t immediately return calls seeking comment.

Citi Infrastructure’s Colin Campbell, who worked on Ferrovial’s 10.1-billion pound bid for BAA in 2006, said Gatwick is being sold at an “inopportune time,” given the combination of the credit crunch and slump in aviation.

“It’s clear that there’s a monumental liquidity squeeze in the credit markets,” Campbell said Feb. 10 in a presentation at the ACI Airport Economics and Finance conference in London. “At the same time, ultra-conservatism is being applied by lenders in their credit analysis in respect of what credit is available.”

Citi’s Lysander Gatwick Investment Group, which also includes Vancouver Airport Services and John Hancock Life Insurance Co., said it still plans to proceed with a bid.

Realistic Price

London-based Global Infrastructure said that while it submitted an indicative offer in the first round of bidding for Gatwick, anyone selling an airport right now must be “realistic” about the price.

“At a time when there is very little equity available, and still less debt available, and provided you’ve got the cash, it’s a good time to buy,” GIP founding partner Michael McGee said at the ACI conference.

BAA offered Gatwick for sale after the U.K. Competition Commission said the company’s market dominance provided little incentive to improve standards of service. The regulator said Dec. 17 that BAA’s London Stansted airport and a terminal serving the Scottish capital, Edinburgh, should also be sold.

The two other groups who may remain in the bidding for Gatwick from an original shortlist of six are Deutsche Bank AG’s RREEF alternative investment management arm and Canada’s Borealis Infrastructure and Global Infrastructure Partners. Neither responded to calls seeking comment.

The Financial Times reported last night that the Deutsche Bank-led bidding group had withdrawn from the auction.

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Low Gatwick passenger number may hit price-bidders

LONDON, April 23 (Reuters) - UK airports operator BAA may raise less than it hoped from the sale of London's Gatwick after latest passenger numbers there disappointed, putting downward pressure on its valuation, bidders said on Thursday.
A source close to one of the bidders said that BAA, which is owned by debt-laden Spanish construction firm Ferrovial, significantly over-estimated passenger numbers for March, which anyone setting a price for a bid would take into account.
Gatwick airport was put up for sale last year to meet competition concerns and BAA was subsequently also ordered to sell London's Stansted and either Edinburgh or Glasgow airports.
The deadline for prospective buyers to put in bids for Gatwick is April 27.
"When the passenger numbers go down the price doesn't go up ... Market conditions for BAA aren't the best for a sale," added another source associated with one of the bidders.
Passenger numbers in March were 17.7 percent down at Gatwick compared with the previous year, against a 7.5 percent fall at Heathrow and 15.9 percent declines at Stansted.
Some analysts see Gatwick as particularly vulnerable to an economic downturn because of its reliance on revenues from "bucket and spade" summer charter flights.
Analyst Andrew Fitchie at Collins Stewart predicted that BAA owner Ferrovial would find it difficult to achieve a premium to the Regulatory Asset Base value of 1.6 billion pounds ($2.33 billion).
"I think they'll struggle in the current climate to achieve a premium to regulatory asset base," he said.
He added that it was "totally reasonable" that the passenger numbers would affect the price.
The expected price for the airport has fallen in the past few years from a high of 3 billion pounds.
"There was some chit chat before the end of March ... that it could be as low as 1.3 billion which is a 20 percent discount to RAB which wouldn't be out of line with other utilities in the UK," added Fitchie.
A spokesman for BAA remained optimistic.
"Given the volume of work being undertaken by potential buyers we expect a number of highly competitive bids next week," he said.
In March, BAA extended the deadline for final bids until the end of April from the end of March, giving bidders more time to finalise due diligence and financing arrangements.
At that time, three groups of bidders remained in the running to buy Gatwick airport, which was valued at up to 2 billion pounds.
The bidders are Global Infrastructure Partners (GIP), a joint venture between General Electric and Credit Suisse, which owns London City Airport; Lysander Gatwick Investment Group, comprising Citi Infrastructure Partners, Vancouver Airport Services and John Hancock Life Insurance Company; and a third consortium consisting of Manchester Airports Group, Borealis and Greater Manchester Pension Fund.
HSBC and RBS are running the sale.

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Gatwick Airport bids close

Bidding to buy Gatwick Airport closed yesterday, with the Manchester Airport Group, Global Infrastructure Partners and Lysander Gatwick Investments all vying for ownership of the UK's second busiest airport.

BAA, which was forced to put the airport on the market following a Competition Commission inquiry, hoped to receive up to£2 billion.

The company, which is owned by Spanish Ferrovial, will also have to sell Stansted Airport and a Scottish airport to comply with the results of the inquiry.

A BAA spokesperson said: "The process will be far from finished - even once we've got all the bids. It'll probably be days, if not weeks, before we are in a position to make an announcement to say here's the winning bid."

The Manchester Airport Group formed a consortium with the Greater Manchester Pension Fund and the Canadian infrastructure investor Borealis to place the bid for the airport.

According to a report in the Manchester Evening News, Lysander Gatwick Investments is the favourite to win the deal.

Gatwick Airport was awarded the Best UK Airport by the Travel Bulletin Awards last year for the fifth consecutive year.

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Airlines ask BAA to cut back on Gatwick improvements

With passenger numbers dwindling and a new owner due soon, the airport's carriers are concerned that they will be stuck with a £900m bill.

EasyJet is one of the airlines that has urged BAA to cut back work on its £900 improvement scheme at Gatwick airport

British Airways, easyJet and Ryanair have urged BAA to cut back work on its £900m improvement scheme at Gatwick airport after warning that the project is futile in the face of dwindling passenger numbers.

Airlines have demanded curbs in the programme because they will ultimately have to pass on the costs to recession-hit passengers through fare increases.

In a letter to BAA executives at Gatwick, seen by the Guardian, the airport's airline customers said the business case for funnelling hundreds of millions of pounds into new facilities was "unproven". Gatwick, which handles 34 million passengers a year, has seen traffic fall by 12% since the beginning of the year.

"At this time, when all the Gatwick airlines are facing a level of unprecedented commercial challenge, the airport is seeing dramatically reduced passenger throughput and many analysts are forecasting a slow recovery, it would not be sensible to proceed without a proven business case," said the committee.

BAA intends to spend £900m on the airport over the next five years. The airlines' letter suggested that a new owner may have cheaper investment plans. "It would therefore be pointless to come to a decision about future developments which are not agreed with the future owner of the airport."

Gatwick's buyer will be confronted by an airline campaign to shelve a £200m aircraft pier in the north terminal. A Gatwick spokesman said the pier was needed to reach a target of transferring 95% of passengers to aircraft via piers instead of coaches. "It's what passengers want," he said. "They don't want to be coached in from a remote stand."

The dispute came as one of the front runners to acquire Britain's second-­largest airport, Manchester Airports Group, pledged shorter security queues and uncluttered terminals if it acquires Gatwick. "We would have a very different approach and our approach is designed with the passenger at the core of what we do," said Geoff Muirhead, MAG chief executive.

Resolving the conflict over the pier will be one of the first tasks facing MAG if it wins the Gatwick auction in a consortium with the Canadian infrastructure investor Borealis. MAG is owned by Manchester's local authorities and is favourite to acquire the airport because the only other bidder, Global Infrastructure Partners, is considering whether to continue work on its offer. MAG is expected to submit its final offer in the next three weeks and both suitors value the business at about £1.4bn.

MAG is the largest UK-owned airports group, carrying more than 28 million passengers a year through its ownership of Manchester, East Midlands, Humberside and Bournemouth airports but far behind Spanish-controlled BAA, whose seven UK airports handled 145.8 million customers last year.

MAG has been criticised by passengers for charging £1 for plastic bags to carry liquids through security gates and the airport's chief executive refused to rule out extending the regime to Gatwick, one of the world's busiest single-runway airports.

"People need to take responsibility for that themselves," said Muirhead. "You should sort yourself out before you get here. In the more than two years that this has been in place we have given out for free 4m bags. Two years is long enough for people to understand."

Muirhead also backed schemes introduced by Luton and Liverpool airports that charge passengers £3 to be fast-tracked through security. The MAG boss said the concept was acceptable so long as ordinary queues were not made longer in order to force customers to shell out £3 to make their flight.

"There is nothing wrong in that so long as you don't go out of your way to make queues longer. If you have fewer security guards on the free queue that's not where we want to be."

It is understood that MAG has no immediate plans to develop a second runway at Gatwick because of an agreement that the airport cannot be expanded before 2019. The Conservative Party, far ahead of Labour in the polls, has also pledged to block any attempt to build a new landing strip at the airport.

A BAA spokesman said: "MAG is right to put the customers first. Putting the customer first is the only way that any airport operator will survive."

This will no doubt be seized upon by opponents of airport expansion generally.

The antis will ensure it will be more difficult for airports, and airlines for that matter, to justify expansion at smaller airports if they are saying that expansion needs to be reined in at a large airport like Gatwick.

The usual message from airports and airlines is that the recession is temporary and they need to be able to be in a position to meet demand when things pick up.
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BAA plans Gatwick 'debrand'

BAA is in discussions with branding agencies about the implementation of a complete 'debrand' of Gatwick Airport ahead of its future sale, Marketing reports. It is reported to be consulting experts about removing the BAA identity from the airport's on-site branding, and creating a suitable replacement.

The project is being led by BAA's marketing and insight director, Nick Adderley, who is also working on the imminent launch of a fresh consumer brand for Heathrow Airport. At the same time, BAA is reported to be carrying out a major review of its roster of marketing agencies. Until recently, the airport operator had worked with more than 100 advertising and branding agencies; it now plans to whittle this down to fewer than 20.

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[textarea]Jobs threat at Gatwick in-flight service company

Staff at a Gatwick based in-flight service provider have been told that their jobs could be on the line. Up to 50 jobs at LSG Sky Chefs Gatwick Customer Service Centre are under threat after the company said it was carrying out a review of its operations due to a dramatic drop in passenger numbers.

The company estimates that from the end of September, the number of winter flights to be serviced will reduce by more than a third. This could see last year's average of 30 flights each day drop to just 19 flights per day for winter 2009/2010. Dale Easdon, chief operating officer UK, confirmed the company has entered into a consultation with staff and union representatives to discuss the redundancies.


These contracts with catering companies are worth so little today because the business is so cut throat. There could come a day when most short haul flights wont have any food option at all.
Are we talking about inflight meals and/or the things you can buy such as muffins on airlines like easyJet?

I'm quite happy to be able to buy a snack from, say, an easy kiosk on board than fly with an airline that provides refreshments as part of the fare but is so frugal as to be next to useless, and with no opportunity to purchase anything on board to supplement it.
[textarea]Gatwick sale talks progressing

BAA has intensified talks on the sale of Gatwick Airport to Global Infrastructure Partners (GIP) - the Credit Suisse / GE lead fund - ahead of an antitrust ruling on the break up of its assets, Bloomberg reports, quoting 'two people close to the negotiations'.

The Competition Commission’s arbitration tribunal will hear evidence starting October 19 on whether BAA should be forced to sell three of its seven UK airports. This is said to have refocused BAA’s efforts to dispose of Gatwick at its own pace, according to 'the people, who declined to be identified because the talks are private.' Bloomberg says that a breakthrough before the start of the tribunal’s deliberations is unlikely.

BAA's parent, Ferrovial, said that it is in talks with ‘a number of bidders’ for Gatwick Airport and no transaction has been agreed with any party. In a statement today it said that it is not working to any specific deadline.

[textarea]Gatwick sale ‘progressing, but not imminent’

BAA parent Ferrovial sees the sale of Gatwick Airport taking more time, although the process is advanced. The Spanish builder's managing director Inigo Meiras said: 'The Gatwick sale process is advanced but talks are ongoing. If you had asked me in July I would have said the same. I think it is possible it could take some time. There is more than one interested party.'

Last week newspapers quoted 'sources familiar with the deal' saying Ferrovial hoped to announce the sale before October 19 when a competition hearing is scheduled on the Competition Commission's decision that BAA should be forced to sell three airports, including Gatwick. A consortium led by Global Infrastructure Partners, which owns London City Airport, was said to be close to buying the airport.

Mr Meiras also said that Ferrovial expects BAA to make an over £1 billion bond issue in 2010. He will be appointed Ferrovial chief executive officer next week.

Said on the news this lunch time, it could be finally sold as early as tommorow at midday if a deal can be finalised properly. I wonder how this will effect flights...if at all?
I would imagine which ever company it is will have purchased it at a bargain price.
Nothing seems to be in the press today and I would think any annoucement will reach headline news once released.
[textarea]New Gatwick owner plans lower fares and no queues

Gatwick's new owner will pledge to slash passenger queuing times after completing the £1.51 billion takeover, the Standard has reported. It says the takeover is expected to lead to huge expansion of the airport, opening up the prospect of lower fares and more destinations.

Global Infrastructure Partners (GIP), which also owns London City airport, said that it wants to end Gatwick's status as the ‘poor relation’ of Heathrow through massive improvements to customer service. Full details will not be announced until the purchase is finalised in December but a source told the Standard that cutting queues through security will be a top priority. The source said: ‘At London City we have a no-queues policy; the longest are 3 minutes at most. There is no reason why we can't apply the same principles [at Gatwick].’

The Times suggests that GIP has pledged to upgrade the airport’s ageing facilities. It will spend about £900 million over the next four years to bring the tired buildings of Gatwick up to standard. Michael McGhee, the GIP partner leading the acquisition, told the newspaper: ‘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 Airport.’

The source said: ‘At London City we have a no-queues policy; the longest are 3 minutes at most. There is no reason why we can't apply the same principles [at Gatwick].’

Would like to see that when checking in or boarding a Virgin Atlantic flight!
It sounds like a gimmicky sales pitch to me. Wait while they get settled in after the promises have dried up and watch them do nothing.

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