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Dogfight looms over Gatwick

kevin feddy
30/11/2008

MANCHESTER Airport Group faces another rival bidder for Gatwick after private equity group 3i reportedly teamed up with one of the world's biggest pension schemes to table an offer.

MAG is understood to have linked up with Sir Richard Branson's Virgin Atlantic for a bid and is in funding talks with Goldman Sachs.

Another consortium, led by Canada's Vancouver Airports Authority, has also expressed an interest in buying Gatwick, which has been put up for sale by owner BAA.

Now 3i's infrastructure fund is said to be working with the Ontario Teachers' Pension Fund on a bid of more than £1.5bn.

BAA, owned by Spanish giant Ferrovial, will formally start the auction process this week when it issues the sales prospectus. First-round bids are expected soon after Christmas.

The move follows a damning report from the Competition Commission earlier this year in which it spoke of poor levels of service for airlines and passengers and proposed that BAA should give up running two of its three London airports.

BAA said the decision to sell Gatwick, used by 35 million passengers a year, was not taken lightly.

Gatwick is the busiest single-runway airport in the world, hosting 80 airlines and managing 262,000 air transport movements a year. It employs more than 25,000 people, about 2,400 of whom work for BAA.

3i and the Ontario Teachers' Pension Fund are understood to have appointed NM Rothschild and the Australian banking group Macquarie as advisers. The Canadian Pension Plan is also rumoured to be in talks to join the consortium.

Low-cost airline easyJet is interested in signing a revenue sharing agreement if MAG's consortium is successful. MAG, which operates Manchester, Humberside, East Midlands and Bournemouth Airports, has consistently said it would be interested in buying one or more of BAA's airports.

It is understood to be looking at Glasgow and Edinburgh in addition to Gatwick. Several Middle East sovereign wealth funds are also thought to considering a bid for Gatwick, including the Kuwait Investment Authority, the Abu Dhabi Investment Authority and Mubadala.

LOW-cost carrier Ryanair today revived its takeover interest in Dublin-based airline Aer Lingus. Announcing its intention to make an offer for Aer Lingus, the budget carrier said it planned to merge the two airlines into ‘one strong Irish airline group’, while still operating as two distinctive brands.

Ryanair said it had requested a meeting with the chairman and board representatives of Aer Lingus, as well as Irish government officials. Today’s approach comes two years after the Aer Lingus board rejected previous takeover interest from Ryanair, calling a £1bn offer ‘ill-conceived, contradictory and anti-competitive’.