Bidders for Gatwick narrows to three

There are now only 3 parties still bidding for Gatwick airport

March 2009

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Final bids for Gatwick are due to be in by the end of April 2009 having recently been extended for a further month.

The three rival consortia consist of Citigroup’s infrastructure fund; Global Infrastructure Partners, the owner of London City Airport; and Manchester Airport with Canada’s Borealis.

BAA has been forced to sell 3 airports including Stansted and Glasgow or Edinburgh where interest is expected to come from foreign airports, infrastructure funds, pension funds and possibly from sovereign wealth funds.

To bolster the Gatwick sale process BAA has offered a "staple debt" package totalling about £1.1bn that has been made available to all bidders. The staple debt has been led by BAA's financial advisers RBS and HSBC.

However a secret report, commissioned by three of Gatwick’s biggest airline customers, has concluded that Gatwick could be worth as little as £1.33bn – far below the £2bn-plus BAA initially wanted.

The study, by economic consultancy Frontier Economics, was carried out on behalf of easyJet, Virgin Atlantic and tour operator TUI Travel. The report was completed in December and concluded that the airport is worth between £1.33bn and £1.73bn.

Since then, Gatwick’s passenger traffic has continued to fall, down 14.4pc year-on-year for February, while the credit crunch is making it tough for bidders to raise finance.

The airline groups commissioned the Frontier report, not because they were considering their own bid for Gatwick, but in the belief that the study would strengthen their hand with any new owner

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