BAA Puts Gatwick On The Market At Volatile Time

"We have decided to begin the process of selling Gatwick Airport immediately." With that announcement -- issued this week by Colin Matthews, CEO of British airport operator BAA -- one of Britain's busiest airports is now on the market, in the face of an uncertain economy and over protests by union workers.

Forbes reports Grupo Ferrovial, the Spanish-held company that owns BAA, put Gatwick up for sale "reluctantly," noting the current condition of the global financial market make this a rotten time to attempt to sell off an airport. But one analyst believes BAA can still get a fair price for Gatwick.

"Although the current financial situation could affect the valuation of airport, this is a very attractive asset, an airport at full capacity in a market hungry for this type of investment," said Victor Acitores, with Landsbanki Kepler in Madrid.

Another industry watcher isn't so sure of that. Collins Stewart analyst Andrew Fitchie believes Gatwick will sell for around $3.6 billion... a lowball price, that in his opinion represents "an indictment of a failed expansion strategy which leaves the group overloaded with debt at a time when cyclical pressures are bearing down across its operations."

Ferrovial bought BAA in 2006 -- and reportedly borrowed quite heavily to do so -- in order to bolster its presence in the aerospace field. There were signs from the start that plan was a mistake... and Ferrovial took heat over allegations it was improperly bolstering its earnings claims to hide the amount of its losses.

By August 2007, the company ordered the seven airports under BAA's control to review and report on their staffing and overall costs. As ANN reported, Ferrovial also hinted it would consider selling off at least one of those airports -- Heathrow, Gatwick, Stansted, Edinburgh, Glasgow, Aberdeen and Southampton.

Earlier this month, Britain's Competition Commission recommended BAA sell off at least two of its facilities.

Since Monday's announcement, press outlets throughout Europe have speculated on potential buyers. Names bandied in various media include Sir Richard Branson, owner of the Virgin Group; Germany's Fraport authority; and Australian bank Macquarie.

Predictably, BAA's announcement drew fire from the British labor union Unite, which represents many airport workers throughout Britain. "This announcement brings uncertainty for hundreds of Unite members," said national union officer Brian Boyd. "Unite will now be doing everything it can to ensure that the Gatwick workforce do not become the losers."

"It simply beggars belief that a For Sale sign can be hung across the country's second largest airport," added union officer Steve Turner. "Gatwick is a core component of the national infrastructure and an essential part of the UK's aviation sector, yet it is to be flogged off with little care for the wider social impact. This is devastating news to the many hundreds of professional, loyal and dedicated staff at Gatwick Airport and it will hit passengers too."

FMI: www.ferrovial.com, www.baa.com, www.amicustheunion.org