Airport operator breakup moves step closer as Competition Commission asks interested parties to look again at ruling on BAA's monopoly
Ferrovial, the Spanish industrial group, could on Wednesday move one step closer to the break-up of BAA, the British airports operator it bought five years ago for £10bn.
Almost exactly two years ago, the Competition Commission ordered BAA to sell Stansted, Gatwick and either Glasgow or Edinburgh, arguing that the group had a monopoly. BAA, backed by Ferrovial, successfully appealed on a technicality, but the competition watchdog overturned it and the court of appeal reinstated its original ruling.
The Competition Commission will now ask interested parties if anything has changed in the intervening two years to make its ruling invalid. Ferrovial has spent the last two years selling off assets – including Gatwick – which has helped it avoid producing a second consecutive annual loss. Selling more BAA airports will boost the coffers further.
Ferrovial is also in talks with potential investors to offload a 10% stake in BAA. The sale would take its current 56% stake below the crucial 50% level, allowing it to deconsolidate the debt, wiping €14bn of debt from its balance sheet at a stroke.
Ferrovial may be best known in Britain as the owner of BAA, but it also builds roads, bridges, railways and other infrastructure, as well as large commercial buildings such as hotels and offices. Almost two-thirds of its revenues come from outside recession-hit Spain.
It has been a torrid couple of years for Ferrovial. Its share price has slumped in over concerns about higher debt costs and slumping public spending on infrastructure projects in Spain in particular and, to a lesser extent, Britain. Construction activity has also severely contracted in Spain because of the economic downturn.
Ferrovial president Rafael del Pino recently urged the Spanish government, since it had got the deficit under control, to loosen the purse springs for public investment in infrastructure, citing Brazil and Britain as examples to imitate.
The Spanish government has announced a €70bn programme to kickstart the economy with new infrastructure projects, such as more high speed rail links bypassing the capital, in line with the trend for the increasing regionalisation of Spain. But these projects are a long way off. The government also recently announced as part of the privatisation of its airports that it will invite companies to bid to run two of Spain's biggest airports – Madrid's Barajas and Barcelona – which could interest Ferrovial.