Value of Gatwick airport may have declined

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A report commissioned by three of the major airline customers of Gatwick airport in secret has revealed that the airport could now be worth only £1.33 billion, which is significantly lower than the more than £2 billion BAA initially was seeking from the sale of the facility.

The study, conducted by Frontier Economics on behalf of easyJet, TUI Travel and Virgin Atlantic, concluded that Gatwick is currently worth £1.33-1.73 billion, although, as the report was issued in December, it may be worth less now.

Since December, Gatwick’s passenger numbers have continued to decline, down in February by 14.4 per cent from the same month last year, and bidders on the airport are finding it difficult to secure financing in the economic downturn.

Gatwick’s regulatory asset base is £1.6 billion.

The release of this new valuation comes at a bad time for BAA, which is owned by a consortium led by infrastructure giant Ferrovial of Spain. BAA has found it necessary to give Gatwick’s three remaining bidders until 30 April to arrange financing.

In a report issued by the Competition Commission last week, BAA was ordered to sell two additional airports – Stansted and either Edinburgh or Glasgow in Scotland. Frontier indicated in the study that “the development of competition” in the London airports market “would make the low valuation scenario… the more likely outcome”.

Thanks to www.telegraph.co.uk for the above quotes, for more information on this article please visit their website.

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