Spanish-owned airports operator BAA agreed Wednesday to sell Britain's second busiest airport, Gatwick, to a US investment fund for £1.51-billion after a ruling from competition authorities.

BAA said it will sell Gatwick, south of London, to Global Infrastructure Partners (GIP) for the equivalent of €1.67-billion or $2.5-billion after Britain's Competition Commission had ordered the sale.

"BAA today announces that it has agreed to sell its 100 percent interest in Gatwick Airport Limited to an entity controlled by Global Infrastructure Partners for 1.51 billion pounds," the operator said in a statement.

GIP already owns London City Airport, a small hub in the eastern docklands financial hub area that mostly serves short-haul destinations.

"We will upgrade and modernise Gatwick Airport to transform the experience for both business and leisure passengers," said Michael McGhee, the GIP partner leading the acquisition.

"We plan to work closely with the airlines to improve performance, as we have done successfully at London City Airport."

British competition authorities last year called on BAA to sell three of its seven airports in Britain — two in London and one in Scotland — to end a dominance they said hurts passengers and airlines financially.

A consortium led by Spanish construction group Ferrovial bought BAA in 2006 for £10.23-billion. On Wednesday, Ferrovial's share price was down five percent at €32.10 as the company said it expected earnings to take a €142-million hit from the sale.

BAA said proceeds from the Gatwick sale, due for completion in December subject to EU regulatory approval, would be used mainly to pay off group debt.

"Of the sale price, 55 million pounds is conditional on future traffic performance and the buyer's future capital structure," it added.

The operator said it would focus on improving Britain's biggest airport, London's Heathrow, as well as its other hubs.

"BAA is changing and today's announcement marks a new beginning for both Gatwick and BAA. We wish Gatwick well for the future and are confident that the airport will flourish under new ownership," BAA chief executive Colin Matthews said.

The airport operator had until October to sell Gatwick in order to satisfy the Competition Commission (CC). The CC has also ordered it to sell Stansted airport, northeast of London, followed by either Edinburgh or Glasgow.

BAA in May launched an appeal on grounds of "bias" against the order that it must sell the other airports by early 2011.

According to recent CC data, BAA holds a 60 percent market share of all passengers passing through British airports. The figure climbs to 90 percent around London.

BAA, which was privatised in 1987, also operates Southampton airport in southwest England and Aberdeen in Scotland.

Global Infrastructure Partners describes itself as an independent fund that invests in infrastructure assets worldwide.

In reaction, airlines welcomed BAA's sale of Gatwick. British Airways said it wanted to see an efficiently-run Gatwick while Virgin Atlantic added that the air hub had suffered from under-investment "for years."

AFP

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