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Contractors line up to buy Gatwick Airport

Balfour Beatty and Hochtief were this week among the firms being tipped to bid for Gatwick Airport, after it was put up for sale by airport operator BAA last week.

German contractor Hochtief has, along with five other firms, declared an interest in the £2bn airport after BAA announced its plans to sell last week.

The move came after the Competition Commission announced its intention to break up BAA’s monopoly of seven airports last month. It comes six months before any decision on which airports BAA should sell is officially made.

Balfour Beatty already owns Exeter and Blackpool airports and heads a list of contenders yet to confirm an interest in the airport.

But some city analysts are predicting BAA may struggle to find buyers given the tough economic climate and the fact that Gatwick has little room to expand. Whoever buys the airport will also have to stick to the five-year caps on landing charges set by the Civil Aviation Authority in March.

"Up until last week, the general feeling was that the obvious thing for BAA to do would be to fight the Competition Commission conclusions which could have bought them a year window and maybe nothing would have been done until 2010," said Andrew Briggs, partner in infrastructure & project finance at City law firm Lovells.

"It’s mad to sell in the current market and the pricing might be better in a year or two. However it looks like they’re selling Gatwick in a bid to convince the Competition Commission that they’re doing something and should be allowed to keep the others. The Commission is often open to discussion and if I were BAA, I’d be talking to them."

By selling an airport ahead of the Commission’s final decision BAA also retains control over
the sale.

"Once we have made the final decision, BAA would have to comply with it,” said a Commission spokesman. "Whether BAA or the Competition Commission would be in control of the process [of selling off airports] we couldn’t say, but there has been some suggestion that we would be the ones ensuring it was viable."

BAA said it would continue to fight to hold on to its remaining assets at Stansted, Heathrow, Southampton, Aberdeen, Edinburgh and Glasgow.

"We will continue to present our case in respect of the South East airports and those in Scotland," said BAA chief executive Colin Matthews.
"At Stansted, we believe that a change of ownership would interfere with the process of securing planning approval for a second runway, which remains a key feature of government air transport policy. Success depends on our day to day management of our airports, and on policy-makers taking the right decisions on runway capacity and future regulation."

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