"BAA to Bid for Chicago Midway"

Sunday, April 1, 2007

BAA on runway to expand overseas
By Jonathan Russell
United Kingdom - The Sunday Telegraph


BAA is to expand its airport empire by bidding for airports in the United
States and Portugal, according to a senior executive.

The Spanish-owned operator of seven UK airports, including Heathrow, Gatwick
and Stansted, will enter the bidding war for Chicago Midway airport and
Portuguese airport operator, ANA Aeroportos de Portugal, when they are
privatised later this year.

Although BAA is in the process of selling off interests in airports in
Australia, Budapest and Naples, the source said the company was interested
in expanding overseas where it can buy controlling or fully-owned interests
in the airports.

advertisementA spokesman for BAA declined to confirm whether or not the
company would bid, but said: "Opportunities like these come along very, very
infrequently. We will keep a very close eye on developments."

No prices have been released on the two privatisations, however, market
analysts expect the operators will fetch well in excess of £1bn each. Both
Chicago Midway and ANA, with its seven Portuguese airports, carry around 20m
passengers per year. The senior executive said that while the company was
still deciding whether to bid as BAA or through its Spanish owner Grupo
Ferrovial, it was likely to be handled through the UK arm.

News about the move to expand overseas came as BAA was referred to the
Competition Commission over its ownership of the three biggest London
airports: Heathrow, Gatwick and Stansted.

The Competition Commission inquiry was announced on Friday after referrals
from the Office of Fair Trading and the Civil Aviation Authority. It comes
after a protracted campaign by airlines such as British Airways to break up
BAA's near monopoly of the London market.

The airlines' complaints seem in part due to the price charged by the
airport operator for landing fees. Although fees are regulated by the Civil
Aviation Authority, some of the biggest users of London's airports such as
British Airways and Virgin argue that a proposed 50 per cent hike in fees
over the next five years to around £14 per passenger is too high.

In return BAA has argued that it needs the investment to finance its £10bn
investment programme.

BAA chief executive Stephen Nelson said: "Our analysis is that the
fundamental problem for passengers is lack of capacity, not the structure of
BAA. Putting BAA in the dock for a complex set of problems - with deep
legacy causes - will not help solve them."

On Tuesday the Office of Fair Trading is expected to publish the reasons it
decided to refer BAA to the Competition Commission.

A source within BAA said the company would "robustly defend" any suggestions
the company structure was anti-competitive.

The inquiry is expected to run well into 2008.

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