FALLING PASSENGER NUMBERS AT GATWICK LIKELY TO KNOCK THE SALE PRICE AS BAA HUNTS FOR BIDDERS
13 December 2008
Ian King Deputy Business Editor
BAA's hopes of securing a top price for Gatwick received a setback yesterday when it was revealed that passenger numbers at the airport in November were down 13.5 per cent on the same month last year.
The news came less than two weeks after BAA, which is owned by Ferrovial, the Spanish construction group, started the sale process of Gatwick, Britain's second-largest airport, by issuing a prospectus to potential bidders.
Andrew Fitchie, of Collins Stewart, the broker, said that the collapse in traffic at Gatwick to 1.977 million passengers in November would depress the price that BAA was likely to achieve.
He added: "The traffic deterioration is, in our opinion, likely to put pressure on forecasts and hence could undermine the disposal value. We continue to recommend Gatwick's regulatory asset base of £.7 billion or thereabouts as a sensible valuation point —ot the rumoured £ billion-plus." But Malcolm Robertson, group communications director of BAA, insisted that one month's traffic figures should not be an issue. "We think most of the bidders will take a long-term view.
There is a scarcity value in Gatwick.
Capital city airports don't often come on the market and this is London.
Gatwick is a superb asset," he said.
Mr Robertson said that Gatwick, the worst-performing of BAA's English airports in November, was continuing to be hit by the failure of lowcost airlines last year. He said the airport had also lost business to Heathrow after the "open skies" treaty liberalising air travel between the United States and Europe.
The company's seven UK airports handled one million fewer passengers during November than in the same month last year, with numbers falling by 8.9 per cent to 9.8 million.
BAA said that this reflected a worsening underlying trend, with airlines cutting capacity and schedules because of the economic downturn, with November results also hit by an industrial dispute causing cancellations of Air France services. The demonstrations that closed Bangkok's international airport also led to a number of long-haul services being cancelled.
BAA said all of its key markets had been affected, most significantly European charter traffic, which fell by 17 per cent at what is traditionally its quietest period. Domestic traffic was down 12.7 per cent, European scheduled routes by 9.1 per cent and North Atlantic routes by 9.2 per cent. Other long-haul services were relatively resilient and down by just 3.1 per cent.
Stansted, where passenger numbers were down by 13.2 per cent on November last year, was also hit by cutbacks in services.
In Scotland, BAA said that Glasgow airport's passenger numbers were down 15.6 per cent on November last year, with Aberdeen down 11.5 per cent and Edinburgh down 7.8 per cent.
BAA insisted that the figures were "almost precisely" in line with the 9 per cent drop in air transport as a whole during the month. It added: "BAA expects, on the evidence of historic economic downturns and the resulting effect on air traffic, that the long-term prospects for growth remain good and that passenger volumes will recover in due course." But Mr Fitchie said: "BAA's traffic statistics for November highlight a collapse in traffic. Granted, the fall was exacerbated by Air France's industrial dispute and the closure of Bangkok's international airport at the end of the month.
"However, the trend is clear. September traffic fell 5 per cent, October fell 6 per cent. The rate of decline is accelerating —ecently introduced winter flying capacity cuts and substantial charter capacity cuts for next summer are likely to speed up the pace of decline."13.5% Fall in November passenger traffic Source: BAA statement
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