The Competition Commission has been arguing for a long time that BAA needs to sell Stansted airport in order for the market to remain competitive. This is something that BAA have been fighting for a very long time, over three years, and they have recently decided that they are not going to continue with their fight and have agreed not to retain the airport.
BAA once owned the three largest airports in the country, as well as numerous other airports around the UK. However, this latest sale is going to mean that they only own Heathrow and some other minor airports. Before the announcement that it was going to give up in attempting to retain Stansted, the company fought several appeals in order to retain the airport.
It is expected that the sale of the airport is going to bring in around £1 billion in for BAA, which is around 10 times the amount the airport takes each year before tax and other costs. It is widely thought the many parties are going to be interested in bidding on the airport including the Manchester Airports Group, which it is believed could fund the purchase of the airport by the sale of some equity in other airports that it owns.
An airport such as Stansted, which is regulated, is very appealing to investors as it is regarded as a very safe investment with good returns. There is some risk however in the purchase of such an airport as the deals are usually very heavily leveraged.
The biggest airline operating out of Stansted is Ryanair, and they have long had a tortured relationship with BAA. The budget airline has long been arguing with the airport owner that the fees they are charging rise too fast and they are ultimately harming consumers.