BAA to Bid for Chicago Midway

BAA is likely to face competition for Chicago from private equity groups and infrastructure specialists, such as Australia's Macquarie, Singapore's Temasek, and America's General Electric.


BAA, THE UK airports operator, plans to bid for Chicago Midway airport, which is expected to be put up for sale this May for around $3billion. It is the first big US airport to be privatised. Spanish-owned BAA also hopes to take part in the mooted privatisation of Portugal's airports according to deputy chief executive Luis Sanchez Salmeron, who was speaking in London last week. BAA, bought by Spanish infrastructure firm Ferrovial last year for GBP10billion, is embarking on the overseas acquisition trail as it faces a Competition Commission inquiry in the UK which could herald the end of its monopoly ownership of London's main airports. The inquiry, launched on Friday after a three-month probe by the Office of Fair Trading, is likely to take two years to complete. BAA's seven UK airports - including key hubs Heathrow, Gatwick and Stansted - handle 63 per cent of flights to and from Britain. The company said it intends to hold onto its airports but admitted it had received expressions of interest in them. The airports operator is already rethinking the future of Gatwick in the light of "open skies", the new agreement between Brussels and Washington to liberalise flight rights between Europe and America. Chief executive Stephen Nelson said last week: "Gatwick could turn into a short-haul or leisure destination under 'open skies'." Long-haul flights to America would leave from Heathrow. Nelson is consulting on the proposals with airlines. BAA is likely to face competition for Chicago from private equity groups and infrastructure specialists, such as Australia's Macquarie, Singapore's Temasek, and America's General Electric. Chicago Midway's airlines have not yet agreed to the sale, which is being handled by CSFB. Sanchez Salmeron said the company had not yet decided whether to bid as BAA or as Ferrovial. He said BAA, currently selling Budapest airport, would be interested in acquiring majority stakes in America and Portugal. Ferrovial is divesting BAA's noncore assets because of the debt burden left by the purchase of the airports operator last year. It plans to sell its stakes in several Australian airports as well as its 65 per cent holding in Naples airport. The firm is due to decide within weeks whether to sell out of its GBP800million property joint venture with Morley. This week BAA will apply for planning permission for Heathrow East, the multi-billion pound redevelopment of Terminal 2. The company hopes to have the terminal - which will be bigger than Terminal Five - ready in time for the 2012 Olympics.

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