Stansted Facelift Targets Long-Haul Elite as MAG Benefits

Manchester Airports Group plans to pitch its London Stansted low-cost hub to a host of long-haul carriers over the next 18 months in a bid to broaden the appeal of an asset that spurred first-half earnings 78 percent.

Operating profit at MAG, which owns Manchester, Stansted, East Midlands and Bournemouth airports, rose to 108.2 million pounds ($178 million) in the six months to Sept. 30 from 60.8 million pounds a year earlier, with the London terminal, bought on Feb. 28, contributing 31.5 million pounds of the gain.

MAG is pursuing plans to bring intercontinental carriers such as Dubai-based Emirates to Stansted in the wake of deals to boost flights operated by discount carriers Ryanair Holdings Plc (RYA) and EasyJet Plc. (EZJ) Valet parking, fast-track security and airport lounges are among enhancements being introduced to draw full-service players to the airport 35 miles north of London.

“Broadening our product offering is a key enabler to bring those airlines in, as we’ve done with Emirates and Etihad at Manchester,” Chief Financial Officer Neil Thompson said in a telephone interview. Emirates serves the north-English city using the Airbus A380 superjumbo, with other long-haul clients including American Airlines, Delta Air Lines Inc. (DAL), Air Canada Rouge, Singapore Airlines Ltd. and Virgin Atlantic Airways Ltd.

Catchment Area

MAG is also working to make foreign carriers aware of Stansted’s potential, Thompson said, adding that about 8 million people drive by the airport annually to other London airports based on Civil Aviation Authority data.

The immediate area includes Cambridge University and science and technology company offices, including the planned base of drugmaker AstraZeneca Plc. (AZN) Some 6.7 million people live within a 1-hour car journey and 12 million within 2 hours.

“If we had the right routes and frequencies and we could put those in place, there is a massive and strong catchment area that we can leverage and bring through,” the executive said.

Norman Foster-designed Stansted contributed 10.1 million passengers to MAG’s total of 25.9 million in the first half.

MAG is committed to improvements at the airport costing 80 million pounds in conjunction with retailers, including upgraded security lanes, a food court and revamped shops. The renovation of the facility will extend into next year, with a new Duty Free store due to open in July.

London’s third-largest airport was sold by previous owner BAA Ltd. amid a forced breakup of its assets as antitrust regulators sought to foster competition.

Manchester Traffic

Heathrow Ltd., as BAA is now known, retains control of Aberdeen, Glasgow and Southampton airports, though it may sell those assets to Ferrovial, Sky News said in December. While MAG will “always take a look” at opportunities, the focus is on existing assets and the integration of Stansted, Thompson said.

Stansted attracted 2.2 percent percent more travelers in calendar 2013 for a total of 17.8 million, aided by the busiest December in four years. Manchester posted a 5.1 percent jump to 20.8 million, making it Britain’s third-busiest airport after Heathrow and London Gatwick.

MAG’s East Midlands terminal served 3 million customers in the six months through Sept. 30, up 11 percent, while Bournemouth traffic for the period was flat at 500,000.

MAG anticipates double-digit growth in operating profit for the third year in a row for the year ending in March, Thompson said. Like-for-like revenue climbed 9.5 percent in the first half, boosted by retail sales at Manchester and East Midlands, as well as car parking revenue, the company said.

To contact the reporter on this story: Kari Lundgren in London at klundgren2@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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