Infratil May Sell Glasgow Airport as Ryanair Cuts Flights

Infratil Ltd. Chief Executive Officer Marko Bogoievski
Infratil Ltd. Chief Executive Officer Marko Bogoievski. Source: Telecom Corp. of New Zealand Ltd. via Bloomberg

Infratil Ltd. may sell Glasgow Prestwick Airport following flight cuts by Ryanair Holdings Plc, the airfield’s largest operator of scheduled passenger services.

“Glasgow isn’t performing,” Marko Bogoievski, chief executive officer of Wellington, New Zealand-based Infratil, said in an Oct. 5 interview. “It’s a difficult asset to see in the portfolio in the long term.”

Combined passenger numbers at Prestwick and Infratil’s other U.K. airport, Manston, tumbled 33 percent in April through August, predominately because of Ryanair paring flights at its Glasgow hub. Infratil may use the proceeds from selling Prestwick for investments in other airports or to boost its portfolio of energy assets in Australia and New Zealand, which offer more reliable earnings, Bogoievski, 49, said.

Investments with strong cash flows “are easier for investors to get their head around and easier for bankers to bank,” he said. “We’ve rebalanced to that sort of asset.”

Infratil has also sold a 90 percent stake in Germany’s Luebeck Airport and its shares in Auckland International Airport Ltd. over the past two years. In March 2010, it joined with the New Zealand Superannuation Fund to buy Royal Dutch Shell Plc’s fuel-retailing assets in the country.

Wellington Airport

Still, Infratil has no plans to shed its 66 percent stake in Wellington International Airport Ltd., even as investor Utilico Investments Ltd. calls for a sale, Bogoievski said. London-based Utilico, which owns about 15 percent of Infratil, said last month the stake should be sold because the investment is mature in nature and unlikely to jump in value.

“They’re an investor and entitled to their view,” Bogoievski said. The company will retain the Wellington stake as earnings are growing and because passenger numbers will probably double by 2030, he said.

Infratil said on Oct. 7 that first-half earnings will likely be in line with full-year guidance as it benefited from higher electricity prices and increased demand for bus rides in New Zealand because of the Rugby World Cup.

The shares fell 0.5 percent to NZ$1.83 at the 5 p.m. close in Wellington trading, extending the stock’s decline this year to 5.7 percent. The benchmark New Zealand NZX 50 index has gained 1.9 percent.

Elvis Visit

Prestwick, Scotland’s busiest cargo airport, and Manston, east of London, handled 560,289 passengers in the five months to Aug. 31. The Scottish airport, about 32 miles (50 kilometers) south of Glasgow, was the only place in the U.K. visited by Elvis Presley. The singer stopped off there in 1960 while flying back to the U.S. following military service in Germany.

Glasgow’s larger airport, Glasgow International, or Edinburgh Airport, Scotland’s busiest, may also go on sale soon as the U.K.’s competition commission has ordered BAA Ltd. to shed one of the two facilities. BAA, the owner of London’s Heathrow, is appealing the ruling.

Prestwick and Manston made a combined operating loss of NZ$11.3 million ($9 million) in the year ended March 31, prompting Infratil to cut their value to NZ$101 million from NZ$138 million a year earlier. The airports’ passenger numbers fell 9.4 percent in the year ended March, while freight volumes tumbled about 20 percent.