Incheon Airport May Rival Manchester in Stansted Bidding
Manchester Airports Group, in the running to buy London’s Stansted hub, said it will tap relationships with carriers including Emirates and Etihad Airways to expand its customer base following any purchase.
“We need to look at acquisitions that enable us to leverage the skill-set we have across commercial and operational areas,” MAG Chief Financial Officer Neil Thompson said in an interview. “Manchester has the largest global network of carriers outside Heathrow and a very broad spread of good relationships.”
Stansted, which may fetch 1 billion pounds ($1.6 billion) in a sale, lured 18 million people in 2011 and specializes in low-cost services, with Ryanair Holdings Plc (RYA) as its No. 1 operator. Manchester, which attracted 19 million customers, has a broader range of flights, spanning Ryanair’s short-haul routes to Airbus SAS A380 services flown by Dubai-based Emirates, the No. 1 international airline.
MAG reiterated yesterday that it’s seeking to purchase a “quality airport” following an agreement with Industry Funds Management of Australia to bring new equity into the business.
That’s after the company said on Oct. 17 that it would bid for Stansted following the announcement of an auction on Aug. 20 by owner Heathrow Ltd. amid pressure for an asset sale from U.K. antitrust regulators. MAG didn’t comment directly on Stansted in its statement yesterday.
There’s scope for broadening Stansted’s user base, given capacity constraints elsewhere, though securing new entrants won’t be easy, said Charles Stanley analyst Douglas McNeill.
“It’s a realistic medium-term goal, but would have already occurred to current management, and they haven’t been able to pull it off,” said McNeill, who is based in the U.K. capital.
Among London airports, Stansted trails Heathrow, Europe’s biggest hub with 69 million passengers in 2011, and Gatwick -- owned by Global Infrastructure Partners Ltd. after an earlier BAA sale -- with 34 million. Both larger facilities are operating close to the limits of their runway capacity.
Manchester is served by 10 foreign long-haul carriers, versus seven at Gatwick, a comparison of their websites shows, though the London hub offers 10 more routes overall. The north English airport is also the only one in Britain outside Heathrow used by the A380 superjumbo, the world’s biggest jetliner.
In addition to Emirates, long-haul operators that fly to Manchester include Etihad of Abu Dhabi, Qatar Airways, Singapore Airlines Ltd. (SIA) and U.S. carriers American Airlines, Delta Air Lines Inc. (DAL), United Airlines (UAL) and US Airways Group Inc., as well as U.K.-based Virgin Atlantic Airways Ltd.
“There aren’t many airports that if they are appropriately managed can’t have a broad mix of airlines across charter, low-cost, long-haul and so on,” Thompson said.
MAG is one of only two bidders still in the running for Stansted following the withdrawal of a group including New Zealand infrastructure investor Infratil Ltd. (IFT) and Morrison & Co., the Daily Telegraph reported Jan. 8, citing people with knowledge of the auction process. The remaining rival is Australia’s Macquarie Group Ltd. (MQG), the newspaper said, adding that Malaysia Airports Holdings (MAHB) may also become involved.
Heathrow Ltd. (FER) spokeswoman Marianna Panizza declined to comment on the bidding or the timeline for the disposal. Macquarie spokeswoman Amanda Mitchell also declined to comment, as did an official at Malaysia Airports.
MAG also runs the East Midlands and Bournemouth terminals, having last year sold its 82.7 percent stake in Humberside airport, bought in 1999 for 10 million pounds, to Eastern Group for an undisclosed sum. The company turned to IFM for backing because its owners, the 10 local authorities around the north-English city, would struggle to finance an offer.
“If we were to make any acquisition you’d expect MAG to be very well-organized and prepared, both in terms of the equity and debt requirements and the subsequent integration of the business,” Thompson said yesterday. “The shareholders will have a significant involvement. They are very supportive.”
Ryanair Chief Executive Officer Michael O’Leary said Nov. 5 he’d rather an investment fund bought Stansted than an industry player with an “airport-monopoly mentality” such as MAG. The Irish carrier had earlier offered to buy a 25 percent stake as part of a wider group, before being barred from the process by Ferrovial SA, the biggest investor in the former BAA.
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