Ferrovial Cuts Heathrow Stake in Battle Over Airport Fees

Spanish construction firm Ferrovial SA sold an 8.65 percent stake in London Heathrow, Europe’s busiest hub, as the airport says a battle with airlines over future fees risks deterring investment.

Ferrovial sold the stake for 392 million pounds ($636 million) to the London-based Universities Superannuation Scheme Ltd fund, Ferrovial said in a statement today. The transaction is expected to close Oct. 24, it said.

Heathrow Airport Holding said Oct. 3 that a government proposal to limit how much it can charge airlines risks driving away investors. Ferrovial, the largest stakeholder in Heathrow, now owns 25 percent in the hub. The builder in December already sold 10.62 percent to Qatar Holding LLC.

“This sale of a stake in HAH is a further part of Ferrovial’s investment diversification strategy,” Inigo Meiras, Ferrovial’s chief executive officer, said in the statement. The Madrid-based company said it will remain “the main shareholder and industrial partner” at Heathrow for the long term.

The transaction is USS’s largest in U.K. infrastructure, it said in a separate statement.

In April, a new fee regime governing London Heathrow is due to come into force. The U.K. Civil Aviation Authority, which sets the maximum amount that London’s top airport can charge to airlines, has proposed fees be limited to the rate of inflation as determined by the country’s retail price index.

Airlines had sought a 9.8 percent annual reduction and warned higher costs could drive away passengers. Heathrow asked to be allowed to increase fees at the RPI inflation rate plus 4.6 percent.

The level of charges Heathrow will be allowed to apply are “very challenging,” Michael Powell, head of private markets for USS Investments, said today. Still, the pension fund management company was a long-term investor, he said. USS has “confidence that the right incentives will be set in place to encourage the investment that Heathrow and the U.K. needs.”

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