London’s City airport up for sale


London’s City airport up for sale

Chinese Portal The London airport on the doorstep of the City beloved by corporate executives is to be put up for sale as its US owners look to capitalise from the soaring global demand for air travel.

An aeroplane lands at London City airport with Canary Wharf in the background

Global Infrastructure Partners, the US fund that also has stakes in London Gatwick and Edinburgh airports, has decided to sell London City airport, which it has owned since 2006. The group said it was in the process of appointing advisers with the aim of selling the airport this year. People familiar with the business suggest it could fetch as much as £2bn.

On runway: US investment firm Global Infrastructure Partners has put London City Airport up for sale, hoping it will fetch around £2billion

Just seven miles from London’s traditional business district and even closer to the financial centre at Canary Wharf, London City has become one of the favoured ways to travel by City workers. Almost two-thirds of the airports passengers are business travellers.

A symbol of London’s resilience as a global business capital, London City has seen passenger numbers double over the past decade from 2m in 2005 to an estimated 4.1m this year, despite the financial crisis. It also has a private jet centre, where passengers can transit through the building in just a couple of minutes.

A £2bn price tag would represent a multiple of just over 60 times the company’s earnings before interest, tax, depreciation and amortisation in 2014 — although people familiar with the business noted that the airport’s adjusted earnings that year were significantly higher.

GIP bought the airport for an estimated £750m in 2006 from Dermot Desmond, the Irish financier, who paid just £23.5m for London City in 1995 from Mowlem, the UK construction group.

Vocal: Last week, IAG boss Willie Walsh (pictured) attacked plans for Heathrow’s third runway, saying its costs would be ‘outrageous’

However, the airport’s value could be limited by its battle to get planning permission for a £200m development that would increase the number of passengers the airport handles to 6m by 2023. It won planning permission from Newham council in February, which was then blocked by Boris Johnson, the mayor of London, the following month over noise concerns. London City is appealing against the mayor’s decision and expects to hear the outcome next year.

Permission would enable it to extend the terminal as well as construct a new taxiway, aircraft stands and arrivals building. It would also help open up the airport to new destinations, such as the Gulf, the Middle East, Russia, north Africa and the US east coast. The airport has already been granted permission to increase the number of flight movements from 70,000 to 120,000 a year.

Michael McGhee, director for transport at GIP, said he believed the market conditions were favourable for a sale. “The market demand for quality airports is very high,” he told the Financial Times. GIP owns 75 per cent of London City, with Oaktree Capital owning the remainder, but both have agreed to the disposal.

Mr McGhee insisted that the group had no plan to sell out of either Gatwick or Edinburgh airports. Opponents to Gatwick’s expansion have accused the consortium of investors led by GIP of planning to sell their investment as soon as the government takes its final decision on where to add airport capacity in the south-east of England.

Last month, GIP said it would be prepared to give a legally binding promise that it will not sell out for a quick profit if the government decides to opt for expansion at Gatwick over Heathrow, which was recommended by the Airport Commission in July.