London City Airport has finally been sold.
Owner Global Infrastructure Partners has announced the sale its 75% interest in the Docklands aviation hub to a consortium of Canadian pension funds and the Kuwait Investment Authority, which narrowly beat two Chinese offers.
Highstar Capital has also agreed to sell its 25% interest in a deal that should be concluded by March 10 and is thought to be worth about £2billion. The price tag is greater than the £1.5billion paid by Manchester Airports Group for Stansted two years ago, which carries more than five times as many passengers.
However, it remains London City Airport’s premium location and blue-chip business customers that attract investors. It has seen record passengers in recent years and is untroubled by the poor reputation of international aviation generally. Under GIP’s ownership, London City Airport grew from 2.4 million passengers in 2006 to 4.3 million in 2015.
LCY CEO Declan Collier said: “I’m delighted to welcome the consortium as the new owners of the only airport actually in London.
“London City Airport is a successful business with huge opportunities for growth. GIP’s ownership has turned the airport into the award-winning and record-breaking business that it is today, and I look forward to working with the new shareholders, as responsible, long-term investors, to build on that success for the future.”
Chairman and managing partner of GIP Adebayo Ogunlesi said: “GIP’s focus on operational improvements, on-time performance and airline partnerships has made London City Airport very popular with passengers. We congratulate the new owners and are sure that London City Airport will continue to flourish.”
The new owners described LCY as “a highly attractive infrastructure investment in the UK”.
“The airport represents a unique opportunity to invest in an integral part of the London airport system and offers a service proposition based around location, convenience, speed and customer service”.
It pledged to boost the number of routes and promised a “positive economic impact for all of London and the local community”.
The consortium includes Borealis Infrastructure, AimCo, Kuwait’s Wren House Infrastructure Management and Ontario Teachers’ Pension Plan which now owns five European airports, including Bristol and Birmingham.
The price exceeded expectations and prompted airlines using the airstrip to express worries that the money would be recouped by charging higher prices. Both BA’s CityFlyer and CityJet suggested they might abandon their routes if they were subject to outlandish increases. Willie Walsh, of BA’s parent group IAG, called £2billion “a foolish price”.
The deal comes just weeks before London City Airport launches a major appeal against the Mayor of London’s rejection of its expansion plan .
The £200million scheme, which would increase the number of flights to 6m by 2023 and change the shape of the airport, was agreed by Newham Council but overruled by Boris Johnson who continues to insist the future of the capital’s aviation lies in an island in the Thames Estuary.
Shut it down
Meanwhile, the Green Party’s candidate for the London mayoralty has wasted no time in pursuing her case against the airport.
Optimistically, she is calling on the new owners to shut down their £2billion acquisition to create a business park and housing.
On hearing news of the sale she said: “I have shown that if this prime piece of the land were used sustainably for innovative businesses, residential areas, leisure, cultural facilities and shops, it could create at least 16,000 more jobs and add an additional £400 million to the UK’s economy.
“As mayor, I will be seeking a meeting at the earliest opportunity with the new owners to convince them of the sound financial arguments for redevelopment – as well as the robust moral case. I hope they will see that closing the airport would be the smartest thing for their bottom line as well as the right thing to do.”