Ferrovial could struggle to find serious buyers for London's Gatwick Airport amid the global credit crisis, and the sale is likely to take more than a year to complete.
The Spanish group said this week it would sell Gatwick, Britain's second biggest airport with 35 million passengers a year, in a deal valued by some in the industry at around GBP2 billion pounds (USD$3.65 billion).
The move immediately prompted interest from a string of potential buyers, including Deutsche Bank infrastructure arm RREEF, airport operator Manchester Airports Group and Virgin Atlantic Airways, but analysts and other industry sources warned that it would not be an easy sell.
They said that although expressions of interest have come in from many different corners, the financial crisis would make it difficult for all but the cash-rich to raise the money.
"There are funds out there able to buy it as they will have the cash to be able to do it, but if a buyer needed to borrow funding from banks it will be very difficult," said Paul Whelan, head of industry body the Small to Medium Airports Group (SMAG).
Former buyers of British airports such as Australia's Babcock & Brown and Macquarie are already effectively out of the race, with the former suffering severe financial constraints and the latter ruling out further airport purchases just last month.
And American International Group -- the owner of half of London City Airport -- was this week the subject of an USD$85 billion bail out by the US Federal Reserve.
"Much of the global, corporate world -- including airports, airlines and funds -- are sobering up to the realities of the new world, where credit availability is limited," said Andrew Fitchie, transport analyst at Collins Stewart.
"There is interest, but whether it will manifest itself as an open cheque book at the price requested, I don't know," he added, saying airlines in particular would be looking to a low price bid in order to cut landing charges.
Ferrovial bought the BAA airports monopoly for GBP10 billion two years ago, valuing the seven airports at a 30 percent premium to their combined Regulated Asset Base (RAB), according to Fitchie.
That would mean it would need to attract a bid of more than GBP2 billion to make a profit on Gatwick, although a sale at any price would help Ferrovial pay down some of the GBP9 billion of debt racked up during the BAA purchase.
The Gatwick sale has been designed to pre-empt a likely order to sell up from Britain's Competition Commission, which ruled last month that the BAA monopoly was bad for competition and it should sell three of its seven airports including two of London's Heathrow, Stansted and Gatwick.
Douglas McNeill, transport analyst at Blue Oar, said the firm was right to take the initiative to avoid a forced sale, but warned the process was likely to be a "long and slow" as Ferrovial attempts to extract Gatwick from the rest of BAA.
"It will take time to fully separate Gatwick from the rest of the group. There's staff pensions, IT systems -- the pace is not going to be very fast," he said.
His view was echoed by an infrastructure fund source familiar with this type of deal.
"Gatwick needs to be a standalone business capable of competing with Heathrow... It needs to have its own set of functions that are required for a regulated airport -- it also needs to have a separate financial reporting unit, and a new retail and operations unit," the source said.
A spokesman for BAA reiterated that the sale was at a very early stage and conceded it might not be completed before the Competition Commission publishes its final report early next year.
"There is a lot of work to be done to extradite Gatwick from the BAA group. It could go past that time period," he said, referring to the months before the Commission's outcome.
