BA Threatens To Leave London City Airport - Report

February 2, 2016

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British Airways has considered pulling most of its aircraft out of London City airport if a new owner raised charges to cover the GBP£2 billion price tag on the airport, according to a media report.

This move could prove to be a hurdle for the airport's sale, which already attracted three groups including Cheung Kong Infrastructure, Atlantia Spa and another three consortia, one of which is led by Macquarie Infrastructure.

"If the owners succeed in selling this for GBP£2 billion, we cannot see how a buyer will be able to recover or make any return on that investment unless they make a significant increase in airport charges," Willie Walsh, chief executive of IAG, British Airways' parent, the Financial Times reported.

Walsh told the newspaper that he had serious concerns about the owners' valuation, which would represent a multiple of 44 times the airport's EBITDA earnings.

"We will not stay in London City at the levels we are today if these charges increase. Quite honestly the margins we make at London City would not support any increase in charges." Walsh added.

London City Airport, popular among executives for its convenient location near London's two financial districts, is majority-owned by Global Infrastructure Partners (GIP), an investment fund that also backs Gatwick and Edinburgh airports.

The airport, located about three miles from the Canary Wharf financial district to the east of the city, catered for about 3.6 million passengers in 2014. It aims to serve 6 million a year by 2023.