BAA and the great airports break-up

The route by which we’ve got this story has surprised even us, but we’ve been told – on good authority – that the news will break this weekend that BAA’s refinancing battle will get even tougher with major backer Citibank pulling out.

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The bank, which was being lined up to provide the largest chunk of money to BAA in this financing round, is believed to have reversed an earlier decision to extend further credit to the UK airports operator.

If this plays out it will be a major blow to BAA, and could influence other banks mulling a role in BAA’s refinancing.The subtext here is that BAA is already in the throes of an investigation by the UK’s Competition Commission over whether it should retain ownership of all the three main London airports and its four other UK airports.

Our sources tell us the UK government would rather like BAA to sell off London Gatwick and Glasgow airports to head off a potential Commission ruling to break up the airport group.

The government has already been pondering its options about the future of BAA, which is considered an asset of national strategic importance, even though it was privatized in the 1990s and since acquired by Spanish group Ferrovial.

These options include the “nuclear” one of buying London Heathrow, injecting cash to shore up BAA’s balance sheet (both immensely unpalatable) or letting market forces play prevail (by far the most pragmatic course of action).

Watch out for further revelations in the coming days

It’s predictable, but airports really fancy BAA being broken up – our recent blog on the subject.

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