Vinci Airports has purchased a majority stake in London Gatwick Airport, the second busiest in the city, for £2.9 billion (USD$3.7 billion). The deal should be completed by June 2019.
Gatwick will be the largest airport in Vinci’s network.
Vinci is buying stakes in Gatwick from existing shareholders. It took advantage of a slump in UK asset prices linked to Brexit proceedings. It now has a foot in the world’s largest metropolitan aviation market, which includes six commercial airports.
“[This deal is a] vote of confidence in Gatwick and its future potential,” said Sir David Higgins, Gatwick’s Chair. He, along with Gatwick Chief Executive Stewart Wingate, will keep his position.
“This is good news for the airport as it will mean both continuity but also further investment for passengers over the coming years to improve our services further,” said Wingate
“Just a few months ago we would not even have dreamed of being able to acquire an unlimited licence in the London airports system for less than 20 times core earnings,” said Nicolas Notebaert, President of Vinci Airports. He says that any hit to UK economic growth will be offset by an expected rise in tourism.
Gatwick hopes to attract more long-haul flights to offset local losses. Like Manchester Airports Group, which operates London Stansted, Vinci does not plan to slow Gatwick’s growth.
“Airports are attractive investments, especially in a world of high volatility, because airport returns can be quite predictable and manageable even if passenger numbers are volatile,” Bernstein analyst Daniel Roeska. “In any Brexit scenario, people will still go on holiday. In the long term it won’t be impacted that much on the leisure side.”
Global Infrastructure Partners (GIP) was the last firm to buy Gatwick. It paid £1.5 billion for the airport in 2009, and, with a number of partners, it will hold 49.99% of Gatwick once the deal goes through.
“We expect the transaction to be completed by the middle of next year, with the senior leadership team remaining in place,” said Michael McGhee, a GIP Partner. “Their focus, along with everyone at Gatwick, obviously remains on doing their very best for customers over the busy holiday period after the challenges of recent days.”
Gatwick Airport is 30 miles south of London. 228 destinations in 74 countries are served from Gatwick, and both easyJet and British Airways have bases there. Gatwick welcomes over 46 million passengers each year, over 25% of those in London’s airport system.
Gatwick is the busiest single-runway airport in the world. In 2017, the airport handled a record 950 flights in one day. In 2018, the airport lost funding for another runway to Heathrow. Yet it does have plans to spend £1.11 billion to expand its two terminals by 2023. The airport will use its standby runway to help handle more flights.
“As Gatwick’s new industrial partner, Vinci Airports will support and encourage growth of traffic, operational efficiency and leverage its international expertise in the development of commercial activities to further improve passenger satisfaction and experience,” said Notebaert.
Vinci’s purchase comes just days after a number of drone sightings near Gatwick wrecked havoc at the airport. The airport was forced to close its runway, affecting at least 1,000 flights and 140,000 people. Gatwick has since committed to investing £5 million in anti-drone technologies.
Two people were arrested in connection to the drone activity, but they have been released without charge, according to City A.M.
“I know this unprecedented criminal activity caused huge inconvenience to thousands of people – many of whom missed important family events in the run up to Christmas. We have appreciated the understanding and tolerance shown at what was a really challenging time for everyone, and we are grateful that passengers recognised that we should never do anything that might jeopardise their safety,” Wingate said.
“I think the whole country and certainly the government will have watched what’s gone on and said we need to up our game here,” said Cressida Dick, Commissioner of the Metropolitan Police Force. “We need to work even more closely with the private companies; we need to work even more closely with the military; we need to try to be able to prevent the criminal use of drones for whatever motivation near our airports.”
Vinci currently operated 45 airports across 12 countries, including France, Portugal, the UK, Sweden, Serbia, Cambodia, Japan, the United states, the Dominican Republic, Costa Rica, Chile, and Brazil. Earlier this year, it bought Airports Worldwide’s management portfolio, allowing entry to the United States and expansion in Europe. In 2017, it handled 180 million passengers and brought in €3.2 billion in managed activities revenue, consolidating revenue at €1.4 billion. This was a 196% increase over 2014.
Vinci is most well known as a construction company. It employs 200,000 people around the world, and it manages France’s motorways.
Featured image by Henrik Pedersen/Aeronautics Online