Regulator wants BAA breakup

LONDON: BAA, the owner of Heathrow, may be ordered by antitrust regulators to sell two London airports and one in Scotland, forcing a breakup of the 42-year-old former government agency after delays angered airlines and passengers.
The unit of Spanish builder Grupo Ferrovial provides a poor service and has failed to plan for extra capacity, the UK Competition Commission said, recommending it be stripped of London���s Gatwick and Stansted airports and either Glasgow or Edinburgh in Scotland. BAA said the analysis was ���flawed.���

BAA handles 91% of passengers in south-east England, where overcrowding and the chaotic opening of Terminal 5 at Heathrow led lawmakers and airlines to demand its breakup. Europe���s busiest airport had the continent���s worst delays in the first quarter, with 45% of departures held for 15 minutes or more. The regulator will give a final ruling later this year.

���This is a ruthless assessment that many will welcome,��� said Howard Wheeldon, senior strategist at BGC Partners in London. ���It may look like a disaster for BAA but I think it���s something they can live with and ultimately it may prove to be to their benefit. Heathrow doesn���t really compete with Gatwick or Stansted. It���s a global player and this will focus minds on improving passenger services to win back customers from other international airports.���

Ferrovial, which may recoup ��3.4 billion from Gatwick alone, according to Exane BNP Paribas analyst Steven Fernandez, rose as much as 1.07 cents, or 3.2%, to e34.43 and traded at e33.85 as of 9:57 am in Madrid, where the construction group is based. The stock has lost 30% this year amid speculation about BAA���s future and after 600 flights were cancelled when Terminal 5 opened in March.

Ferrovial is down 45% since the $19 billion purchase of BAA closed on August 15, 2006. The deal was funded by debt loaded onto the airport operator, forcing it to focus on the world���s largest-ever refinancing amid a global credit crunch. BAA completed the ��13.3 billion-reorganisation two days ago. ���The commission proposes the divestiture of two of BAA���s London airports,��� the London-based body said in a statement. ���Guidelines mean that it is unlikely to require the divestiture of Heathrow unless the sale of Gatwick or Stansted is likely to be or ineffective.���