Manston sold for one pound

Infratil, the Wellington-based infrastructure investor, has agreed to sell Manston Airport in the UK for 350,000 British pounds to Stagecoach Group co-founder Ann Gloag and her brother Brian Souter.

Ann Gloag

Infratil agreed to sell the airport for 1 pound plus adjustment for working capital variances and cash injected by Infratil, the company said in a statement.

The latest sale comes after Infratil last week said it was in talks to sell its Glasgow Prestwick Airport to the Scottish government, allowing the infrastructure investor to exit the unprofitable overseas airports it earmarked for sale in March last year. Infratil expects to write down the value of the assets in its books by about 11 million pounds to zero in its earnings for the six months to September 30, the company said today.

Infratil chief executive Marko Bogoievski said in the statement:

"From Infratil's perspective, while Manston was a very small part of the company's overall asset base, this sale will result in a more focused portfolio and improve our future cash flow position,"

The announcement comes a day after news that David Newman, a director of Infratil for almost two decades and chairman for the past nine years, had died in Wellington.

Shares in Infratil last traded at $2.535, having gained 12 per cent this year. The stock is rated a 'buy' according to the consensus of analysts polled by Reuters.

NZ Herald 14th Oct 2013

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Infratil Limited has agreed to sell Manston Airport to Lothian Shelf (710) Limited, an entity wholly owned by Ann Gloag, for cash consideration of £1 plus an adjustment for working capital variances and cash injected by Infratil between 14 October 2013 and transaction completion (which is expected to be around GBP350,000).

Ann Gloag is an experienced investor who co-founded Stagecoach Group, the UK-listed public transport operator, along with her brother, Brian Souter.

Marko Bogoievski, Chief Executive of Infratil said:

"Infratil Limited is very pleased to have found an acquiror with a vision for Manston Airport's future development. From Infratil's perspective, while Manston was a very small part of the company's overall asset base, this sale will result in a more focused portfolio and improve our future cash flow position"

Ann Gloag said: 

"I am delighted to have purchased Manston Airport from Infratil as I believe there is real potential for growth that has not been fully captured. Having worked in the transport industry for over 30 years, I believe I am very well placed to help maximise opportunities for both freight and passengers at Manston."

Following the sale of this asset and the proposed sale of Glasgow Prestwick Airport to the Scottish Government announced last week, Infratil expects to impair these assets by approximately GBP11 million in its half year financial statements to 30 September 2013.

Completion and settlement of the Manston Airport sale will occur on 29 November 2013 (or earlier, at the purchaser's request), and is only conditional on matters within Infratil's control.

Kevin Baker
Chief Financial Officer

4-traders.com  14th Oct 2013

Infratil STILL trying to flog a dead airport

Infratil's year-end report is out, and it seems they're having more trouble scraping Manston off the sole of their shoe than they expected:

The Infratil Airports Europe segment comprising Glasgow Prestwick and Manston Airports is presented as a disposal group held for sale following the decision of the Group to sell these businesses and the subsequent sales programme. The Group remains committed to the sale process, and it is the expectation of the Group that a sale will be completed within the next financial year.

You can download the full report HERE, but the only page that mentions Manston is reproduced below.

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Infratil aims to offload loss-making UK airports

Infratil says it is still trying to sell two airports in Britain, despite passenger numbers improving. The company has been trying to sell Glasgow Prestwick and Kent International airports, which last year lost $10 million, for more than a year.

Latest figures show passenger numbers at Glasgow increased 14% in May with more than 118,000 passengers passing through, and the budget airline Ryanair plans to add more flights in July.

Infratil chief executive Tim Brown says the airports have attracted lots of potential suitors but have not yet found a buyer. Talks with several interested parties are ongoing.

Infratil shares rose 3.5 cents yesterday to close at $2.23.

Radio New Zealand 14th Jun 2013

Airports write-down lead to Infratil profits plunge

The plunging value of for-sale Prestwick airport contributed to a nose dive in its New Zealand owners’ profits, Infratil reported today.

The firm said the Ayrshire airport and its sister at Manston in Kent were now together worth £11.4 million compared to £38 million a year ago. They had been valued at £44m in 2011.

Infratil said the write-down had been the biggest element of its net profits falling from £28m to £1.8m in the year to March. The company admitted it was struggling to offload the airports. Its results statement said:

“The state of European markets has made the sale of the airports unpredictable and difficult. The two UK airports have not yet been sold and have been written down further. The decrease in value of Infratil Airports Europe [Prestwick and Manston] reflects a negative revaluation of airport assets during the year.”

Prestwick, which has been on sale since March last year, suffered the loss of Wizz Air’s two routes to Glasgow this year.

However, Ryanair - the airport’s sole remaining passenger airline - has increased its flights from there, and chief executive Michael O’Leary has said the firm had an “unbreakable commitment” to Prestwick.

Scotsman.com 15th May 2013

Game-changer - Manston to stop being an airport

Manston and Prestwick have proved hard to sell. Unsurprisingly. Infratil wants to sell them because they're failures - and that's why they're hard to sell.

Infratil has been losing millions every year, for years, and they're eager to staunch the flow. The penny seems to have dropped that these two failed airports would be easier to sell... if they weren't airports.

So Infratil is putting the word out that they're prepared to stump up cash to help potential buyers transform the airports into, er, something they actually want to buy.

Do feel free to use the comments section to pass on any helpful suggestions for Manton's future... theme park... solar farm... race track... nature reserve...

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Infratil says it would consider investing in its two British airports to change their functions to help make them more attractive to sell.

The listed infrastructure investor's Glasgow Prestwick and Kent airports are for sale after years of under-performance. Last week, Dutch national carrier KLM confirmed it would start making twice daily flights from the Kent airport to Amsterdam from April 2013.

Infratil executive Tim Brown says the process of selling the airports has taken longer than the company expected. He says the company now has to look at a range of complex proposals and if the use of an airport is going to change, it will have ramifications for local communities.

Mr Brown says if airports are very successful then councils or cities often then tax them, but if they are struggling they may then either need subsidies or be closed and put to alternative use. He says the debate then becomes more complicated, which makes timeframes more difficult to guess. Mr Brown would neither confirm or deny whether Infratil is looking to buy Stanstead Airport in London.

Copyright © 2012, Radio New Zealand 19 November 2012

No sign of Prestwick airport sale

The New Zealand company which owns Prestwick has said there is no sign of a buyer for the airport, and its value has fallen. Infratil put its two UK airports, which include Kent, up for sale in March this year.

However it said the sales process for both had been "unsuccessful to date". As a result, Infratil said it had taken an impairment charge of £22m, which now values Prestwick at about £14.3m and Kent at £7.6m. Infratil said that it would "continue to seek a buyer for the airports and work with local stakeholders to review alternatives". 

Together Prestwick and Kent's Manston Airport recorded losses for the six months to the end of September of just over £2m. Passengers travelling through the airports fell by more than 180,000 during the period compared to the same time in 2011, although freight business increased.

Prestwick airport has had several owners in recent years. In 1991 the newly-privatised British Airports Authority, BAA, put it on the market. In 1992 the airport was bought by Canadian businessman Matthew Hudson. He sold it in 1998 to transport group, Stagecoach. Stagecoach then sold it to Infratil in 2001 for £33.4m.

A significant percentage of the airport's aviation revenue is derived from freight and other aircraft activity, with business and property income also playing a significant role.

bbc.co.uk 13th Nov 2012

Infratil Airports Europe; right ingredients wrong outcome

Infratil's assessment of their European airports, in their own words...

In the 1990s Australia and New Zealand were amongst the first countries to sell state-owned airports and to allow their commercial operation. The resulting value uplift encouraged Australasian investors to look at markets where similar developments were occurring, which led to Europe.

Infratil invested in Prestwick, Kent and Lübeck airports and purchased an option over an airport near Berlin. These airports were acquired at well below replacement cost as rapid growth in European air travel made it likely that their capacity would soon become needed and valuable.

Kent for instance cost less than £20 million and the next London runway will cost over £2 billion (Mayor Boris Johnson’s preferred site in the Thames Estuary is likely to cost over £20 billion).

Notwithstanding this enormous potential, Infratil has now called it quits. European air traffic growth has slowed so that the need for additional airfield capacity is postponed, and Infratil’s assessment of the relative benefits of waiting (and continuing to meet operating cost) versus refocussing elsewhere have favoured exit.

Infratil Update September 2012

Infratil is selling Manston, but wants to buy Stansted. Why?

In March 2012, Infratil announced that Manston was up for sale because it wanted to "refocus its investment profile" and concentrate on retail, production and supplying gas and electricity. What they didn't mention in their press releases was that Manston had lost them money hand over fist ever since they bought it.

In the previous couple of years Infratil had "written down" the value of its two European airports (Manston and Prestwick) from £70m to £36m. These write-downs were simply more realistic estimates of the actual value of the airports, in the light of their performance and the fact that they were losing Infratil about £6m a year.

Don't forget, dear reader, that Infratil is an infrastructure investment company. They buy and sell "big stuff" (putting it technically) to make money for their investors. On their website, Infratil state that "Infratil’s primary goal is to provide its shareholders with a consistent return of 20% per annum over the long term".

Clearly this 20% hadn't happened at Manston, and Infratil realised it wasn't going to happen soon enough to please their investors, if ever. So they decided to cut their losses.

But now we learn that Infratil are joining forces with Morrison & Co (the bank that owns a large chunk of Infratil) and a large pension fund to put in a bid for Stansted Airport. Stansted is owned by BAA, the largest airport operator in Britain, and the Competition Commission ruled some time ago that BAA owned to much of Britain's airport capacity and would have to sell some of it. BAA spent a lot of time and and money fighting this through the courts, but has finally accepted that it will have to sell Stansted.

This makes Stansted a very interesting purchase for a number of reasons. BAA also owns Heathrow, and has spent years carefully managing the mix of flights and carriers at the two airports to avoid them cannibalising each other's customer base. It hasn't been in BAA's interests to have Heathrow and Stansted competing with each other. Clearly, this will change when a new operator takes control of Stansted - there will be a massive increase in competition.

Stansted is well placed to take on new business. Throughout the recent hoo-hah about airport capacity in the south-east, one simple fact has been under-reported - there isn't a shortage of capacity in the south-east. BAA's own chief financial officer was reported as recently as April 2012 saying that Stansted is "only half full".

Both Stansted and Manston have spare capacity, long runways, and are in the "aviation-hungry" south-east. So why would Infratil balk at spending a few million a year at Manston, but leap at the opportunity to invest a BILLION in Stansted? The answer, of course, is in the question - it's the difference between "spending" and "investing". And this is also the answer to those who ask why not Manston.

Manston doesn't feature in any of the serious discussions about the future of aviation in the south-east (and it doesn't feature in Infratil's strategy) for one plain and simple reason - it's in the wrong place. If these two maps don't explain it clearly enough, have a look at this. 

Rival group enters battle for Stansted airport

A consortium led by an Australasian investment manager has emerged as an early rival to Manchester Airports Group in the £1bn battle for Stansted airport.

Morrison & Co, which operates out of New Zealand, Australia and Hong Kong, is heading a bid team that also includes the New Zealand Superannuation Fund and Infratil, a Wellington-based infrastructure investor.

Stansted was finally put on the block last month after a three-year legal fight by owner, BAA, which tried unsuccessfully to halt the forced sale of the airport demanded by the Competition Commission. BAA’s controlling shareholder, Ferrovial, is thought to have issued non-disclosure agreements last week to interested bidders, effectively kick-starting the process. The sale is being handled by Deutsche Bank and ING.

The interest of Infratil in Stansted has surprised some industry observers because it is currently trying to sell its two smaller British airports Glasgow Prestwick and Manston in Kent after a difficult foray into the UK aviation market. Infratil, which runs about £2.5bn of assets, has twice written down the airports in the past two years, with their carrying value almost halving from £70m to £36m today. The two airports lost around £6m last year.

Even so, Infratil is an experienced airport operator, with its interests including a 66pc stake in New Zealand’s Wellington Airport. Infratil’s operations at Prestwick have also enabled the company to develop a relationship with Ryanair the low-fare airline responsible for almost 70pc of Stansted’s traffic. The Morrison consortium is believed to have held early talks with Ryanair. The NZSF, which has more than £9bn assets, devotes about 9pc of the fund to infrastructure investment, spanning airports, transport, energy and oil.

The Morrison consortium faces early competition from the council-owned Manchester Airports Group, which is building up its firepower via a potential deal with Australia’s Industry Funds Management. The giant antipodean infrastructure investor, which has around £21bn under management, has agreed to inject about £1bn for a 35pc stake in the Manchester airport company on the condition it wins the bid for Stansted.

The Stansted auction, which may also attract interest from JP Morgan, Citi Infrastructure Partners and Morgan Stanley Infrastructure Partners, is complicated by the Government’s review of airport capacity in the south east, led by former Financial Services Authority chairman Sir Howard Davies. While there will be no decision on where to build a new runway before 2015, the recommendations of the Davies Commission could have a major impact on Stansted’s value.

Michael O’Leary, the Ryanair chief executive, can also influence how much BAA gets for Stansted. He has already expressed interest in taking a minority stake in any new owner of the airport as long as it agrees to lower both landing charges and the cost of building new facilities. Mr O’Leary has also attempted to drive down the price by declaring that any bid based on the airport’s £1.3bn regulated asset base the regulator’s proxy for its value is “artificial” and based on “Noddy land” economics.

telegraph.co.uk 22nd Sep 2012