Nostrildamus (F)

Infratil don’t want night flights... but TDC’s refusal would provide them with a handy cover story for leaving.

Please bear in mind: Infratil have grown into a billion dollar company as a result of being noticeably better at both strategy and risk assessment than most of the other major international players. This does of course mean that they are significantly better on both counts than TDC.

Infratil's shareholders are pleased with Infratil's ownership and management of Wellington Airport in New Zealand. Building on this success, Infratil made a carefully considered speculative punt, and started buying airports in Europe - Germany, Scotland and England. This turned out to be a mistake.

The least bad mistake was Lubeck Airport, north-east of Hamburg. Thanks to some quite frankly brilliant negotiating, Infratil had the right to sell the airport back to city of Lubeck after a fixed time period if they chose to do so. Time passed, the airport didn't succeed as they had hoped, so they sold it back to Lubeck at cost price, thereby exiting without too much loss or pain. Neat.

Prestwick Airport south-west of Glasgow has also failed to live up to expectations, but unlike Lubeck, there is nobody waiting in the wings who is contractually bound to buy it back off Infratil. Prestwick's vulnerability to the fluctuations in the air passenger market are reflected in the swingeing staff cuts imposed from time to time. Prestwick continues to make a significant negative contribution to the overall negative picture for what's left of Infratil Airports Europe.

Manston is definitely the worst of a bad bunch. Having cost millions, it has lost millions every year since. It has never made a profit. This contrasts sharply with Infratil's overall performance of 18% year on year return, and does not sit happily with their declared aim of achieving a 20% return for their investors. The local New Zealand financial analysts estimate that the European airports transalte into a 5% mark-down on Infratil's share price. This is not something that makes their shareholders happy - Infratil are under pressure.

Infratil need a lot of good news to start happening, and then keep happening, at Manston. They need to recover the purchase price and the subsequent losses (say £20m-£30m) and then start reliably raking in cash if Manston is to compare favourably with their other investments. Failing that, they cannot justify to their investors retaining Manston. The time is fast approaching when Infratil will have to bite the bullet. Selling Manston for a nominal £1 starts to look like an attractive alternative to losing millions a year. It is a fact of life that professional investors like Infratil have long since learnt to deal with: sometimes you just have to cut your losses and walk away.

Realistically, that time has already passed. Infratil's recognition and acceptance of the fact was signalled by the replacement of Matt Clarke (their hand-chosen representative on Planet Thanet) with Charles Buchanan (a PR and communications specialist, and experienced airport vendor) to clean up the remnants. Infratil can tell their shareholders that they've given it their best shot. The aviation industry has been through rocky times: wildly fluctuating fuel prices made business erratic; Icelandic ash clouds forced some customers into the welcoming arms of marine freight. It would be easy and convenient for Infratil to present an uncooperative or unwelcoming local regulatory framework as being the last straw. Bye!

"Nostrildamus nose the future"