Thursday, January 31, 2013

Manchester Airports Group buys Stansted

 Adapted from Manchester Evening News

Adam Jupp

1) If Manchester Airports Group is owned by the 10 Greater Manchester councils, how can it afford to spend so much on another airport at a time when there are huge cuts to public services?
The councils have not had to pay anything towards the deal, which is set to be finalised at the end of February. The cash has been raised through a combination of MAG selling a 35.5 per cent stake in itself to an Australian company called Industry Funds Management and agreeing a new debt package with its banks. The deal will see Manchester council reduce its stake in MAG from 55 per cent to 35.5 per cent. The other nine town halls, which currently have a five per cent stake each, will share equally the remaining 29 per cent.

2) Will Manchester Airport itself benefit?
As a result of this deal, MAG will control nearly 19 per cent of the UK aviation market, owning Manchester, Stansted, East Midlands and Bournemouth. That is likely to strengthen its bargaining power when negotiating with airlines. As a result, the deal could help airport bosses in their quest to bring new routes to Manchester.

3) Why was Stansted so attractive to MAG?
Stansted has seen its passenger numbers fall by around a quarter over the past five years and that is why MAG thinks it has huge growth potential. It believes it can improve the airport's retail areas, increasing the amount of money brought in by its shops, restaurants and bars. After investing heavily in Manchester's terminals, retail revenues have risen steadily year-on-year – they grew from £69.4m in 2011 to £74.6m in 2012. MAG will also be looking to make the most of its airline relationships to bring passengers numbers back to what they were five years ago. Ryanair currently accounts 70 per cent of all flights out of Stansted but the airport is only at 47 per cent capacity. MAG will be looking to encourage other carriers like, Flybe and easyJet, many of which have a strong presence at Manchester, to launch new routes from the Essex gateway.

4) Could it lead to greater profits, which could then be distributed to the 10 Greater Manchester town halls?
The councils have reduced their stakes in MAG but have agreed to the deal in the hope it will boost the dividend they receive each year. The dividend is based on MAG's annual earnings and in 2012, £20m was paid out, of which £11m went to Manchester and £1m each to the other nine. Buying Stansted will automatically add around £80m to MAG's profits, which the group will hope to increase through the measures mentioned above.

5) Will any people currently employed at Manchester Airport be transferred to Essex?
It is too early to say but it is unlikely large numbers of workers will be asked to transfer to Stansted. MAG has said it has “a detailed integration plan in place to ensure a seamless transition of ownership and operations at Stansted."

6) As MAG is owned by the people, why were the people not consulted?
The proposals were first put the the Association of Greater Manchester Councils, then secured approval from each town hall individually, where they were voted on by publicly-elected councillors.

7) And finally, with all the cutbacks taking place, which we hear about on a daily basis, why didn't our town hall leaders consider selling their stake in MAG?  
Selling their shareholdings in MAG would have netted a one-off windfall for the councils. However, it is hoped by not only retaining their stakes, but backing the expansion of the group, the amount they pocket year-on-year through their dividends will grow.

8) Is £1.5bn value for money?
When weighing up whether a deal represents value-for-money, analysts tend to look at the purchase price as a multiple of a company's underlying profits. The £1.5bn price tag was 15.6 times Stansted's 2012 earnings. When looking at other airport deals, Newcastle sold a 49 per cent stake in itself for a reported £150m, which was 16.1 times its profits, while Edinburgh Airport was sold for £807m – 16.7 times its earnings. On that basis, the Stansted deal has been viewed as a good one from MAG's perspective by some industry commentators.

9) What are the risks associated with a purchase of this magnitude, particularly during the current recession?
There is, of course, a risk that MAG's plans for Stansted won't come off.  However, it has a proven track record of not only managing an airport of a similar scale - Manchester - but improving its performance, even during a  recession. In the last six months alone, Ryanair and easyJet have added routes from Manchester, while United Airlines started daily flights to Washington and American Airlines started using bigger aircraft for its New York and Chicago services. Earlier this month, it revealed revenues, profits and passenger numbers in the six months to the end of September were all up on last year.

Tuesday, January 15, 2013

Airport City North: planning application submitted

from BBC News Manchester

Airport City North plans submitted

(Nb: these plans were approved on 17th Jan 2013)

Plans for a £650m business park at Manchester Airport have been submitted.

Developers MAG said Airport City Manchester will include office space, hotels and manufacturing centres and will create 11,400 jobs.

Manchester Airport's parent company plans to build the park on 65 acres of scrub land near the M56 and Woodhouse Park in Wythenshawe.

It is in the new Manchester Enterprise Zone - one of four in the country - set up by the government.

Enterprise zones were created to offer business rate discounts, simplified planning and access to super-fast broadband in order to boost economic growth.

MAG hopes the development will attract inward investment and bring job opportunities to the people of Wythenshawe.

'Economic hub'

At the centre of the proposal is a new 13-acre central park, surrounded by buildings and public areas.

MAG's Airport City director, John Atkins, said: "Airport City will attract investment from international businesses and become a catalyst for the wider long term regeneration of Wythenshawe, with the creation of thousands of new jobs.

"It brings a world-class commercial product that is sustainable and innovative to the UK for the first time - this presents Manchester with a unique opportunity to add to its offer as a major European business city and will enhance the airport's reputation as an economic hub and a global gateway to the UK.

"The aim is to create a modern business destination that makes full use of infrastructure already in place and the majority of workers and visitors will not drive to Airport City - instead they will walk, cycle, take a tram, bus, train or a plane."

The outline planning application has been submitted to Manchester City Council and follows public consultations carried out in the local area by MAG.