AIG-led consortium buys London City Airport

A consortium lead by American International Group (AIG) will buy London City Airport, media reports said.

12 October 2006
LONDON, UK

Apart from AIG, the consortium includes a Global Infrastructure Partners, which is a joint venture between GE Capital and Credit Suisse. The terms of the deal and the amount has not been disclosed.

AIG and Global Infrastructure Partners will hold 50 percent each in the airport.

The London City Airport is currently owned by billionaire Irish businessman Dermot Desmond.

Earlier in 2006, Dermot Desmond had appointed Morgan Stanley to initiate its sale.

Desmond has bagged the docklands airport, situated in east London airport, in 1995 for 23.5 million pounds.

The present deal is likely to be in the range of over $ 1 billion, analysts said. London City Airport has emerged as one of the busiest traffic hubs in the United Kingdom and is the most likely transit hub for the London Olymipcs in 2012.

This year, the airport will handle more than 2 million passengers. This is a jump of 20 per cent from last year.

The AIG-led consortium expects to close the deal by November, subject to EU clearance.

Though airlines across the globe were hit by the surge in oil prices recently, European airports have been minting profits and attracting investors.

This is mainly due to the air travel boom. Analysts said the number of passengers in the continent is expected to double to 2 billion by 2020.
Spain's Ferrovial had bought BAA Plc, owners of the Heathrow Airport in London earlier this year. AIG's structured finance and derivatives unit AIG Financial Products will represent the parent company in the consortium formed to buy London City Airport.