Dominic O’Connell
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THE beleaguered airports group BAA is to recruit new heavyweight nonexecutive directors to help it deal with a flood of criticism from politicians and airline bosses.
The move to bolster the board comes ahead of a crucial regulatory decision next month, when Ferrovial, BAA’s Spanish owner, will learn what prices it can charge at Heathrow and Gatwick over the next five years.
If the decision goes against it, Ferrovial may be forced to put on hold billions of pounds of investment to improve facilities at Heathrow.
The decision would renew public wrath over standards at the London airport, Britain’s busiest.
BAA’s search for new nonexecutives comes just over a year after Airport Development and Investment, a consor-tium led by Ferrovial, bought the company for £10.3 billion, taking it off the London Stock Exchange.
At the time of the bid, BAA’s board was chaired by City grandee Marcus Agius, and contained other well-connected business figures, including Tony Ball, former chief executive of BSkyB, and Chris Fay, former chairman and chief executive of Shell UK.
BAA’s board is now representative of the Spanish, Singaporean and Canadian investors in the Ferrovial consor-tium and the company’s management. It includes Rafael del Pino, Ferrovial’s executive chairman, and Stephen Nel-son, BAA’s chief executive.
The airports group declined to comment on the plan yesterday, but sources close to the company confirmed a search had begun for new nonexecutives, with the aim of recruiting at least one City heavyweight.
It is understood that the company’s top executives believe that the right new nonexecutives could help the company in its relations with the UK government and regulators.
BAA has been hit by a storm of criticism in recent months over standards at Heathrow, Gatwick and Stansted, its three London airports. Lengthy queues at security and check-in and mountains of lost baggage have drawn the ire of airline executives and politicians, with Ken Livingstone, London’s mayor, saying Heathrow “shamed” the capital.
Ferrovial feels that it has been unjustly singled out. “What is happening at Heathrow is the result of decades of underinvestment. We have actually begun to tackle the problems which weren’t being taken care of before,” said a source close to the company.
Ferrovial executives are also understood to feel BAA is being blamed for problems that are not of its making. Airlines have also been at fault, they say, while tougher security restrictions imposed by the government have made airport operations more difficult.
Other airline-industry sources say Ferrovial has been caught off guard by the ferocity of the attack, which has coincided with two important regulatory hurdles for BAA.
Regulators are reviewing not only its prices for the next five years, but also whether it should be allowed to own all three of the London hubs. The Competition Commission recently confirmed it would investigate airport ownership in Britain, with its inquiry expected to take up to two years.
But the commission will report next month on pricing. On September 27 it will give its views on BAA’s prices for the next five years, with a final recommendation from the Civil Aviation Authority (CAA) expected a month later.
To date, BAA and the regulators are far apart on price, with the CAA suggesting a 6.2% return on capital, and the company asking for 7.75%. If BAA does not receive what it considers a satisfactory return, it may reconsider plans for a £4 billion reconstruction of the central terminals known as “Heathrow East”.
A failure to secure the desired returns could also hamper Ferrovial’s plans to refinance its acquisition of BAA by raising loans against its future income.
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thats what happens when you are a monopoly, one has no competition.
you think you are bad try scotland where they own 3 of the largest airports
well at least we have snp, so it should,t take long for them to despose of one.
don,t think snp like our airports owned by foreigners
mike mckeary, paisley, scotland
Heathrow is just a mess. I spent 3 hours on Tuesday evening waiting for my bags to arrive. The staff were disinterested and the airport was scruffy. The toilets smelled.
The thing is I really believe that BAA do not care. In fact they profit from the incompetence: fewer staff = lower costs. Also, more delays = more car park revenue.
I phoned BAA the next day to complain- what a waste of time. They seemed to think that a 3 hour to collect one suitcase was acceptable.
BAA are not fit to run our busiest airport.
Carl Wright, Sheffield, England
Welcome to London, as you walk through the airports, every other strip light flickers on and off, or just doesn't work, the celing is permantly removed or hanging down in places, the walls filthy, the fllor tiles held to gether with gaffer tape, the escilator to the baggage hall more of a fixed staircase, an inaudable PA system and a baggage hall bereft of baggage as you wait for hours wondering why it taks so long for a case to get from an aircraft to the hall. Travel around the World, Barcelona, Madrid, San Francisco, Miami it's a different expereince. BBA have made massive profits and thier only refurbishment is to squeeze as many retail shops into every airport as possible, how about having toilets than don't make you wretch, facilities that don't discredit the country. Some of the issues at the airport are not huge to solve. Actually clean the place!! If BAA's only answer is to threaten not to invest further when criticised then they really don't deserve the job.
Michael Bolton, LOndon, UK