Following on from the news earlier in November 2024 that three UK regional airports have been sold to Canadian investment firm AviAlliance, it has been reported that three more airports are being put up for sale by their current owner. Birmingham (BHX), Bristol (BRS), and London-City (LCY) airports have reportedly been offered for sale by their Canadian pension fund owner as they seek to cash in on the resurgence in demand for air travel to and from the UK.
According to reports, the Ontario Teachers’ Pension Plan (OTPP) is currently engaged in talks over a potential sale of its stakes in the UK airports to minority shareholders. The OTPP’s portfolio, which also includes Copenhagen (CPH) and Brussels (BRU) airports, is estimated to be worth more than $12.6 billion, according to the Sunday Times, which first broke the story.
OTPP, which holds stakes ranging from 25% to 70% in each of the three airports, had made offers to the minority shareholders which have the right of first refusal for 30 days. However, analysts say that OTPP selling up could prompt the other stakeholders to also consider selling their shares, particularly if any potential buyer is seeking a controlling interest.
Reports state that OTPP has begun the process of approaching potential outside bidders who may be interested in buying the Canadian organization out. One such party could be the Australian investor Macquarie, which itself has been active in the airports sector in the past.
Current estimates of the value of the three airports vary. However, airports in general are experiencing surging business and elevated values as demand for air travel continues to soar in the post-pandemic era. London-Heathrow Airport (LHR) saw its busiest ever month in July 2024, while London-Stansted Airport (STN) also reported a record summer period in 2024, handling almost nine million passengers between June and August.
Meanwhile, London-City, one of the three airports at the center of this latest sale, recorded its first profitable year of operations since before the COVID-19 pandemic in October 2024. Financial accounts filed by the airport’s owners showed that the gateway made a pre-tax profit of £6.6m ($8.64m) in 2023, returning the airport into the black for the first time since 2019.
The airport, located in former docklands in East London around 10 miles from the city center and just seven miles from the Canary Wharf financial district, had struggled to return to profitability since the pandemic although traffic numbers at the facility continue to rise. In 2019, the airport recorded a profit of £47.8m ($62.6m). However, in the years since, the positive results disappeared, largely in part due to the pandemic and its resulting drop in business-related air travel.
The surging popularity of UK airports recently saw AviAlliance, a private airport investor and operator, acquire AGS Airports, the owners of Aberdeen Airport (ABZ) and Glasgow Airport (GLA) in Scotland and Southampton Airport (SOU) in England from joint parent companies Ferrovial and Macquarie. The deal was reportedly worth around £1.53 billion ($1.98 billion). That transaction remains subject to regulatory approvals and is expected to be completed in the first quarter of 2025.
There is some ongoing speculation in the financial media that AviAlliance could take an interest in Birmingham, Bristol, and London-City to bolster its portfolio of UK airports. AviAlliance is owned by PSP Investments, which manages the retirement funds for the Canadian armed forces and Royal Canadian Mounted Police.
The OTTP and PSP are two of Canada’s renowned Maple 8 investment funds. Collectively, the companies manage about $2 trillion in taxpayer-backed pension schemes for teachers, municipal employees, and healthcare workers in Canada.
Elsewhere in the UK, the Paris-based transport group Vinci bought a 50.1% holding in Edinburgh Airport in April 2024.