The UK’s Civil Aviation Authority threw something of a curve ball into the path of BAA’s planned securitization last month when it proposed that Stansted Airport be “de-designated”, which would effectively remove the airport from the BAA’s regulated asset base (RAB). The CAA has taken the view that a deregulatory environment might bring forward “efficient and economic” investment that “furthers the reasonable interest of users”. BAA does not yet charge up to the price cap set by the CAA at Stansted. The low-cost carriers that currently dominate the airport do not seem willing to support proposals for expansion – including a second runway. The removal of price caps would be one way to address this.
BAA has a current RAB of about £10 billion ($19.7 billion), which includes the three London airports of Heathrow, Gatwick and Stansted. All three were destined to back the refinancing. Tim Jagger, co head of investment grade corporate credit research at RBS, calculates that Stansted accounts for roughly 14% of that figure, and that this will leave £8.6 billion of regulated assets to back any securitization. The LBO involved a £8.97
