Ryanair planning to purchase 25% stake in London’s Stansted Airport

Ryanair is planning to buy a 25% stake in London’s third largest airport, Stansted, according to its deputy CEO, Michael Cawley, who said they were hoping to make a bid within months.

Ryanair, Stansted’s biggest customer, is prepared to make “a modest commitment” as “anchor tenant” at the airport and has been examining proposals from five or six groups, from which one or two serious bids are likely to emerge.

The Competition Commission in 2009 ruled the British Airports Authority had too large a market share by owning three London airports and ordered it to sell Stansted and Gatwick.

The BAA plans to appeal to the Supreme Court, but is coming close to exhausting its options through the UK legal system.

Mr Cawley said the BAA “appear to be running out of road and we would hope that it will be a matter of months, not years before a deal is done”.

Other interested parties being linked with a possible bid for Stansted include South Korea’sIncheon International Airport Corp. It could face competition from Manchester Airports Group, owner of Britain’s busiest airport outside London, which has been seeking outside investment to fund purchases.

Bid groups would welcome Ryanair because its involvement would bring security and a guarantee of future airport growth, according to Ryanair, which has clashed with BAA over access fees.

Ryanair’s stock price increased by 2% despite the company announcing that profits were down after the airline flew into the headwinds of higher oil prices and Europe-wide austerity measures.

Mr Cawley said there should have been no surprises for any one who read beyond Ryanair’s headline figures. He said the airline had announced last year it expected profits to decline in this quarter.

Announcing the results for the first quarter which ended on Jun 30, Ryanair CEO Michael O’Leary said the company had warned it would be hit by rising fuel prices this year.

“As we previously guided, significantly higher fuel costs causedfirst quarter profits to fall by €40m [from €139m last year] to €99m.

“Our 6% traffic growth, combined with a 4% rise in average fares, led to an 11% increase in revenues. Ancillary sales grew by 15% to €286m [outpacing traffic growth] accounting for 22% of total revenues.”

He said that the cost of running the airline, in particular fuel costs, ate into the company’s profits.

“Operating unit costs rose 10% as fuel increased 27% [by €117m] to €544m.

“Fuel amounted to 47% of total operating costs,” he said.

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