Ferrovial commits to BAA spending plans

Ferrovial has given its assurance that it will be committed to BAA’s 10-year, £9.5bn capital expenditure programme if its takeover of the airports operator is successful at the end of this month.

A spokeswoman for the company, which launched a £10.3bn takeover bid as part of a consortium last week, told CJ that despite reports of disruption to BAA’s frameworks and cutbacks of its £2.7bn spending plans for the expansion of Stansted Airport, Ferrovial would maintain the status quo.

The group’s acquisition vehicle, Airport Development and Investment, posted its official bid document to BAA at the end of last week.

“We will be committed to meeting all the obligations of the [aviation] White Paper and we will not be making any cutbacks to the programme,” she said. “We have to ensure that there are no capacity constraints, which means that investments will be made.”

However, the future is not so certain on BAA’s proposed £1.5bn Heathrow East project, which falls outside the White Paper’s remit; BAA has already revealed its list of suppliers to submit proposals for the early stage design and development work on the project.

Although the spokeswoman said it is still very “early stages” to talk about running BAA’s existing frameworks, she said Ferrovial is a very “effective operator” and would seek to take the “best option” for the delivery of airport infrastructure.

One source told CJ that the future of BAA’s framework contractors is “much more positive” than it would have been if the rival bidder, Goldman Sachs, had sealed the deal; Goldman Sachs pulled out of the running last week.

The spokeswoman did give one proviso to the spending pledge, adding that the only disruption to the consortium’s spending plans is the Office of Fair Trading’s proposal to conduct a market study of the aviation industry, which may consider breaking up ownership of UK airports to improve competitiveness.

The spokeswoman denied that Amey, Ferrovial’s UK construction arm, would benefit from its joint ownership of BAA’s capital works programme. “Ferrovial will be opening up all tender opportunities to the outside market,” she added.

CJ understands that BAA’s supply chain heads carried out presentations to its contractors last week to provide an update on the bid and the timetable, which will conclude in a meeting on 26 June between the Ferrovial-led consortium and BAA.

This will decide if the bid has been successful – subject to shareholder approval as well as that of stakeholders such as the airline operators.

However, one framework contractor remained unconvinced by Ferrovial’s pledges. “Contractors are really nervous about this deal and most are expecting a moratorium of works once the deal has been completed. Some feel Ferrovial will be looking to claw back its outlay by cutting back on works,” it said.