Airport operator BAA”s chief executive Stephen Nelson will step down just weeks before the opening of Heathrow Terminal 5, and the day after parent company Ferrovial announced a drop in net income.
From 1 April the job will be taken by the former chief executive of Severn Trent, Colin Matthews.
”With the opening of T5, and the completion of the CAA Price Review for the next five years, BAA really is at the start of a new beginning,” said Nelson.
BAA chairman Sir Nigel Rudd, said: ”BAA is now entering a new era, in which we have to not only complete the transformation of our airports that T5 has begun, but also meet the new demands for quality service and environmental responsibility.
”This is also a period in which BAA will be to the fore in arguing for a new regulatory framework which recognises those priorities. Colin Matthews has the right background and experience to take BAA into that new era.”
Nelson joined BAA in 2006, when Spanish infrastructure group Ferrovial bought the operator ” which runs seven UK airports, including Heathrow and Gatwick - in a multi-billion pound deal. The Spanish giant”s 2007 figures ” which yesterday revealed an overall fall in net revenue - did show the BAA airports performing well.
A statement said the operator”s various divisions saw an ”18.4% increase in revenues to ”14.63bn ($22bn). The Airports division consolidated BAA for the first full year in 2007. For that reason, revenues increased by 88.6% to ”3.86bn, of which ”3.82bn were provided by BAA. Heathrow, the group's largest airport, contributed 47.3% of BAA's revenues, i.e. ”1.81bn. Gatwick ranked second in importance, contributing ”596m in revenues.”
But Ferrovial took on enormous debts for the BAA takeover, which it desperately needs to refinance to decrease its interest payments. It has put this off for various reasons - an unsteady economic climate has made it harder to achieve - and there is the possibility of the CAA”s price review cutting the group”s projected income from landing fees at Heathrow and Gatwick for the next five years. There has also been speculation BAA could be split up by the Competition Commission, which is evaluating the operator.
”We are focused on bonds to refinance the debt but we are logically studying other alternatives,” said Ferrovial finance director Nicolas Villen.
Ferrovial confirmed plans to sell assets to raise cash, including BAA's retailer World Duty Free, but as yet it has no buyer. And last year Ferrovial sold Budapest Airport for ”1.31bn, 20% of Sydney Airport for ”547m, and its stake in six Australian airports for AUS$775m (”483m) ” all ”divestments relating to BAA's strategy of shedding non-strategic assets outside the UK” said the group.
A Ferrovial spokesman gave ABTN no indication what ”other alternatives” there may be, and denied there is any plan to sell a UK airport.
”We could sell a BAA airport legally, it”s not forbidden, but I don”t know if it”s a real issue. It”s not on the agenda now.”
He said the group hopes to close the refinancing process ”three or four months” after the CAA”s decision is due on 11 March.