Deal done with owners of London City
BAA has sold Gatwick Airport to the owners of London City Airport for £1.51bn.
The new owners of Britain's second largest airport are a consortium led by Global Infrastructure Partners (GIP), which already owns 75% of London City.
BAA which itself is owned by Spanish conglomerate Ferrovial, said the proceeds of the sale will be used "primarily" to repay part of its debt.
The deal comes on the third day of the hearing of an appeal by BAA against a ruling by the UK consumer watchdog the Competition Commission (CC) that it must sell three of its seven UK airports.
This included Gatwick as well as Stansted and one of either Edinburgh or Glasgow.
The sale has been welcomed by Ryanair, easyJet and Flybe but with reservations.
easyJet, the biggest user of the airport with 10m passengers a year, said it remained a "monopoly."
BAA announced its plans to sell Gatwick, which handles about 35m passengers a year, in 2008 while the CC was conducting its inquiry.
Colin Matthews, BAA's ceo, said: "Gatwick and its people have long been a central part of BAA and we are proud of the airport's development as one of the world's leading international airports.
"BAA is changing and today's announcement marks a new beginning for both Gatwick and BAA.
"We wish Gatwick well for the future and are confident that the airport will flourish under new ownership.
"BAA will focus on improving Heathrow and our other airports."
The sale, which is subject to approval by the EU merger regulators, is expected to go through by the end of the year.
£55m of the sale price is conditional on future traffic performance and GIP's future capital structure.
GIP is backed by Credit Suisse and General Electric and has investments in the gas industry.
It bought London city with AIG in November 2006 for £742m.
The minority 25% stake in the docklands airport is held by Highstar Capital.
The new owners have said they will upgrade Gatwick substantially.
Andy Harrison, easyJet's ceo, welcomed the sale but he added: "Regardless of who owns Gatwick, it is still a monopoly.
"Therefore it is vital that Gatwick is properly regulated to protect airline passengers from the new owners exploiting their market power.
" It is vital that the Government's review of airport regulation produces a tougher and more effective system than the current discredited one which has contributed so much to the poor sate of London's airports."
Ryanair said the sale was the first step in the "much needed" break up of BAA's monopoly.
Michael O'Leary, its ceo, said: "It is vital for the future of Britain's air transport and tourism industries that the high cost, inefficient BAA monopoly be broken up as recommended by the Competition Commission report.
"The Competition Commission's extensive investigation has revealed that the airport monopoly has been bad for competition and bad for consumers."
Mike Rutter, Flybe's chief commercial officer, said offered a "cautious welcome" to the sale.
He added: "Over the years, the airport's mission has changed and this sale represents a real opportunity for the new owners to strengthen Gatwick's position as the champion of short-haul and European flying.
"GIP would be making a fatal mistake if they try and chase trophy airlines promising glamorous long-haul destinations.
"That's not the future - Gatwick's growth lies with efficient, environmentally sensitive, well-managed and stable airlines like Flybe.
"Everyone knows that BAA's charges were some of the most expensive in the industry and Flybe looks forward to Gatwick shedding that reputation and engaging early with its major customers to create a sustainable, economically realistic future."
www.baa.com www.global-infra.com www.competition-commission.org.uk www.ryanair.com www.easyjet.com www.flybe.com