BAA given three months to start selling Stansted

BAA was today given just three months to start the sell-off process for London's third-largest airport, Stansted, after the Competition Commission rejected its final plea to be allowed to keep it.

Chief executive Colin Matthews said he was "dismayed" by what he called "this Draconian decision taken against a company which has invested £1 billion a year in the UK for the past five years".

He said the Spanish-owned BAA would decide whether to take the final step in its appeal by launching a judicial review of the decision within a matter of weeks. If it does not, BAA is expected to be given about 18 months to find a buyer for Stansted, and slightly longer to sell Glasgow or Edinburgh airport.

BAA was forced to sell Gatwick for £1.5 billion in October 2009 to an infrastructure fund backed by GE Capital and Credit Suisse. This fund also owns City airport and would almost certainly be barred from buying Stansted.

Manchester Airport Group is a lead contender to buy Stansted but is likely to face stiff competition from private-equity and infrastructure firms.

Matthews and BAA argued that much has changed since the commission's original ruling two years ago - not least the coalition Government's ruling out of any new runways at London airports.

Matthews said: "It has become much more evident in the past two years that Heathrow and Stansted serve completely different customers. There is not a single airline that flies out of both."

But Freeman, who led the commission inquiry, said: "Our report has been challenged, reviewed and upheld, and it is clear that the original decision to require BAA to divest three airports remains the right one for customers. It has been a long process while BAA has challenged the decision - understandably given its significance.

"The introduction of new ownership at Gatwick, while too recent for us to draw any firm conclusions, has given a foretaste of the benefits competition can bring."