MAG buy STN
which raises the question of why the users of an airport in Essex should be topping up the coffers of councils in Greater Manchester.
As the shareholders have voted in favour, there must be a convincing reason put forward for making the purchase. We may have to wait until the annual report is released in August to get a better insight into their decision.
Last edited by pug; 23rd Jan 2013 at 12:26.
The question is very simple: why do the council tax payers of Manchester want to own an airport in Essex?
Last edited by pug; 23rd Jan 2013 at 13:34.
The point is that the council tax payers in Manchester have not voiced an opinion. It is the faceless bureaucrats and their political masters that have made the decision by the power they believe has been vested in them by Manchester's electorate.
I would venture to suggest that no elector in Greater Manchester cast his or her vote on the basis that their council was about to commit £1.5bn to buying an airport 200 miles from home.
The post facto rationale will be that the transaction will benefit the taxpayers through increased dividends, and therefore better services/lower council tax. As I have argued above, this is an optimistic view of the eventual outcome - and I hope that Manchester's taxpayers don't suffer a loss if their new acquisition doesn't work out in the way they hope it does.
I would venture to suggest that no elector in Greater Manchester cast his or her vote on the basis that their council was about to commit £1.5bn to buying an airport 200 miles from home.
The post facto rationale will be that the transaction will benefit the taxpayers through increased dividends, and therefore better services/lower council tax. As I have argued above, this is an optimistic view of the eventual outcome - and I hope that Manchester's taxpayers don't suffer a loss if their new acquisition doesn't work out in the way they hope it does.
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The answer is very simple, profit
From memory, the dividends received by the councils over the years have been very low from an asset of this worth. The focus should be on increasing dividends not spending time raising external funding from equity and bank funders for an acquisition that has been competitively priced (i.e. it's not an offmarket, low price deal).
From memory, the dividends received by the councils over the years have been very low from an asset of this worth. The focus should be on increasing dividends not spending time raising external funding from equity and bank funders for an acquisition that has been competitively priced (i.e. it's not an offmarket, low price deal).
As for the strategic standpoint, I've no idea how it will play out. Surely the increase in competition in the South East will be good for the London passenger? The bargaining power may help bring more airlines and routes into Manchester eventually. Who knows?
And yet there seems some doubt as to exactly how much profit will be made……
Perhaps I didn’t make my point about STN users funding Manchester councils very well. Let me put it another way. Why should local authorities in Manchester, rather than local authorities in Essex, be allowed to profit from running STN?
Call me old fashioned, but I expect local authorities to be responsible for things like running libraries, cutting the grass in public parks, providing sports centres etc. Activities specific to and adding value to their own governmental area. I can just about accept that their remit, since it includes transport, could extend to a local airport, but becoming a significant investor in a major business with interests in several other parts of the country? It doesn’t seem appropriate to me.
Perhaps I didn’t make my point about STN users funding Manchester councils very well. Let me put it another way. Why should local authorities in Manchester, rather than local authorities in Essex, be allowed to profit from running STN?
Call me old fashioned, but I expect local authorities to be responsible for things like running libraries, cutting the grass in public parks, providing sports centres etc. Activities specific to and adding value to their own governmental area. I can just about accept that their remit, since it includes transport, could extend to a local airport, but becoming a significant investor in a major business with interests in several other parts of the country? It doesn’t seem appropriate to me.
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I cannot imagine them achieving shareholder support where there to be an increased risk of reduced dividends. Whether the population of Greater Manchester supports the acquisition or not is irrelevant IMO for as long as they are not subsidising MAG, but where MAG are effectively reducing council tax/subsidising other capital projects in the Manchester area.
FANS, I think you are missing my point. That being you dont know the details behind the acquisition therefore, even though you can pluck out soundbites like 'increase dividends' and 'drive current financial performance', doesnt really answer any of your own, or anyone elses questions at the minute.
Due dilligence will have been practiced, and shareholders consulted. We have to therefore put faith in the fact that MAG know what they are doing before taking such a risk.
From where, from hard analysis of facts or from opinions of people on a forum? I think a bit of perspective is needed here.
As for the rest of your post. I agree in essence, however surely there is nothing wrong with a consortium of local authorities increasing revenue streams to keep the park benches maintained and the streets lit, whilst trying to keep council tax low for their population.
Due dilligence will have been practiced, and shareholders consulted. We have to therefore put faith in the fact that MAG know what they are doing before taking such a risk.
And yet there seems some doubt as to exactly how much profit will be made……
As for the rest of your post. I agree in essence, however surely there is nothing wrong with a consortium of local authorities increasing revenue streams to keep the park benches maintained and the streets lit, whilst trying to keep council tax low for their population.
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That being you dont know the details behind the acquisition therefore, even though you can pluck out soundbites like 'increase dividends' and 'drive current financial performance', doesnt really answer any of your own, or anyone elses questions at the minute
Yet again: why do the council tax payers of Manchester want to own an airport in Essex?
Due dilligence will have been practiced, and shareholders consulted. We have to therefore put faith in the fact that MAG know what they are doing before taking such a risk.
MAG sells its majority stake in Humberside Airport - Manchester Evening News
Pug, you're the one telling me it's been done because of profit and yet you don't "know the details behind the acquisition"
Is this the same MAG that paid £17m for Humberside then sold it for £2.3m. They should not be allowed near acquisitions until the current house is producing meaningful returns to local councils & taxpayers.
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On a slightly different topic, a slight rumour that Monarch and Jet2 will be MAG's first targets for opening a base at Stansted. Personally if I had to choose I think it would be Jet2. If Monarch were to open a base, I wonder what that would mean for Gatwick and Luton??
Manchester Airports Group buys London Stansted Airport
Manchester Airports Group buys London Stansted Airport
The same article contains this interesting chart on the largest users at each MAG airport:
Manchester: 1,Ryanair. 2,easyJet. 3,Flybe. 4, Thomson. 5,Monarch.
London Stansted: 1, Ryanair. 2, easyJet. 3, Germanwings. 4, Pegasus 5, Thomson
East Midlands: 1, Ryanair. 2, Flybe. 3, Jet2.com. 4, Thomson. 5, Thomas Cook.
Bournemouth: 1, Ryanair. 2, Thomson. 3, Aer Arann.
They make the point that Ryanair is the largest client of the group, but also state that FR have 78% of the market capacity at STN (only 14% at MAN) - even more than has been quoted elsewhere.
Manchester: 1,Ryanair. 2,easyJet. 3,Flybe. 4, Thomson. 5,Monarch.
London Stansted: 1, Ryanair. 2, easyJet. 3, Germanwings. 4, Pegasus 5, Thomson
East Midlands: 1, Ryanair. 2, Flybe. 3, Jet2.com. 4, Thomson. 5, Thomas Cook.
Bournemouth: 1, Ryanair. 2, Thomson. 3, Aer Arann.
They make the point that Ryanair is the largest client of the group, but also state that FR have 78% of the market capacity at STN (only 14% at MAN) - even more than has been quoted elsewhere.
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FR have 78% of the market capacity at STN
Last edited by FRatSTN; 23rd Jan 2013 at 19:42.
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a pretty shrewd move for all concerned
Please tell me that you're not connected to MAG?
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They should not be allowed near acquisitions until the current house is producing meaningful returns to local councils & taxpayers.
the dividends received by the councils over the years have been very low from an asset of this worth
Why should local authorities in Manchester, rather than local authorities in Essex, be allowed to profit from running STN?
Last edited by Ringwayman; 23rd Jan 2013 at 20:10. Reason: adding further quote
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Last year = £20million in dividend payout: £1 million each for 9 councils and £11 million for Manchester Council. £65.5 million profit - not too bad a return?
Last edited by LTNman; 24th Jan 2013 at 05:23.
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Last year = £20million in dividend payout: £1 million each for 9 councils and £11 million for Manchester Council. £65.5 million profit - not too bad a return
I do think that is a very very low return for an asset of this size and type. As one example only, if the shareholders are getting £20m and they should be aiming for at least a basic 5% return on this type of asset (and really a lot higher), this implies that the equity is only worth £400m. It is worth a damsight more, but is simply not delivering appropriate shareholder returns.
The councils' overriding focus should be on maximising what they have rather than being sucked into management's agenda.
Again, why do the council tax payers of Manchester want to own an airport in Essex?
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Again, why do the council tax payers of Manchester want to own an airport in Essex?
Please tell me that you're not connected to MAG?
Buying a business for £17m and then selling for £2m is not my idea of a shrewd move. Then again, my company can't just fall back on the taxpayer to pick up the tab.
Anyway, will leave you to keep asking your hypothetical questions.