MAG buy STN
Manchester taxpayers shouldn’t own an airport in Essex for the simple reason that it’s in Essex rather than Manchester. The operative word in Local Authorities is ‘Local’; councils in Greater Manchester exist to provide a variety of services in Greater Manchester. Not Essex.
While I would prefer, for emotional reasons as much as anything else, that our airports have British owners, I don’t have a problem with foreign ownership or control of our airports provided that we have equal access to ownership of foreign infrastructure assets. That’s clearly not the case in Spain for example.
I don’t have any ideological problem with public ownership, although I would make the point that the public sector doesn’t have a particularly good track record in running businesses. What I do have a problem with is local authorities, who should be looking after parks, libraries and emptying the bins, expanding their activities into the business world. Of course you can make the argument that it generates extra income that can be invested in public services, but what happens if the business struggles or fails? Who picks up the tab? The point has already been made that MAG operated Humberside at a modest profit for a number of years but then sold it at a cracking loss. Was that really a good deal for the taxpayers of Greater Manchester? Or were MAG more driven by ambition and hubris than a commitment to public service?
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Anyway, will leave you to keep asking your hypothetical questions
I can't understand why the council tax payers of Manchester want to own an airport in Essex, especially in light of the public sector making such a hash of running businesses (newcastle airport directors payoff!), and MAG's own disastrous track record of acquisitions and low dividend payouts.
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You're absolutely right that no new money is put in by the councils, but if MAG looses £10m+ on Humberside that's £10m less to pay to the councils.
The STN deal has involved a new financing, but this is probably cross-collaterised against the wider MAG rather than just STN. I haven't looked into any of the details of this.
The STN deal has involved a new financing, but this is probably cross-collaterised against the wider MAG rather than just STN. I haven't looked into any of the details of this.
You're absolutely right that no new money is put in by the councils, but if MAG looses £10m+ on Humberside that's £10m less to pay to the councils.
You need to fact check that one. For a start they didnt buy HUY for £17m..
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Acquiring it for £10m + spending £7m on investment is the same as buying it for £17m, bar timing.
If you know how much they lost in total, let us all know as I can't see how it's a shrewd move.
If you know how much they lost in total, let us all know as I can't see how it's a shrewd move.
For comparison:
LLAOL (LTN's operator) declared EBITDA profit of £35.1m in 2011. This is after paying Luton Borough Council around £3 per passenger under its licensing agreement (the airport freehold is owned by the Council), or around £25m.
Thus the equivalent profit emanating from Luton is just over £60m, on 8.5 million passengers, or around £7 per passenger. The only borrowings/depreciation relate to plant, machinery, buildings and constructions.
STN has just been sold for an amount that implies an EBITDA of £96.1m, on 17.416 million passengers, or around £5.50 per passenger. It is carrying an enterprise capital employed of £1,500,000,000.
No wonder BAA didn't take long to accept MAG's bid!
LLAOL (LTN's operator) declared EBITDA profit of £35.1m in 2011. This is after paying Luton Borough Council around £3 per passenger under its licensing agreement (the airport freehold is owned by the Council), or around £25m.
Thus the equivalent profit emanating from Luton is just over £60m, on 8.5 million passengers, or around £7 per passenger. The only borrowings/depreciation relate to plant, machinery, buildings and constructions.
STN has just been sold for an amount that implies an EBITDA of £96.1m, on 17.416 million passengers, or around £5.50 per passenger. It is carrying an enterprise capital employed of £1,500,000,000.
No wonder BAA didn't take long to accept MAG's bid!
Perhaps my post shouldn't be taken out of context FANS.
I didn't know that the majority of funds invested in keeping the place operational for the 13 years was classed as part the purchase price..? I dont believe the councils recieved any money from the sale of HUY shares, as there was a negative net value when Manchester took over. Could be wrong? But thats my understanding.
I'm not sure how its comparative anyway, as MAG weren't even formed when HUY was purchased. Comparing apples with oranges.
I'd say a pretty shrewd move for all concerned. Clearly a small airport with limited scope is not going to generate a sufficient return for the public sector shareholders. Those same shareholders voted in favour of the sale of Humberside Airport at that price. You can speculate all you want about why Manchester Airport bought Humberside back in 1999, but they subsequently got their second runway, and HUY was in profit for most of the 2000's..
I'm not sure how its comparative anyway, as MAG weren't even formed when HUY was purchased. Comparing apples with oranges.
Last edited by pug; 25th Jan 2013 at 10:43.
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I didn't know that the majority of funds invested in keeping the place operational for the 13 years was classed as part the purchase price
They bought a business for £10m, spent a further £7m on capex + supported it during their ownership period and then sold it for only £2.3m. That is cash that has been lost forever and hence not benefiting the council tax payers.
Rather than getting lost on what's the definition of purchase price and contextualising this as a good deal, you should focus on the cash that has gone.
I dont believe the councils recieved any money from the sale of HUY shares, as there was a negative net value when Manchester took over.
Comparing apples and oranges.
The policy of undertaking a massive acquisition in another part of the country is not something that a council controlled business should ever be undertaking.
The councils didn't own HUY
The corporate legal entity which does the acquiring is not relevant.
Are you a GM council tax payer?
Last edited by pug; 25th Jan 2013 at 10:56.
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It's Manchester airport undertaking an acquisition of an another UK airport, so it's not that completely completely completely different.
The management team should focus on maximising their dividends out to the councils before embarking on a massive acquisition in a different part of the country.
You keep putting your faith in management and let them tell you what another shrewd move this is.
The management team should focus on maximising their dividends out to the councils before embarking on a massive acquisition in a different part of the country.
You keep putting your faith in management and let them tell you what another shrewd move this is.
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I don't recall all this concern over the GM council tax payers owning BOH, EMA and HUY (till it was sold). Seems all these concerns have floated to the surface because they have purchased Stansted.
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and they made a complete hash of previous acquisitions.
I'm sure it's a great deal for management however; I bet the remuneration committee are already revisiting the bonuses and LTIP for all of this additional pressure and responsibility.
I'm sure it's a great deal for management however; I bet the remuneration committee are already revisiting the bonuses and LTIP for all of this additional pressure and responsibility.
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LGS6753
Expanding from your poor rail services comments - between Bishops Stortford and London there are I think 8 level crossings
It is all well and good for various sites to waffle on in corporatese about Stanstead in 30 and links to crossrail but it is my belief that fast frequent trains and level crossings do not go together
I have recently spent 40 mins at Spellbrook crossing hoping to get home a couple of miles away
Does anyone think a road fairy will miraculously built flyovers to replace the level crossings? That would be interesting at Spellbrook and Sawbridgeworth! Or will they just close them permanently? God help Bishops Stortford town centre then
The rail line is in part still in the 1950's
Without major investment (paid by who?) good rail links surely will not happen
It is all well and good for various sites to waffle on in corporatese about Stanstead in 30 and links to crossrail but it is my belief that fast frequent trains and level crossings do not go together
I have recently spent 40 mins at Spellbrook crossing hoping to get home a couple of miles away
Does anyone think a road fairy will miraculously built flyovers to replace the level crossings? That would be interesting at Spellbrook and Sawbridgeworth! Or will they just close them permanently? God help Bishops Stortford town centre then
The rail line is in part still in the 1950's
Without major investment (paid by who?) good rail links surely will not happen
