TBI increases stake in its Luton concession

[Buster the Bear]

LONDON, Oct 27 (Reuters) - British Regional airport owner TBI Plc TBI.L plans to buy 28.6 percent that it does not own of Luton Airport from Alterra Partners for about 78 million pounds ($144 million), TBI said on Wednesday.

TBI will pay about 67.3 million pounds in cash and 10.7 million pounds in its stock, TBI said in a statement. It will also buy loan notes for 2.7 million pounds, the company added.

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[LTNman]

(Reuters) The deal will allow TBI to reap the full benefits of investing in Luton and give it all the airport's cash flows, improving the company's financial structure, TBI said. The deal will dilute earnings in the near term, the company added.

"This is an important transaction for TBI which will allow us to realise fully London Luton's potential as London's fourth airport, to capitalise on the growing demand for air travel and low cost travel in particular," TBI chief executive Keith Brooks said.

Luton is the main hub for low-cost carrier easyJet EZJ.L , which is expanding its capacity at the site, and rival Ryanair RYA.I is investing $240 million there as the main focus for its UK expansion in the next two years.

Alterra partners is a joint venture between U.S. construction firm Bechtel Corp. and Singapore Changi Airport Group.

The deal needs TBI shareholders' approval at a general meeting. Shareholders representing about 19.2 percent of the company's share capital have agreed to vote for the deal, the company said.

TBI's shares rose to a three-year high on Oct. 8 on rumours that investors controlling a fifth of the company were pressing for a breakup after annual profit slumped. (end)
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But TBI only rent the airport from the council. In 2028 they will have to hand it back and kiss goodbye to their investment.

[OLNEY 1 BRAVO]

The FT today says that the cash element is mostly coming from increased bank borrowing.

[LTNman]

Pity they can't borrow a few bob to resurface the car parks.

[Powerjet1]

Spending a bit more money on some more stands must now be a high priority, as the place is pretty full. Have we reached the limit on stands etc, covered under the existing planning approval, and therefore, would any new stands require new planning approval?.

Apparently ryan are interested in basing a further three aircraft at LTN after 12 months, bringing their total to 7 based, if things work out, so TBI need to get their finger out if they don't want to miss out. This is aside to various other new business bubbling under the surface, that is likely to come to fruition over the coming months.

[LTNman]

TBI have never been the masters of forward planning. It was only last year that much concrete was poured at great expense by Taxiway Echo for a new airside coach park. The concrete was poured in two layers to the same depth as the taxiway. I was thinking at the time that this could be later converted into aircraft stands but it was pointed out to me by an ex- ATC man that the angle was to severe. Just 12 months later this concrete is being dug up so they can start again and this time make two aircraft stands. Apparently stand 9L is going to be modified to bring it back into 737 use and the easyJet tent is going to be moved to the cargo apron to create two more stands on the eastern apron. This should bring 5 extra stands into use for January.

I see work continues at a snails pace on stand 16. Yesterday I saw executive jets parked on the eastern apron for the first time as well as all the way along the hangar line from stand 11 to 15 and today they had some parked up in engine run up bay.

Anyone looked inside the terminal lately? Work is starting on what the airport call the skywalk which will get the passengers to the new departure lounge.

[OLNEY 1 BRAVO]

Today's FT reports that TBI have sold AGI (Airports Group International) for £13.1M ($24M) to BBA.

AGI will become part of BBA's ASIG commercial aviation services group.

Slightly at a tangent, BBA is to also acquire Executive Aircraft Services at Heathrow from Group4Securicor for £4.5M.

[TS Hauler]

LTN Man

"TBI have never been the masters of forward planning.." Why do they need too. If you go to the Luton Website - there are several forward plans - lodged with Government and Luton Council. Seems to me these plans are more than enough to grow the business to 20mppa let alone the Government's target of 31mppa. So if they grow at 4-5% per annum in line with the market then at about 2020 they will be somewhere between 18-20m pax. The DfT is only asking for plans for the year 2015 which Luton already has and which shows terms, stands and taxiways.

The concrete you are talking about was designed for a very different type of 'bus - a land bus or coach. Its PCN was not designed for an Airbus nor a 737. The slope was never designed for any ac. I understand that it's easiest place to build new stands and they will be ready before those on the other side of Delta (which will be outside the current RZ).

Why the immediate build at Luton? Well you might recall that FR and eJ within 24 hours of each other announced 7 new aircraft being based there. I think in these days the fact that TBI can accommodate that growth is because they had such a plan and pulled it off the shelf.

You might be interested to know that for all the things they get "wrong" at Luton - according to their PR, they have had a string of airport companies visiting the airport to see how they do things - most recently; BAA, Peel, Singapore Changi, Budapest, Berlin, Amsterdam, Malaysian Airports, Indian Airports, Manchester, Southampton and Bournemouth. A number of LHR airlines alledgedly including BA and VS have had discussions to see how they can put pressure on BAA to reduce their capital costs. Not bad for a bunch of welsh property people who claim that they can pour concrete at half the price of BAA. But then with BAA if the regulator says you can charge the airlines what you need to cover the capital cost BAA can't lose. Luton however is in a free market and you only spend when your customers want you to. Can you imagine eJ and FR and now MON and TOM all saying - oh yes build loads of stands - but we won't use them for 2 or 3 years and what?....you want us to pay for them. Get real.

The world has changed and airlines will only pay for the facilities they use - hence our little issue with BAA at STN over the fuel hydrant system.

BTW spoke to my PR mate at the airport - the skywalk is at LGW and what you see at Luton is the scaffolding for the bridgework which will go from the new security hall to the new departures area on the first floor. The airport are changing aboout 60-70% of the whole facility, including the pier, retail and catering, the immigration and customs hall and arrivals.

Car parking and the bus rail link well they are other issues entirely.

However, as my FD would say "prudence is a wonderful ting"

[LTNman]

By the end of 2005 LTN should be handling around 9 million passengers. According to TBI the terminal has a capacity of around 10 million, which is twice what it was originally claimed to be. This is the reason why a public enquiry was never held into its construction.

Even through TBI might have lines drawn on a map it has not submitted any sort of planning permission to take LTN beyond 10 million passengers. . If all goes well 10 million passengers could be on the cards in less than 2 years. The anti LTN brigade will not be caught out the second time so any major expansion TBI might submit will probably mean a public enquiry. TBI need to get this out of the way now so when required work can start without delay. Lets not forget that the new pier under construction now was approved as long a go as 1998.

Oh another thing, the skywalk is what the airport call the bridge in their staff newspaper.

On another note I see that Sterling are operating a series of flights into Luton on Wednesdays, Thursdays and Fridays throughout much of December.

[vintage ATCO]

LTNman

I see work continues at a snails pace on stand 16. Yesterday I saw executive jets parked on the eastern apron for the first time as well as all the way along the hangar line from stand 11 to 15 and today they had some parked up in engine run up bay.

There is actually quite a lot of work going on on stand 16. They are putting in a deep slot drain from the Sig ramp towards the edge of the stand. It isn't finished yet but presumably has to be got right before they tarmac.

Biz jets have been parked on the east apron before. Personally I think the airport are doing a good job of tactical parking.

[Buster the Bear]

PRESS RELEASE: Changi,Bechtel Sell UK Airport Concession
Following is a press release from Changi Airport Enterprise Pte. Ltd.:

29 October 2004
Singapore Changi Airport Enterprise's Alterra Reaches Agreement With TBI PLC To Sell Its Stake In London Luton Airport

Singapore Changi Airport Enterprise Pte Ltd (SCAE) through Alterra Partners, its 50-50 joint venture with Bechtel Enterprise, has reached an agreement to jointly sell its stake in London Luton Airport Group Limited to TBI plc. SCAE and Bechtel Enterprise collectively owns 28.6% of London Luton Airport Group Limited, which has a 30-year concession to operate London Luton Airport. TBI owns the remaining shares of London Luton Airport Group Limited. The transaction is subject to TBI shareholders approval and financing conditions.1


The consideration for the transaction comprises of GBP70 million cash and 14.9 million TBI plc shares valued at GBP10.7 million based on the mid-market price of TBI plc shares traded on the London Stock Exchange on Wednesday.

"SCAE invested in London Luton in April 2001 and over last 4{ the years, the cooperation between the two entities have been mutually beneficial. Luton has seen tremendous growth and we have now reached a stage where we believe greater value can be unlocked through the injection of our stake in Luton into TBI. This arrangement will benefit TBI in allowing them greater financial flexibility and we will also be able to continue to benefit in any upside from our equity stake in TBI." said Mr Boon Swan Foo, Chairman of SCAE and CHAMPS.

Mr Boon Swan Foo added that the proceeds from the deal would be deployed by Singapore Changi to pursue new investment opportunities in Asia, particularly in China and India.

About London Luton Airport

London Luton Airport is one of the four commercial airports serving London and the South East of England. It is located approximately 30 miles from central London and handled about 6.9 million passengers in the year to 31 March 2004. It is the principal base of operations for easyJet, one of Europe leading low cost airlines.

About SCAE

Singapore Changi Airport Enterprise Pte Ltd. is a wholly owned subsidiary of the Civil Aviation Authority of Singapore, the owner, manager and developer of Singapore Changi Airport. SCAE acquired a 50% stake in Alterra Partners from Bechtel Enterprises in April 2001.

About CHAMPS

Changi Airport Managers and Partners (Singapore) Pte. Ltd., a sister company of SCAE, is a wholly-owned subsidiary of the Civil Aviation Authority of Singapore. It was incorporated in 2004 to lend focus to Singapore Changis new investment strategy of concentrating its efforts on airports in Asia. CHAMPS is currently actively pursuing airport projects in India and China.

About Alterra Partners

Alterra Partners is a 50-50 joint venture between SCAE and Bechtel Enterprises. It owns equity stakes in Luton Airport in London (28.6%), San Jose Airport in Costa Rica (85%), Lima Airport in Peru (57%), and Curacao Airport in Netherlands Antilles (51%).

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[Buster the Bear]

'The airport is still all ours...'Borough assurance as TBI secures deal Town Hall chiefs have issued a public reassurance the Luton Airport continues to be owned by the borough council in the wake of an announcement over the running of the booming transport hub.

Operating company TBI now completely controls the operational side of the business after snapping up the quarter-share owned by another firm.

TBI and minority partners Alterra have run the airport since 1998 in an award-winning public/private partnership.

Council leader David Franks said: "I would like to assure all residents that the council still owns Luton Airport and it will continue to remain in public ownership.

"But the running of the airport will now be solely managed by TBI, which should mean greater flexibility for financing future developments."

The airport is currently the UK's seventh largest, and fastest growing airport in the country, handling more than seven million passengers every year.


31 October 2004


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