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Council-owned airport operator seeks private investment to buy another 'quality' airport

Airport operator Manchester Airport Group (MAG), which is owned and controlled by a consortium of local authorities, is seeking private investment to enable it to buy another "quality airport", it has announced.17 Feb 2012

The UK's second largest airport operator owns Manchester, East Midlands, Bournemouth and Humberside Airports. The group was unable to confirm which airports it might bid for due to "commercial confidentiality", it said. However rival airport operator BAA has been ordered to sell Edinburgh and Stansted Airports by the Competition Commission.

MAG was formed in 2001 by Greater Manchester's 10 metropolitan borough councils. Manchester City Council owns a 55% majority share with the other nine local authorities owning 5% each.

"Following a strategic review of the group's performance and future prospects, MAG is pursuing two key recommendations: one to explore the opportunity to add a quality airport to the Group and the other, to bring in new equity investment as part of the deal. Both of these recommendations are interdependent and one will not happen without the other," the authorities and MAG said in a statement.

If private investment was found then the councils would need to consider "new governance arrangements", which the authorities had agreed in principle, the statement said.

It added that no further statements would be issued before a potential investment partner was identified - a process that it anticipated would "take a few months".

In 2009 the Competition Commission (CC) said that BAA would have to sell Stansted Airport and one of either Glasgow or Edinburgh Airports. The operator is currently in the process of selling Edinburgh Airport, but is continuing to pursue a challenge to the decision on Stansted. The CC's decision has already been upheld by the courts and was confirmed in a Competition Appeal Tribunal decision earlier this month.

MAG was involved in discussions with BAA when the larger airport group sold London's Gatwick Airport in 2009. At the time it was working in conjunction with Canadian infrastructure investment firm Borealis and the Greater Manchester Pension Fund, however it pulled out of the bidding process due to price concerns.

Planning and aviation law expert Jonathan Riley of Pinsent Masons, the law firm behind Out-Law.com, said that MAG's search for private investment was another sign of "renewed confidence and activity" in the aviation sector.

“UK operators have worked together to show that airports are good for growth, good for creating jobs. Business gets that, and politicians of all hues are starting to get it too," he said. "With the Government’s aviation policy due out for consultation in March, all the major operators are putting their expansion cards on the table. We can expect airport policy to be front page news for the rest of 2012”.