London City to be “offloaded” by Global Infrastructure?

London City Airport, the airport of choice for many City workers and senior executives, is reportedly being put up for sale by its private equity owner Global Infrastructure later this year in a deal that, if it proceeds, would see it exit the additional investment it made in September 2008. 

Hindsight would suggest that investing in an airport that serves predominantly City-based executives and is located so close to Canary Wharf, just as the global banking crisis was taking hold, might not have been the most opportune investment, but speculative values being reported would suggest otherwise. Sources close to the business have talked about the airport being sold for figures as high as £2bn, which, if achieved, would be a significant return on the estimated £250m it paid for its stake at the time of the deal.

London City has shown phenomenal growth in the last ten years, with passenger numbers reaching over 3.7m in 2014, in spite of its predominantly European flight network. But its proximity to the City means that a very high proportion of its passengers are flying on business, and, in addition, British Airways fly their only all-Business Class flights twice daily between London City and New York, enabling the most senior of executives to commute quickly and easily from London’s financial centre to New York’s Wall Street. 

If the sale goes ahead, it won’t mean the departure of Global Infrastructure from UK-based airports completely, as the fund currently owns Edinburgh Airport and a small stake in Gatwick Airport.