It's another small milestone but I'm almost alone in thinking it matters. BAA, the acronym that stands for British Airports Authority, which owns and runs Gatwick, Heathrow, Stansted and various other British airports including Edinburgh and Glasgow, has accepted a £10 billion plus bid from the Spanish group Ferrovial. The consensus is that this is win/win all round - better management, more investment and a good deal for shareholders, many of whom are pension funds. Who can possibly complain?
Me, for a start. This will mean shoddy airports, higher taxes, higher airport charges and sweated labour while enriching a few investment bankers and corporate lawyers along the way. There should be a national collective cry of outrage. Columnists should fulminate; film crews should be doorstepping the Spanish and their accomplices; and the lives of the ministers and officials who have nodded this through be made a misery. Instead I will write this blog, there will be some congratulations in tomorrow's City pages about the deal and the whole thing will be forgotten within seven days.
In the first place Ferrovial has borrowed £10 billion to make this bid, and the poor mites who are going to pay it back are you and me. The interest on the debt will be £600 million which will set against BAA's profits, thus lowering their tax contributions to the Treasury by around £250 million. That's a fair few roads, schools and hospitals that will not be built as a result. In order to find the wherewithal to repay the principal, Ferrovial will have to divert cash that would otherwise have been spent on improving our airports into debt service.
The notion that they are managerially so brilliant that they conjure up an extra £ 1 billion of free cash flow every year is for the birds. Only somebody who has run nothing - a city commentator, an investment banker, an official or a minister - could entertain the idea for a nanosecond. They will have to put up charges and lower wage rates and all the time British airports will become danker and more cesspit like than ever.
BAA is an utility. It, and other British utilities, should be protected from debt financed takeovers by a simple one clause addition to the current Companies Bill going through parliament. To suggest the idea is to be cast as the man in a Bateman cartoon who points out the minister has no clothes: derision all round. The gods destroy who they first make mad, and the British have a collective mad spot that disallows them from seeing the obvious.
I'm delighted to have the chance to sound off, but this blog will make no difference to anything. I've been writing or broadcasting this stuff for twenty five years and I might as well have been a Trappist monk. Over and out.
