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Birmingham Airport boss doesn’t rule out sale by council shareholders

Birmingham Airport boss doesn’t rule out sale by council shareholders

🕔08.Oct 2012

Birmingham Airport’s delicate public-private sector ownership could be at risk amid claims that a West Midlands council is considering selling its shareholding in the £100 million business.

Airport chief executive Paul Kehoe told a Conservative Party conference fringe meeting that “every man and woman has his price” and “who knows what might happen” if one or more of the region’s seven local authorities attempted to offload its shares.

Mr Kehoe gave no indication of knowing about any proposed sale, although there have been persistent rumours that one of the four Black Country councils may be considering selling its airport holding to raise cash for squeezed public services.

He was answering questions at the meeting – Transport Looking Ahead to 2015 & 2020 – organised by the Urban Land Institute and RJF Public Affairs, publishers of The Chamberlain Files.

Any change to the airport shareholding structure could have dramatic consequences for the balance of power in the boardroom.

Under the current arrangements, the seven West Midlands district councils have 49 per cent of shares and the Ontario Teachers’ Pension Plan and Australia’s Victorian Funds Management Corporation have 48.25 per cent. An employee share trust has the remaining 2.75 per cent.

Mr Kehoe batted away questions about whether the airport would prosper under outright private sector control, although he admitted that the existing cumbersome structure can be problematic.

Board meetings at the airport are usually attended by up to 30 directors, which “is quite a challenge”, Mr Kehoe said.

He went on: “It would be nice to have fewer directors. Having fewer shareholders would make life clearer. Some of the decision making might be faster.”

He said the runway extension, which is about to be built, could have been delivered 20 years ago if the airport had not gone through the “machinations” of changing shareholders.

It’s thought that some of the seven West Midlands councils – Birmingham, Solihull, Coventry, Walsall, Wolverhampton, Dudley and Sandwell –who are battling against severe Government spending cuts might fancy cashing in their airport shares. Mr Kehoe pointed out that the sale of Stansted and London City airports made “massive profits” for their shareholders.

Birmingham City Council has always steadfastly rejected selling the “crown jewels” of public  investments such as the airport and the National Exhibition  Centre and there is no indication that this policy is about to change.

The prospect of a sale raises several questions about process, which are governed by complex rules in a shareholders’ manual “an inch thick”, according to Mr Kehoe.

It remains unclear whether the local authorities would have ‘first refusal’ and the right to buy any shares being sold by one of the councils.

On the face of it, the Ontario Teachers’ Pension Plan and Australia’s Victorian Funds Management Corporation could snap up any council-owned shares up and take outright control of the airport.

But the prospect of two pension funds, traditionally cautious institutions, running the airport might not necessarily deliver the type of future expansion and radical planning needed to turn Birmingham into a major player in the aviation industry.

The fringe meeting heard a generally upbeat assessment of public transport prospects for Birmingham and the West Midlands, where projects including the airport runway extension, the £600 million refurbishment of New Street Station and the Midland Metro extension through Birmingham city centre are at last coming to fruition.

Tom McGrath, Policy and Strategic Director at the integrated transport authority Centro, said he was witnessing a change of pace and fresh confidence about improving connectivity which was essential to promote Birmingham as a global city.

However, much will depend on the next stage of the City Deal between the Government and the Greater Birmingham and Solihull Local Enterprise Partnership. LEP directors are demanding greater powers from Ministers to run and fund transportation free from Whitehall interference.

In a ‘white paper’ setting out a strategy for growth, the LEP puts forward the following priorities:

•Develop a Transport City Deal to improve connectivity, ensuring alignment with M42 Economic Gateway and wider place priorities.

• Establish a fully operational Enterprise Zone including the commencement of retention of all additional businesses rates generated from businesses within the EZ.

• Deliver the Creative City Partnership, using the creative and cultural sectors to drive growth.

Appealing for public participation, the leader of Birmingham City Council, Sir Albert Bore, said: “This is the opportunity for everyone living and working in the LEP area to have their say on the strategy and, ultimately, help shape the way we are going to tackle key issues and deliver sustainable growth within the Greater Birmingham area.

“The white paper has been guided by existing data, new research, feedback taken at engagement events and expert commentary. We now want to test out our thinking.”

 

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