In light of the recent sale of three UK regional airports to the Canadian investment firm AviAlliance earlier this month, it has been reported that an additional three airports are being offered for sale. Birmingham (BHX), Bristol (BRS), and London City (LCY) airports are reportedly on the market as their Canadian pension fund owner seeks to capitalize on the resurgence in air travel demand to and from the UK.
The Ontario Teachers’ Pension Plan (OTPP), which currently holds stakes ranging from 25% to 70% in the three airports, is said to be in discussions with minority shareholders regarding a potential sale. The OTPP’s broader portfolio, which includes Copenhagen (CPH) and Brussels (BRU) airports, has an estimated value exceeding $12.6 billion, according to The Sunday Times, which initially reported the development.
Under the terms of the sale, minority shareholders have been granted a 30-day right of first refusal. Analysts suggest that OTPP’s decision to divest could prompt other stakeholders to consider selling their shares, particularly if prospective buyers are pursuing a controlling interest.
The valuation of the three airports remains subject to market fluctuations; however, the aviation industry is experiencing significant growth in business activity and asset valuations, driven by the post-pandemic surge in air travel demand. For instance, London Heathrow Airport (LHR) recorded its busiest month on record in July 2024, while London Stansted Airport (STN) also reported a record-breaking summer, handling nearly nine million passengers between June and August.
London City Airport, one of the airports involved in the potential sale, recently achieved profitability for the first time since the onset of the COVID-19 pandemic. In October 2024, financial statements revealed a pre-tax profit of £6.6 million ($8.64 million) for 2023. This marks a recovery from the substantial losses incurred since 2019, when the airport last recorded a profit of £47.8 million ($62.6 million). Despite challenges, including the pandemic-induced downturn in business travel, traffic levels at London City have shown consistent improvement.
The recent surge in the valuation of UK airports is exemplified by AviAlliance’s acquisition of AGS Airports, which owns Aberdeen Airport (ABZ), Glasgow Airport (GLA), and Southampton Airport (SOU). The transaction, valued at approximately £1.53 billion ($1.98 billion), is subject to regulatory approval and is expected to conclude in the first quarter of 2025.
Speculation within the financial sector suggests that AviAlliance may express interest in acquiring Birmingham, Bristol, and London City airports to expand its portfolio of UK assets. AviAlliance is owned by PSP Investments, which manages pension funds for Canadian Armed Forces personnel and the Royal Canadian Mounted Police.
The OTPP and PSP Investments are among Canada’s prominent Maple 8 investment funds, which collectively manage approximately $2 trillion in pension assets for teachers, municipal employees, and healthcare workers.
In a related development, the Paris-based transport group Vinci secured a 50.1% stake in Edinburgh Airport in April 2024, further underscoring the growing appeal of UK airport assets in the international investment landscape.
