Thursday, 30 August 2007
BAA; More trouble ahead.
I have mentioned BAA recently, along with British Airways, as companies in difficult straits. The BBC reports today that BAA is now to shed 2000 odd staff.
It is well known in the industry that BAA has much corporate fat to lose. They have a large M&A department for example that won't be needed now they are owned by the Spanish. They also suffer from a highly unionised force which has kept them from reaping the benefits of technology by downsizing the staff.
However, the real cause of the problem is that with the Credit market turmoil they have been unable to re-finance their loans. The Spanish company bought BAA with a huge chunk of debt at high rates, that they would look to re-arrange after the deal completed. Now they can't do that they need to seek other ways to raise money to pay the debt and try and make a profit.
At this rate the management will be praying for a break up of the monopoly of South East UK Airports, as the only way to realise cash from the business in the next few years!
Posted by CityUnslicker