Airport rule changes will benefit BAA

THE government yesterday watered down proposed new solvency rules for big airports, making it easier for Spanish-owned BAA &ndash; which runs Heathrow and Gatwick &ndash; to raise funds.<br /><br />Plans have been dropped for a special administration regime to ensure airports stay open even if their operators go bust, which would have meant investors in airport infrastructure would be able to demand higher rates.<br /><br />The plans would also have meant a hike in the cost of financing development projects.<br /><br />The costs would have been a struggle for BAA, whose bond ratings were at risk of a downgrade if the original plan had been introduced, as it struggles with a &pound;10bn debt mountain.<br /><br />&ldquo;The government has concluded that the implementation costs of introducing Special Administration would outweigh the benefits, and could significantly restrict airport operators&rsquo; ability to commit to ongoing investment in the airport infrastructure,&rdquo; the Department of Transport (DoT) said yesterday.<br /><br />Macquarie Equities Research said yesterday the government&rsquo;s move was &ldquo;an extremely important de-risking event&rdquo;.<br /><br />BAA, which is controlled by Spanish builder Ferrovial, said the change would make it easier to complete the planned refurbishment of Heathrow airport.<br /><br />Standard &amp; Poor&rsquo;s warned last month that the insolvency regime could trigger a &ldquo;multi-notch downgrade&rdquo; of BAA&rsquo;s bonds.<br /><br /><strong>FAST FACTS </strong> BAA<br />&9679; BAA risked its bonds being downgraded because bondholders' ability to claim control of airport assets might have been restricted.<br /><br />&9679; The government says the cons of the plans now outweigh the benefits.