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CEO confirms: Prestwick for the chop

Well, Dear Reader, you can tell your grandchildren that you read it here before you read it on Bloomberg!

Infratil's Supreme Commander has gone on record in an interview with Bloomberg telling the world that Prestwick doesn't have a long-term future in Infratil's portfolio, because it "isn't performing".

That's the sort of no-nonsense straight talking you would expect from a hard-headed businessman. I would love to know what he makes of Manston...

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Infratil may sell Glasgow Prestwick Airport following flight cuts by Ryanair, the airfield's largest operator of scheduled passenger services. Marko Bogoievski, chief executive officer of Wellington, New Zealand-based Infratil, said in an October 5th interview:

"Glasgow isn't performing. It's a difficult asset to see in the portfolio in the long term."

Combined passenger numbers at Prestwick and Infratil's other U.K. airport, Manston, tumbled 33% in April through August, predominately because of Ryanair paring flights at its Glasgow hub. Infratil may use the proceeds from selling Prestwick for investments in other airports or to boost its portfolio of energy assets in Australia and New Zealand, which offer more reliable earnings, Bogoievski, 49, said. ["other airports" = Wellington, New Zealand, not Manston]

Still, Infratil has no plans to shed its 66% stake in Wellington International Airport Ltd., even as investor Utilico Investments Ltd. calls for a sale, Bogoievski said. London-based Utilico, which owns about 15% of Infratil, said last month the stake should be sold because the investment is mature in nature and unlikely to jump in value. "They're an investor and entitled to their view," Bogoievski said. The company will retain the Wellington stake as earnings are growing and because passenger numbers will probably double by 2030, he said.

Infratil has dropped 5.2% this year in Wellington trading to NZ$1.84 on Oct. 7. The benchmark New Zealand NZX 50 index has gained 2.3%.

Prestwick, Scotland's busiest cargo airport, and Manston, east of London, handled 560,289 passengers in the five months to August 31st. The Scottish airport is about 32 miles (50 kilometers) south of Glasgow. Glasgow's larger airport, Glasgow International, or Edinburgh Airport, Scotland's busiest, may also go on sale soon as the U.K.'s competition commission has ordered BAA Ltd. to shed one of the two facilities. BAA, the owner of London's Heathrow, is appealing the ruling.

Prestwick and Manston made a combined operating loss of NZ$11.3 million ($9 million) in the year ended March 31st, prompting Infratil to cut their value to NZ$101 million from NZ$138 million a year earlier. The airports' passenger numbers fell 9.4% in the year ended March, while freight volumes tumbled about 20%.

Bloomberg 9th Oct 2011