The UK government warned potential bidders for airport operator BAA on Tuesday that they will need to invest heavily to meet an expected rise in travelers to and from south-east England.
Backing comments made by the Civil Aviation Authority (CAA) regulator last month, Transport Secretary Alistair Darling said essential future air travel investment in the region included two additional runways by 2030.
"The government therefore supports the view, recently expressed by the CAA, that it is important that any owner of a London airport should recognize the significant near- and medium-term investment requirements," Darling said in a statement.
"This is likely to require the maintenance of credit quality sufficient to ensure the cost-effective financing of future investment."
Spain's Grupo Ferrovial last week made an GBP£8.8 billion (USD$14.87 billion) takeover bid for BAA, which owns Heathrow, Gatwick and Stansted airports. BAA rejected the bid.
Ferrovial said last week it was committed to the continued development of BAA's businesses.
BAA is building a GBP£4.2 billion (USD$7.35 billion) fifth terminal at Heathrow and plans a second runway at Stansted under government-backed plans to cope with growing air travel demand.
Darling was responding to a consultation by the CAA on price caps to airport charges. The CAA is currently reviewing the price BAA can charge airlines to use its London airports.
Ferrovial plans to lobby major BAA shareholders to support its proposal this week before deciding whether to take the bid hostile or walk away. Major shareholders have said its offer is too low.
Sources familiar with the situation have said Australia's Macquarie Bank is also looking at a possible bid.
Ferrovial's consortium included an investment company directed by GIC Special Investments and Canadian fund manager Caisse de depot et placement du Quebec.
