Ontario Teachers’ fund sells out of the airport business — for now

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The structure of these subsidiaries would allow private investors to buy or be issued shares, so long as the airport authority maintains a controlling interest.

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A third avenue for investment would allow institutional investors to provide subcontracted services for certain aspects of airport operations.

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On Wednesday, a Teachers’ spokesperson declined to say whether the $266.3-billion pension fund would be interested in airport investments in Canada despite selling off international stakes. 

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“(It’s) too early to speculate on where the proceeds will be allocated,” said Dan Madge, Teachers’ director of external communications.

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He characterized the rapid unloading of airports in Europe and the United Kingdom over the past few months as the culmination of a long, successful run in the sector.

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“It was a very good outcome for the fund,” he said. “Our first investment was in the early 2000s, so it has been a long investment period for us.”

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Teachers’ first investment in U.K. airport infrastructure was in 2001, and it bought direct stakes in the airports in Birmingham in 2007 and Bristol in 2008. 

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Eight years later, Teachers’ boosted its U.K. presence with the purchase of a 25 per cent stake in London City Airport, a regional hub for business and vacation travel. Together, the three airports manage tens of millions of passengers annually.

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Over the years, the Canadian pension giant has also bought and sold stakes in airports in major cities in Australia and Denmark.

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After Teachers’ acquired its stake in Bristol’s airport, traffic increased by 72 per cent, with the airport serving more airlines and boasting the fastest recovery among major U.K. airports following the global pandemic. More than £300 million has been invested in the airport over the last decade.

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Passenger growth at Birmingham increased by 35 per cent to more than 13 million after Teachers’ acquired its stake, and more than £425 million has been invested in expansion and modernization over the past 18 years. The expansion included extension of the runway, the opening of a new pier, a new baggage system, and upgraded security and check-in areas, while multiple new flight routes were added, with some 30 airlines connecting travellers to more than 165 destinations.

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Meanwhile, more than £600 million was invested in London City Airport to accommodate larger aircraft and expand facilities, with projects including the U.K.’s first remote digital air traffic control tower.

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Teachers’ said the airports under its ownership also played a central role in regional economic growth, collectively contributing more than £3.7 billion in “gross value added” and 37,600 jobs.

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“Each airport plays an important role in its region and, with all currently undergoing expansion (programs), will continue to grow and deliver for their passengers, communities and the broader economy,” said Charles Thomazi, Teachers’ senior managing director and head of infrastructure in Europe, the Middle East and Africa.

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“We are confident that (the airports) will continue to flourish and are pleased to be passing the baton to new investors Macquarie as they support them in the next stage of their growth.”

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