Jeremy Warner: Ferrovial's BAA nightmare

Outlook Ferrovial, the Spanish construction company, cannot claim it wasn't warned. Midway through its top-of-the-market bid for BAA, the Office of Fair Trading announced that it was conducting a competition inquiry into ownership of Britain's airports which could result in the company's eventual break-up. Ferrovial could have cited force majeure, and withdrawn. With the bravado of the matador, Rafael del Pino, Ferrovial's chairman, merely turned his back on the bull and bowed to the crowd. My god did that man have cojones.

Unfortunately for him, they've since been repeatedly put through the mangle. First came the row about appalling standards of customer service at Heathrow. Then came the credit crunch, making the highly leveraged takeover impossible to refinance on the anticipated terms. An unfavourable price review piled on the agony. Now comes the final report of the Competition Commission, which instructs BAA to sell three of its seven airports within two years – Gatwick, Stansted and either Glasgow or Edinburgh in sequence.

Ferrovial and its partners insist that it was only ever Heathrow they were really interested in, yet however attractive this core asset, there is no hiding from the pain of forced peripheral disposals in these markets. At the last count, BAA had more than £12bn of loans on its books. It will be a struggle to service this debt mountain from Heathrow and a few regional airports alone. The disappearance of leverage means that Ferrovial won't get anywhere near what it effectively paid for Gatwick and the other airports it must now dispose of.

Which is why BAA may feel obliged to appeal against the commission's findings. The principle of break-up will be hard to contest, since that's what all the customers – the airlines – want. But there may be room to win concessions on timing. Ferrovial will want to delay things long enough for asset values to recover. As I say, whatever the outcome, Mr del Pino cannot claim he wasn't warned.