The bid is likely to set Ferrovial back at least £8bn and possibly up to £9.5bn because BAA has the option to alter the terms of its recent £1.9bn bond issue so that it has to be paid back immediately in the event of a takeover. Ferrovial is smaller than BAA in terms of market value (£6.4bn compared to BAA’s £8.07bn) but dwarfs its target in terms of sales (£5.15bn compared to BAA’s £2.21bn).

Nevertheless Ferrovial will have to borrow heavily to finance the deal and this will adversely affect BAA’s credit rating should Ferrovial be successful. A cut in BAA’s credit rating would have an adverse impact on the company at a bad time because BAA has just issued a little less than £2bn of debt. It also plans to invest a further £8bn over seven years to upgrade capacity at Heathrow and Stansted.

The major airlines are broadly behind BAA in fending off the takeover bid but Ryanair, one of BAA’s biggest customers flying out of Stansted, supports Ferrovial because it believes that the Stansted expansion plans are “gold plated” and far too expensive, which will in turn drive up landing fees.

Ironically there is a possibility that Ferrovial could sell off Stansted if its bid was successful thus scuppering the Government’s plans to use this airport to increase capacity in the south-east. Higher borrowing costs, due to a reduced credit rating, would make the investment in Stansted even less attractive to Ferrovial.

If Stansted isn’t developed the spotlight falls on Heathrow which is struggling to reduce emissions to a level that will be acceptable to the EU by a deadline of 2011. If Stansted and Heathrow are out of the picture the best realistic alternative to increase capacity is Gatwick although technically this couldn’t happen until 2019 when a legal agreement expires.

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So what are the chances of Ferrovial being successful if it launches a bid for BAA, then abandoning Stansted and the pendulum swinging towards a second runway at Gatwick?

Without major financial backing from another source, the answer to the first question is “slim” which makes the second and third academic for the moment.