Whitehall officials asked Merrill Lynch, the investment bank, to investigate the "robustness" of BAA's finances before Christmas after a slump in the the airport operator's bonds. The Merrill Lynch report, revealed in papers released to The Sunday Times under the Freedom of Information Act, also covered Ferrovial, the Spanish group that is BAA's controlling shareholder.

Notes of government meetings called to discuss BAA's sale of Gatwick show the Competition Commission separately asked BAA to provide a "review of their financial profile", a request that left the company "surprised and concerned".

Disclosure of official concern over BAA's finances will add to City fears over the company and increase speculation that it may need to raise fresh debt or equity. Some transport experts believe the group may struggle with the billions in capital spending that are planned for Heathrow, including funds for a controversial third runway.

Read the full article in The Sunday Times.


Ferrovial must rue the day it bought BAA.

The good news is that this is yet another reason why the third runway won't be built.