LONDON (Bloomberg) ? American International Group Inc. and a team of investors agreed to buy London City Airport, taking control of the terminal serving the UK capital?s financial district in anticipation of a surge in air travel. Terms weren?t disclosed.

AIG, the world?s largest insurer, and an investment fund run by General Electric Co. and Credit Suisse Group are buying the airport from Irish billionaire Dermot Desmond, City Airport said in a statement. The companies will pay ?750 million ($1.4 billion) for the airport, the Financial Times reported earlier.

Airports are attracting interest from investors in search of reliable flows of cash. Grupo Ferrovial SA of Spain agreed to buy BAA Plc, the owner of London?s Heathrow airport, for 10.1 billion pounds in June. City Airport forecasts that the expansion of Canary Wharf, London?s second financial district, and the hosting of the 2012 Olympic Games will help quadruple passenger numbers to 8 million in the next 25 years.

?City Airport is much more convenient than the other London airports,? said Gabriele Montesi, an analyst in Milan at Citigroup Inc., which has its European headquarters in Canary Wharf.

?It?s much easier to get to from the office, especially when you fly back and forth from Europe a lot.?

The airport handled 2 million passengers in 2005 and is three miles from Canary Wharf, where Morgan Stanley and HSBC Holdings Plc have their European headquarters. Heathrow, Europe?s busiest airport, lies southwest of London and had 67 million passengers in the past 12 months to September 30.

?The airport has tremendous potential,? Joseph Cassano, head of AIG?s financial products unit, said in an e-mailed statement. AIG and the fund run by GE and Credit Suisse will each own 50 percent of the airport, the companies said.

Desmond, the fourth-richest man in Ireland, bought the airport in 1995 from John Mowlem & Co., the U.K. construction company that built it. Mowlem received ?14.5 million for the airport, which had a loss of ?4.2 million in 1994, the builder said in a statement in October 1995.

AIG, General Electric and Credit Suisse won a three-month contest for the airport, defeating bids from a group comprising Cologne-Bonn Airport GmbH and infrastructure fund Galaxy, and a separate offer from Balfour Beatty Plc and Merrill Lynch & Co.

Desmond said in an interview on September 12 that he would sell the airport to ?whoever provides the most money?. Fraport AG, operator of Frankfurt airport, pulled out of the race last month saying the price couldn?t be justified.

AIG, which in February settled probes of the company?s accounting and sales practices, last month raised $700 million to invest with US buyout firms in the consumer, pharmaceutical and media industries.

Credit Suisse and GE established their $1 billion Global Infrastructure Partners fund in May to invest in toll roads, gas pipelines and airports. Deutsche Bank AG followed with its own infrastructure fund last month.

?We are pleased that London City Airport is our first investment as it is a very high quality asset,? Adebayo Ogunlesi, chairman of the Infrastructure Fund, said in the statement.

About 70 percent of the 2 million passengers using City Airport each year travel for business and make their return trip on the same day or a day later.

The relocation of banks and law firms to Canary Wharf, where about 78,000 people now work, has driven the airport?s growth since its opening in 1987. Canary Wharf and London?s main City financial district, which is seven miles from the airport, account for about 13 percent of London?s economy.

The 139-acre (56-hectare) airport handles small turbo-prop and jet aircraft such as ATR 42s and British Aerospace 146s for short- haul flights to domestic and European destinations.

Desmond was a founder of Irish mobile phone company Esat Digifone Plc, later bought by BT Group Plc. Desmond also owns a stake in the Celtic soccer team of Glasgow, Scotland. The Irish entrepreneur is worth ?846 million, the Sunday Times estimates.