Stansted airport, one of the prime contenders to supplant Heathrow as part of an expansion of airport capacity in the southeast of England, is to be sold by the company formerly known as BAA in a £1.5bn deal.

The sale of the UK's third largest airport to Manchester Airports Group (MAG) is expected to be completed by the end of February and marks the continued rise of the group, whose three existing airports and property business contribute around £3.2bn to the UK.

The breakup of BAA also continues apace as a result of the deal, which reduces the number of airports in the hands of the company from seven to four.

The Competition Commission ruled in July 2011 that it should sell Stansted and either Glasgow or Edinburgh airport as part of a breakup which was resisted in a succession of ultimately unsuccessful legal challenges.

But the company, which owns Heathrow, Southampton, Aberdeen and Glasgow, and announced in October that it was to change its name from BAA to Heathrow Airport Holdings, has announced that Stansted was being bought by MAG.

Stansted, in Essex, which is London's third busiest airport and a major hub for budget airlines such as Ryanair, has been identified by London's mayor, Boris Johnson, as the only viable alternative to proposals to construct a £50bn airport in the Thames estuary.

The mayor, who is opposed to expansion at Heathrow in west London and said in October that he favoured an airport to the east of London, later suggested Stansted should be turned into a "superhub" airport with three extra runways and commissioned a feasibility study.

The airport, which handles around 17.5 million passengers and more than 131,000 flights a year, posted pre-tax profits of £86.6m in 2011.They were estimated to be £94.2m in 2012.

Colin Matthews, Heathrow chief executive and a BAA board member, said: "Stansted airport and its people have been part of our company for a long time.

"It has been named by passengers as the world's best airport for low-cost airlines for two consecutive years at the Skytrax World Airport Awards, and we are proud of its achievements."

He added: "We wish the new owners every success and are confident the airport will continue to flourish. We will continue to focus on improving Heathrow, Glasgow, Aberdeen and Southampton airports."

As well as operating Manchester, East Midlands and Bournemouth airports, MAG owns a commercial property company, MAG Developments, which has a £350m portfolio across the three airports and is leading the £650m Enterprise Zone development, Airport City, at Manchester.

It also runs businesses in car parking, airport security, firefighting, engineering, advertising and motor transport.

BAA's airport ownership was brought into question when the Office of Fair Trading referred the company's holding to the Competition Commission which, after a long inquiry, ruled that BAA's airport ownership was uncompetitive.

Criticising the company's performance, the commission said BAA had to sell Gatwick and Stansted and one of either Edinburgh or Glasgow airports.

Gatwick had already been sold by the time of the ruling and since then BAA has sold Edinburgh.

It held out for some time before finally accepting the ruling on Stansted – mounting a succession of ultimately unsuccessful legal challenges.

MAG had been one of the bidders for Gatwick when BAA put it up for sale while the competition inquiry was going on but it lost out to American private equity group Global Infrastructure Partners which now also runs Edinburgh.