BAA optimistic after challenging year

British airports operator BAA overcame the impact of the London bombings and the Gate Gourmet catering dispute to post an 8% rise in operating profits today.

BAA, which is the subject of an £8.75bn (€12.9bn) takeover attempt by Spanish infrastructure group Ferrovial, said passenger numbers grew by 2% but that it was able to drive revenues by 7% to £2.23bn (€3.3bn) in light of stronger retail income and rising tariffs at its three London airports.

Operating profits rose to £710m (€1bn), but a raft of exceptional items, including property revaluations, meant statutory profits were 17.3% lower at £757m (€1.1bn) in the year to March 31.

Looking ahead, chief executive Mike Clasper said he was confident of “another good financial performance” after forecasting a 3.5% rise in passenger numbers in the current year.

He described operating conditions over the past year as difficult, with the London bombings in July, the catering dispute in August and the impact of a slowing economy in the UK.

BAA, which owns seven UK airports, also faced a 7% rise in operating costs to £1.52bn (€2.2bn), including a 7% jump in staff costs to £535m (€786m) and a 23% hike in utility bills.

It said Heathrow generated revenues of £1.08bn (€1.6bn) in the year, with operating profits of £447m (€657m) being 11.8% ahead of a year earlier. Profits at its two other price-regulated airports of Gatwick and Stansted were unchanged and ahead by 19.5% respectively.

At its Scottish airports, Glasgow achieved a rise of 8% and Edinburgh grew its profits result by 6.9% to £31m (€45m), the company added.

It also emerged in the results that BAA ran up costs of more than £15m (€22m) in dealing with the takeover interest from Ferrovial in the period up to March 31.

BAA said the final bill was uncertain, but pointed out it would be “significantly greater” than £15m (€22m).