More bad news from BAA today: the UK airport operator saw its losses widen to £316m in the first three months of 2009, as passenger numbers slumped in the downturn. BAA herded 24.8m of us through its three English airports in Q1, 10% fewer than this time last year; Gatwick and Stansted were the worst affected, with both down nearly 15%. Since BAA is hoping to make a dent in its massive debt pile by flogging these two, that’s the kind of figure it can do without. And although Heathrow seems to be doing marginally better, BAA won’t have enjoyed reading in the Sunday papers that some of Britain’s top business leaders have come out against the third runway...
In truth, BAA’s results were a bit of a mixed bag today. The good news was that revenues were up 16% to £522m, with underlying profits climbing a healthy 28% to £186m (which also meant profits for the year to March were just about on target). Despite the big slide in passenger numbers, those people who did travel continued to splash out flight-side – the average passenger spent an extra £4.71 (which is probably just about enough for a small coffee). Higher runway charges also boosted profits substantially - much to the disgust of the airlines, who have no choice but to fork out the extra.
However, BAA also made an alarming £140m less on financial derivatives (clearly it’s no better at playing the markets than it is at refurbishing airports), and also took a £63m charge on Heathrow Terminal Five. As a result, it lost six times as much cash as it did in the same period last year – not exactly ideal when you owe the banks about £11bn. So the forced sale of Gatwick (courtesy of the competition regulator) takes on even more significance: BAA will have to hope that would-be buyers don’t use this passenger decline as an excuse to drop the price. It shouldn’t do, really, given that airports are a long-term asset – but BAA is hardly negotiating from a position of strength.
Heathrow fared slightly better in passenger terms, with numbers down less than 4% on an underlying basis. But BAA bosses will have been horrified to read a letter in the Times this weekend from 13 top business leaders, opposing its much-vaunted third runway plan (on the grounds that its benefits are unproven). BAA has consistently claimed the support of the business community in arguing for the plan – and the TUC, CBI and BCC have all come out in support – but opposition from the likes of Sainsbury’s Justin King and Carphone Warehouse boss Charles Dunstone won’t make its life any easier...
In today's bulletin:
BAA losing passengers, money and business support
Fiat to acquire GM Europe?
Adidas takes a shoeing as profits plunge
Editor's blog: Crazy paving highlights public sector waste
Nick Hood: Austria gears up for insolvency rush