BAA said today that it made a pre-tax loss of £62m in the first three months of 2008 – well below the £89m profit it made this time last year, despite revenues climbing 9% to £506m. Chief exec Colin Matthews blamed this whopping loss on higher security and maintenance costs at its seven UK airports, ‘reflecting the importance we place on delivering a safe and convenient service to passengers, through higher standards and better facilities.’ We’re sure you’ve noticed.
On the plus side, at least we’re still going through the airports (albeit we haven’t got much choice in the matter). BAA recorded a modest 0.9% increase in overall passenger numbers, to 32.3m, helped by a 5.7% rise at Gatwick – although that may have had a lot to do with the fact that Easter arrived much earlier than usual this year. And these extra security costs should be offset by the rise in airport tariffs, which kicked in at the start of April (much to the airlines’ disgust).
However, as you’d expect, the hapless BAA is also finding other inventive ways to lose money. Most significantly, its property portfolio dropped in value by nearly £100m, due to what it calls ‘certain re-measurements’ (perhaps someone forgot to carry a nought last time?), while it also managed to lose £8m on its financial derivatives. And although it spent £24m on ‘operational readiness costs’ for the ill-fated Terminal Five opening – more money well spent, we’re sure you’ll agree – the worst may be yet to come: the botched launch came right at the end of the period, so we won’t really see the impact until next quarter.
Admittedly some of these factors are largely out of BAA’s control, but the figures still make pretty grim reading – particularly while it stumbles along under the weight of a huge £7.4bn debt burden. It’s already been forced to raise £400m from shareholders as it struggles to refinance this debt, and today’s results are not likely to have any of the big banks begging for its business. If the Competition Commission does force BAA to sell off one of its airports, that will make life even more difficult.
Still, at least it's got those security queues sorted, right? Oh.