Airport shopping boosts BAA profits

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The Independent Online
The boom in airport shopping helped boost pre-tax profits at BAA, the privatised group which runs Heathrow, Gatwick and Stansted, by 6 per cent to pounds 397m in the nine months to the end of December.

The figures confirm the increasing importance of retailing to BAA. Cash earned from shopping concessions in airport terminals surged by 10.9 per cent over the past nine months to pounds 331m. Income from property also increased substantially, jumping 8.4 per cent to pounds 168m.

Last summer Sir John Egan, BAA's chief executive, said the proportion of revenues accounted for by retailing had grown to 44.4 per cent, suggesting shopping could soon overtake the core airports business as the main cash generator. Yesterday's results emphasised this trend, with retailing accounting for more than 46 per cent of revenues.

In contrast, the group said revenues from its regulated airport and traffic charges had climbed by a more modest 5.5 per cent to pounds 385m. BAA's airports, which also include Glasgow, handled 76.6 million passengers in the nine months to 31 December, a rise of 4.4 per cent.

Total revenues increased by 7.8 per cent to pounds 1.064bn, while operating profits rose by 9 per cent to pounds 425m. BAA shares fell 6.5p to 525.5p.

Separately, it emerged yesterday that BAA had reduced its stake in a consortium set up to bid for a role in the privatisation of Australia's airports. The group had originally had a 49 per cent share in the venture, Australia Pacific Airports Corporation (Apac).

This will now drop to 29 per cent in the hope that a more "Australian" feel to the group will have a better chance of winning the bidding. So far Apac has put in bids to run airports in Melbourne, Brisbane and Perth.

"We have been persuaded that our consortium is more likely to succeed with a higher level of Australian equity. However, the bid remains in all respects consistent with our international strategy, providing both the rate of return we seek and the opportunity to expand our experience of overseas airports," a BAA spokeswoman said yesterday.

However, BAA was silent on its biggest current concern, whether it will fall within the remit of Labour's planned windfall tax on the privatised utilities.

In recent weeks BAA has stepped up its lobbying as clearer signals emerged from Labour that it would include the tax in its first budget. Party sources have suggested that the bill would include blanket wording covering all the "privatised utilities", though BAA insists its operations can no longer be included in this category.