Alpha stake sale confirmed

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The Independent Online

Flat pre-tax profits at Alpha Airports were overshadowed yesterday by confirmation from Granada that it plans to sell its 25 per cent stake in the airport services group by September, as one of the first of its planned disposals. Granada inherited the holding when it acquired Forte at the start of the year.

Briefing analysts yesterday, Gerry Robinson confirmed that Granada planned to sell the Alpha investment on to a "strategic buyer" some time before its own year end in September. The sale of Alpha would mark the latest stage in a dramatic consolidation of the airport services industry, which over the last year has seen the number of large players halve through takeover.

Alpha's shares nudged 2p higher yesterday to 121p after the company confirmed the difficult trading highlighted in a profits warning in February which dashed hopes that a first-half setback would be recovered in the second half. Problems arising from the industry's consolidation have been compounded by airlines putting the squeeze on suppliers.

In the year to January, Alpha's second as a public company following the spin-off from Forte, pre-tax profits slid from pounds 21.4m to pounds 20.6m despite a 16 per cent rise in turnover to pounds 552.9m. Earnings per share fell to 9.24p (10p), but strong cash flow allowed a final dividend of 3.25p to be paid, making a total for the year of 5p, an 8.7 per cent increase.

Hardest hit was catering services, where Alpha struggled to make up for the loss of an pounds 11m contract with British Airways at JFK Airport in New York. That contract represented about 50 per cent of the group's turnover at JFK and its loss contributed to the fall in catering profits from pounds 13.9m to pounds 10.3m.

The chief executive, Paul Harrison, remained optimistic, however: "We expect catering to improve as growth continues across all sectors of aviation services. Airlines enjoyed a better market in 1995/96 and that is set to continue. I believe the industry has reached the bottom of its cycle."

Retail services fared much better, with operating margins, up from 2.9 per cent to 3.2 per cent, pushing operating profits pounds 1.4m higher to pounds 9.7m. During the year, Alpha reached agreement with the government of Sri Lanka to buy 60 per cent of Orient Lanka, the airport duty free operator at Bandaranaike International Airport, where Orient has a 10-year concession on the sale of duty free.