BAA faces rise in cost of tunnelling collapse

RUSSELL HOTTEN

BAA, the UK airports operator, may face heavier costs over last year's collapse of a rail tunnel at Heathrow after ruling out legal action against Balfour Beatty. But Sir John Egan, BAA's chief executive, refused to say how much the delays in the construction of the Heathrow Express tunnel link would mean to the company.

Insurance payouts will not cover the extra costs and there had been suggestions that BAA might seek to recover money through the courts.

Asked if he would go to court over the matter, Sir John said there was "no conflict" between BAA and Balfour Beatty, the construction company building the rail link. "We are working together. It is a partnership," he said.

He said BAA might not know for another two to three years what additional costs it faced, while talks with the insurance companies are held.

Although building work on the tunnel has now resumed, the opening of the link has been delayed by about six months to mid-1998. He stressed that, even with the delay, the Heathrow Express was a "good profitable project".

There was "a good healthy gap" between the break-even cost of the Express and the return on the project BAA was expecting. The rail link, initially costed at pounds 300m, will take travellers between the airport and Paddington station in west London.

BAA, which yesterday reported a 10.9 per cent rise in half-year profits to pounds 294m, on revenues up 5.8 per cent to pounds 698m, expects the Eurostar train service to take away more passengers next year.

Although passenger defections to Eurostar so far had been smaller than expected - about 1.5 per cent against forecasts of 2-3 per cent - the amount of lost business will rise next year.

Russell Walls, finance director, said Eurotunnel was removing 125,000 passengers a month from BAA's airports. He estimated that BAA passenger growth for the first half of 5.8 per cent would rise to around 7 per cent without competition from Eurotunnel. The lost business was hitting the London-Paris route, with London-Brussels services hardly affected, Mr Walls said.

BAA, which is looking to expand overseas, said it would only enter into international deals if they produced better returns than the UK operations. Friday sees the launch of Australia Pacific Airports Corporation, a venture between BAA and investors in Australia, where the UK company is hoping to buy airports being privatised.

Investment Column, page 22

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Loren Hughes: Financial Accountant

£45,000 - £55,000: Loren Hughes: Are you looking for a new opportunity that wi...

Sheridan Maine: Finance Analyst

Circa £45,000-£50,000 + benefits: Sheridan Maine: Are you a newly qualified ac...

Day In a Page

General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?
How Tansy Davies turned 9/11 into her opera 'Between Worlds'

How a composer turned 9/11 into her opera 'Between Worlds'

Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece
11 best bedside tables

11 best bedside tables

It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
Italy vs England player ratings: Did Andros Townsend's goal see him beat Harry Kane and Wayne Rooney to top marks?

Italy vs England player ratings

Did Townsend's goal see him beat Kane and Rooney to top marks?
Danny Higginbotham: An underdog's tale of making the most of it

An underdog's tale of making the most of it

Danny Higginbotham on being let go by Manchester United, annoying Gordon Strachan, utilising his talents to the full at Stoke and plunging into the world of analysis
Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police

Steve Bunce: Inside Boxing

Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police
No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat