BAA profits take a knock from landing charges
Tuesday 30 July 1996
Revealing a 2.4 per cent increase in pre-tax profits to pounds 130m, boosted by higher retail sales, BAA chief executive, Sir John Egan, said the recently published Monopolies and Mergers Commission report on future airport charges for airlines together with the Civil Aviation Authority's response "create a particularly challenging environment for BAA for the next five years".
Earlier this month the CAA, BAA's regulator, published a proposal document on landing charges, which said BAA should cut pounds 150m from airport fees over the next five years following an enquiry by the MMC. Though many observers felt the terms were less onerous than expected, Sir John said BAA was discussing the detailed implications of the review with the CAA and its larger airline customers.
In the three months to 30 June, net retail income rose to pounds 105m with the increase per passenger strongest at Gatwick where it rose by 12 per cent. BAA's airports, which include Gatwick, Heathrow and Stansted, handled 24.7 million passengers in the quarter, up 3.7 per cent on the same period last year.
Capital expenditure during the quarter was pounds 86m, which included the completion of the departure lounge at Heathrow's terminal 2 which provided an extra 24,600 square feet of retail space.
BAA said the programme to smooth out charges between peak and off-peak times knocked around pounds 4.6m off profits.
Marshall Whiting, an analyst at brokers Societe Generale Strauss Turnbull, said the figures, which were in line with expectations, were over-shadowed by the regulatory issues. "There will be another few weeks of consultation and the CAA will probably make its final price proposals around October."
Under the CAA proposals landing fees at Gatwick and Heathrow would be allowed to rise by no more than inflation less 3 percentage points while prices at Stansted prices could rise by inflation less 1 percentage point. The prices are set for the next five years from next April.
BAA's total revenues in the third quarter rose by 6.4 per cent to pounds 347m. Sir John Egan said the year had seen a positive start with sales and profits up relative to passenger numbers. BAA shares closed a penny lower at 471p.
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