Alpha said it was recommending a final dividend of just 1.16p a share for a total of 3p for the year - 44 per cent down. The shares, which have been gradually losing altitude for five years, closed 8p down at 62.5p.
Alpha, which runs baggage handling, catering and retail services at airports, said it had cut the payout in the light of BAA's decision not to renew its retail management contracts at Heathrow airport last year.
The decision knocked 10 per cent off Alpha's turnover. BAA, the airports operator, will withdraw a similar contract for Gatwick in June, and Alpha is now bracing itself for this July's abolition of duty free in Europe.
Kevin Abbott, chief executive, said: "The reason for the dividend cut is that we have a large number of new projects with existing customers in the pipeline." He said the group had to preserve its financial capacity to exploit new opportunities.
Analysts were surprised by the cut but said it did little harm to an already bombed-out stock. Tim Sedgwick of Henry Cook predicts earnings per share of 8.4p in 1999, putting the group on a forward p/e of just six; potentially a good investment but not without risk.