Though BAA was studying the legal position on the tax, Sir John Egan, chief executive, denied the company was seeking a deal with the Government to reduce its contribution in return for stepping up its investment in public transport infrastructure at Heathrow Airport.
"We are not involved in any kind of trade off," he said. "It's very difficult to get bellicose when you haven't seen the actual law. We can't possibly plan for something we know absolutely nothing about."
Last month BAA issued a strong attack on the tax on the day BT warned it may mount a court challenge. The two privatised companies have insisted they are no longer utilities and have not made windfall profits, though BAA was privately concerned with the direct link.
Sir John pointed to BAA's investment record yesterday with a pounds 500m-a- year capital spending programme which substantially outstripped the group's profits for last year of pounds 444m before exceptional charges, an increase of 10.2 per cent. Capital spending in the year to March rose by 3.5 per cent to pounds 496m, of which pounds 111.6m went on the fast rail link to Heathrow, due in service next summer.
BAA pledged to raise investment at Gatwick from pounds 59.6m last year to pounds 70m in response to the 6.9 per cent surge in passenger numbers to 24.6 million. Gatwick's growth outstripped Heathrow's as British Airways moved long- haul African flights there. Growth at Heathrow fell from 5.3 per cent to 2.4 per cent.
The main success story was Stansted, which broke even last year for the first time before including interest charges, making a small profit of less than pounds 100,000. Passenger numbers rose by 19.2 per cent and BAA said it would raise investment at Stansted to pounds 15m this year, to build a second "satellite" mini-terminal.
Headline profits were hit by a pounds 40m exceptional charge covering interest costs on Terminal 5 at Heathrow which had previously been capitalised through the group's balance sheet. A further pounds 13m of interest costs for last year were also added, reducing profits after write-offs last year to pounds 407m, a drop of 2.6 per cent.
BAA published its annual report to shareholders on the same day as revealing its results. It showed Sir John's bonus fell last year by 18 per cent to pounds 109,000 after a drop in BAA's earnings per share. Sir John's total pay fell by pounds 1,000 to pounds 592,000.