BAA hit by ballooning losses

Half-year losses at BAA's three London airports ballooned to £545.7 million today after the Heathrow firm suffered a string of one-off charges.

BAA, which is owned by Spain's Ferrovial, reported £400 million in non-cash items, reflecting an increased pension scheme deficit and the depreciation in value of Heathrow Terminals 1 and 2 due to plans for a new development.

Passenger numbers also slumped 7.4 per cent in the recession, but BAA said operational standards improved with better scores for punctuality and airport service.

Pre-tax losses without the exceptional items increased to £140.3 million in the six months to June 30, against £71.4 million a year earlier.

Despite the loss, chief executive Colin Matthews said BAA's underlying performance was in line with expectations, after demand at Heathrow showed "resilience" with a decline in passenger numbers of 3.8 per cent to 31.2 million. Gatwick fell by 9.8 per cent and Stansted by 14.4 per cent to 9.2 million after budget airlines cut capacity in order to meet reduced demand.

Net debt rose to £9.6 billion but BAA said it would be able to meet all of its repayments due next year, even if the current sale process for Gatwick airport failed to go through. Gatwick is thought to have a £1.5 billion asking price.

The group is battling against a Competition Commission ruling earlier this year that it must sell Gatwick, Stansted and either Glasgow or Edinburgh, two of its Scottish airports not included in today's results.

BAA had already decided to sell Gatwick before the ruling, but if it loses its appeal at a hearing in October it could be forced to sell the West Sussex airport, with an independent trustee appointed to handle the sale.

In terms of service standards, BAA said the proportion of aircraft departing Heathrow within 15 minutes of schedule averaged 79 per cent in the six months - against 64 per cent a year earlier. The ratio of passengers passing through security in less than five minutes was 98.4 per cent, up from 92.4 per cent and compared to the 95 per cent service standard.