BAA, the operator of London's Heathrow airport, announced an annual loss of £822m yesterday, including charges related to the forced sale of Gatwick airport.
The company said that the deficit was exacerbated by a £277m charge linked to the sale of Gatwick last October when Global Infrastructure Partners, a private equity fund backed by Credit Suisse and General Electric, bought the UK's second biggest airport for £1.5bn. The sale followed a ruling by the Competition Commission, which found that BAA had an unfair market share.
Yesterday's results also contained details of a £218m charge relating to BAA's increased pension deficit.
The group yesterday pointed out, however, that revenues in 2009 had increased by 8.3 per cent to just under £2bn, while Ebitda and cashflow had each jumped by more than 17 per cent.
"BAA made substantial progress in 2009, against a difficult economic backdrop," said its chief executive, Colin Matthews. "We sold Gatwick airport, returned to the debt capital markets and our future regulation is clearer. Our operational performance is improving and we will invest more than £1bn this year to upgrade our airports. Our financial performance remains resilient, especially at Heathrow.
"We expect 2010 to present further economic challenges for the industry as a whole, and we will remain focused on improving our efficiency and the service we offer customers."
The company trumpeted the 1.5 per cent fall in passenger traffic at Heathrow, which bettered the average decline of 5.6 per cent at the next four biggest European airports. Passenger numbers at Stansted fell by 10.7 per cent, but the group was at pains to point out that falls at both airports steadied in the third and fourth quarters.
"The feeling is that BAA is through the worst of it," said Chris Yates, an aviation analyst. "I would hate to say for certain that the economy is out of the mire, but if things continue to pick up, the next 12 to 18 months could be a lot better. We are likely to see more bums on seats and more planes in the sky, and that has to be good for BAA."
BAA was bought by the Spanish infrastructure group Ferrovial in 2006 for £10.1bn, saddling the group with debts of £9.6bn. The pressure on the group's balance sheet was eased last year with the help of a £500m equity injection from the company's owners and a return to the bond markets after a three- year absence. The group raised £900m in the debt markets, allowing it to stretch out the average length of its borrowings, and to repay £2.1bn in shorter term loans. The return to the bond market was also helped by the appointment of Fred Maroudas, a well-respected debt capital markets borrower, as BAA's treasury director.
Mr Matthews also called on British Airways and the union Unite to reach an agreement on their dispute over working practices for cabin crew, saying that a strike by Heathrow-based staff would lead to people taking fewer flights, or using other European airports.
Unite last night announced that its members had voted in favour of strike action. The union said that 80.79 per cent of its members had returned ballot papers and that an overwhelming 78.7 per cent had backed the union's call for industrial action.