BAA profits bounce back from duty-free blow

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The Independent Online

BAA, the airports operator, yesterday reported a rebound in retail sales, saying it had tackled the downturn in airport shopping following the abolition of duty-free purchases in Europe.

BAA, the airports operator, yesterday reported a rebound in retail sales, saying it had tackled the downturn in airport shopping following the abolition of duty-free purchases in Europe.

The company also indicated that the Department of the Environment, Transport and the Regions had quietly dropped its inquiry into competition at airports. An adverse finding could have led to a break-up of BAA.

In a reference to the recent train crash at Hatfield, Mike Hodgkinson, the company's chief executive, said: "We have seen in recent days how fragmentation in other industries has been a disaster.

"If you want a world-class industry, you don't hack it around. The inquiry is done. I don't think we'll hear any more about it."

BAA was forced into a profits warning last October, after the abolition of duty-free shopping within Europe hit its retail sales unexpectedly hard.

Yesterday it reported that, for the three months to 30 September, the first like-for like comparison since duty free shopping ended on 1 July last year, retail profits grew 14 per cent to £132m. For the six months to 30 September, the figure was 1 per cent ahead at £245m.

Jonathan Wober, an analyst at Deutsche Bank, said: "The retail problems are largely in the past. It was a question of restoring confidence and that's basically what they've done now."

BAA revealed that, for the half-year, it lost £4.5m on its Eurotunnel shopping concession. BAA is suing the operator of the Channel Tunnel for allegedly misrepresenting passenger growth expectations. The number of passengers using the tunnel has fallen. BAA expects a court hearing early next year.

At its airports, UK passenger numbers grew 6.6 per cent in the half-year to 69.5 million. Pre-tax profits, before exceptionals, increased 5.2 per cent to £322m. BAA shares closed up 19p at 583p.

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