BAA warns of delay to superjumbo as it cuts investment

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The Independent Online

The Airports operator BAA yesterday predicted that the introduction of the Airbus super-jumbo, the 555-seater A380, would be delayed for at least a year because of the sharp downturn in the airline market.

The forecast came as the owner of Heathrow, Gatwick and Stansted airports slashed its investment programme and pegged the dividend for the first time since its privatisation in 1987. The dividend was held at 6.1p.

BAA said that capital expenditure this year would be £75m to £100m lower than planned at £550m, although no projects which had already begun or were safety critical would be abandoned.

Mike Hodgkinson, BAA's chief executive, also indicated that the £150m-£250m of investment earmarked to accommodate the A380 could be deferred because of delays in bringing the aircraft into service.

"Nobody at Airbus has made an announcement but there has got to be a possibility that it slips by a year," Mr Hodgkinson added. The A380 is scheduled to enter service in spring 2006 and will require BAA to widen runways, extend taxiways and build a new pier at Heathrow's Terminal 3.

BAA said that overall traffic levels this month had fallen 12 per cent with North Atlantic passenger numbers down by 26 per cent in the wake of the terrorist attacks on America.

Mr Hodgkinson said the decline in traffic was only half that experienced a decade ago during the Gulf war, in large part because the presence of low-cost carriers had helped hold up domestic and European passenger numbers.

Despite the slump in passenger numbers, Mr Hodgkinson said the rationale for building Terminal 5 remained solid. BAA is expecting the go-ahead from the Government in the next two to three weeks although Stephen Byers, the Secretary of State for Transport, is expected to impose a cap on flight movements.

Pre-tax profits for the six months to the end of September fell from £328m last year to £150m, owing to a £190m goodwill write-off on the sale of BAA's World Duty Free Americas subsidiary.