Losses at BAA's three London airports tripled to £546m in the first six months of the year as the company poured money into its pension scheme and wrote down the value of its ageing terminals at Heathrow.
Aviation has been hit hard by the recession, with 7.4 per cent fewer people – 4.4 million passengers – flying to and from Heathrow, Gatwick and Stansted bewteen January and June. Those who did fly spent more in BAA's airport shops, pushing net retail spending per passenger up by 7.3 per cent to £4.72.
However, BAA's unpopular decision to raise the fees it charges airlines to use its terminals helped to push up the group's aeronautical income by 24 per cent to £624m. The result was that BAA's underlying earnings soared by 28 per cent over the half-year, to £470m, and revenues were up by 12.8 per cent at £1.1bn.
The main trouble for BAA was a string of exceptional charges. A revaluation of its pension fund left it with a £219m deficit, while further non-cash items included £290m of depreciation on the old Terminals One and Two at Heathrow, which are now being rebuilt, and another £150m related to the revaluation of financial instruments. These helped to increase its losses by 303 per cent from last year's £135m. No further pension payments are anticipated, the company said yesterday.
Colin Matthews, the chief executive, said: "BAA's underlying financial performance remains in line with our expectations. I am particularly pleased that Heathrow continues to show its resilience, but trading conditions for the industry remain difficult."
Of the three London airports, Heathrow is holding up best in terms of traffic. More than 31.2 million travellers used the hub between January and June, only 3.9 per cent fewer than in the same period the year before. But passenger numbers at Stansted fell by 14.4 per cent, or 1.6 million people, as its main airlines, Ryanair and easyJet, cut capacity to cope with the recession.
BAA said it was still working on selling Gatwick for £1.5bn. The net debt of the London airports was 3.2 per cent higher at £9.7bn, but BAA said it did not need the Gatwick deal to go through for it to pay off £1bn of debt that matures next year. Gatwick was put on the market last autumn in an attempt to pre-empt a sale forced through by the Competition Commission. Nevertheless, the watchdog ruled in February that BAA had to sell both Gatwick and Stansted, as well as one of its Scottish airports, to comply with monopoly laws. BAA has appealed against the ruling and the case will be heard by a tribunal in October.
In the meantime, the sale of Gatwick has been stymied by potential bidders shying away from BAA's £1.5bn price. The Lysander consortium, led by Citigroup, was ditched in May for offering too little. Earlier this month, BAA was forced to deny that both other bidders – Manchester Airports Group and the Global Infrastructure Partners consortium — had also walked away.
BAA insisted last night that it "remains in discussions with parties interested in acquiring Gatwick".Reuse content