Record passenger numbers boost BAA

BAA, the airports operator, posted a 25 per cent rise in first-quarter profits yesterday as passenger numbers hit record levels and their average spend increased.

BAA, the airports operator, posted a 25 per cent rise in first-quarter profits yesterday as passenger numbers hit record levels and their average spend increased.

The company said pre-tax profits for the three months to the end of June were £159m, with passenger numbers up 9.7 per cent to 36 million. Southampton and Stansted saw the biggest rise in numbers, up 23.6 per cent and 15.8 per cent respectively, as the demand for low-cost air travel continues. Income from retail outlets in its airports rose 12 per cent to £146m, with income per passenger up nearly 2 per cent to £4.06.

Mike Clasper, the chief executive of BAA, said: "A record number of passengers have used our airports, experiencing reduced waiting times for security screening and increased reliability of escalators and other facilities. These improvements have allowed us to accommodate the significant growth in passengers during peak periods."

He is forecasting a further 6 per cent growth in passenger numbers this year and a similar boost to retail spending. This year's figures compare with very poor figures in 2003, when the travel industry suffered the fallout of the Iraq war and the outbreak of Sars in Asia. Operating costs rose by £28m, some of which went on an increased number of security staff at its airports. Construction of a fifth terminal at Heathrow, due to open in 2008, is ahead of schedule, according to BAA, and has so far stayed within budget. Of its £345m of capital expenditure in the quarter, £202m was on the fifth runway. There was also some good news for the company's pension scheme, which saw its deficit fall to £75m from £111m earlier this year.

BAA could be hit by a forthcoming strike by airport ground staff. Unions representing 4,000 workers are planning to ballot members over the next two weeks, although negotiations continue with their employer, British Airways. Should the strike go ahead, the cost to BAA could be about £800,000 a day, the group indicated. During a similar strike at Heathrow last summer, BAA provided food and shelter for more than 100,000 stranded travellers.

There is no sign, however, that BAA is backing down over a legal spat with Ryanair. BAA has filed a suit to reclaim landing fees from the airline, while Ryanair is suing BAA over fuel charges.