Air London plunges as profits crash

SHARES in Air London, Europe's biggest air charter group, fell 18p to 74p yesterday after the company announced a 39 per cent drop in first-half profits, writes Tom Stevenson.

Tony Mack, the chairman, said: 'We continued to increase our client base, but existing customers spent up to 50 per cent less in some cases.' One client, which spent pounds 1.5m at the peak of the market, cut its budget back to pounds 300,000 last year.

Air London takes a 5-7 per cent cut for arranging private plane hire. Charters have included helicopters for weddings and a DC-10 for a family jaunt to Washington.

Mr Mack said that the European Bank for Reconstruction and Development was not a customer but was on a 'hit-list' of users of other charter companies whose business Air London hoped to win.

He added that the bank's new-found parsimony regarding executive travel was mirrored by other organisations concerned about the perceived insensitivity of jetting their executives around while laying off other staff.

Air London's spread of clients, from Saudi princes to jockeys to rock stars and FT-SE 100 companies, had been expected to protect the company from recession. Mr Mack said: 'We thought it would be pretty awful if they all spent less at the same time. But they have.'

Turnover slipped from pounds 7.2m to pounds 6.9m with pre-tax profits falling from pounds 671,000 to pounds 411,000. Earnings per share were 3.17p (5.03p) and the interim dividend was held at 1.6p.

Profits were hit by over-capacity in the industry, leading to tighter margins. The interest-rate fall also meant there had been a lower return on the company's pounds 3.5m cash-pile.