BAA hit by ballooning losses

Author: By Graeme Evans, Press Association

BAA, which is owned by Spain’s Ferrovial, reported £400 million in non-cash
items, reflecting an increased pension scheme deficit and the depreciation
in value of Heathrow Terminals 1 and 2 due to plans for a new development.

Passenger numbers also slumped 7.4 per cent in the recession, but BAA said
operational standards improved with better scores for punctuality and
airport service.

Pre-tax losses without the exceptional items increased to £140.3 million in
the six months to June 30, against £71.4 million a year earlier.

Despite the loss, chief executive Colin Matthews said BAA’s underlying
performance was in line with expectations, after demand at Heathrow showed
“resilience” with a decline in passenger numbers of 3.8 per cent to 31.2
million. Gatwick fell by 9.8 per cent and Stansted by 14.4 per cent to 9.2
million after budget airlines cut capacity in order to meet reduced demand.

Net debt rose to £9.6 billion but BAA said it would be able to meet all of its
repayments due next year, even if the current sale process for Gatwick
airport failed to go through. Gatwick is thought to have a £1.5 billion
asking price.

The group is battling against a Competition Commission ruling earlier this
year that it must sell Gatwick, Stansted and either Glasgow or Edinburgh,
two of its Scottish airports not included in today’s results.

BAA had already decided to sell Gatwick before the ruling, but if it loses its
appeal at a hearing in October it could be forced to sell the West Sussex
airport, with an independent trustee appointed to handle the sale.

In terms of service standards, BAA said the proportion of aircraft departing
Heathrow within 15 minutes of schedule averaged 79 per cent in the six
months – against 64 per cent a year earlier. The ratio of passengers passing
through security in less than five minutes was 98.4 per cent, up from 92.4
per cent and compared to the 95 per cent service standard.

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