"BAA sees more passengers at UK airports"

Wednesday, May 19, 2004

BAA sees more passengers at UK airports 
By Kevin Done
United Kingdom - The Financial Times


BAA, the airports group, is forecasting "robust" passenger traffic growth at
its UK airports.
 
Mike Clasper, chief executive, predicted volumes would rise by more than 6
per cent despite the uncertain international political outlook.

The growth would be supported by strengthening economies in the UK, North
America and Asia.

Passenger volumes in the year to the end of March rose 4.4 per cent to
133.4m.

BAA said its operating profit for the period had risen 4.9 per cent to £616m
on turnover up 4.7 per cent at £1.97bn. Pre-tax profit was virtually
unchanged at £539m.

The group is raising its full-year dividend 5.3 per cent to 20p.

Of BAA's three regulated London airports, Heathrow lifted operating profit
7.1 per cent to £364m while operating profit fell 2.2 per cent at Gatwick to
£91m and 9.3 per cent at Stansted to £39m.

Heathrow accounts for 48 per cent of BAA's UK traffic and for 63 per cent of
its UK airports' operating profit.

The growth in profits and revenues at Heathrow last year was driven in
particular by increased airport charges and stronger retail sales.

Mr Clasper rejected forcefully proposals put forward by BMI British Midland,
the second-largest Heathrow operator after British Airways, for differential
charging at the airport to reflect different standards of facilities.

Sir Michael Bishop, BMI chairman, has said British Airways will gain an
unfair advantage when it moves into Terminal Five in 2008.

Landing charges at Heathrow are set to rise by more than 40 per cent between
2003 and 2008 to finance the £4.2bn project and the increase, set by the
Civil Aviation Authority, the economic regulator for the three London
airports, has been bitterly criticised by Heathrow airlines led by BA, BMI
and Virgin Atlantic.

Mr Clasper said BAA was also investing £3bn at Heathrow over the next 10
years on non-T5 projects, including the development of the central area
terminals that were expected to be used by BMI and the Star alliance.

BAA group capital expenditure jumped from £774m to £1.3bn last year under
the impact of the T5 project.

BAA is expected to face a similar battle with the low-cost carriers Ryanair
and EasyJet over increasing landing charges at Stansted, where it is in the
early stage of planning a second runway and a second terminal in a project
estimated to cost £2bn to take capacity initially from 35m to 50m passengers
a year.

The first low-cost long-haul flight out of Stansted, to Vancouver, is to be
launched by Zoom Airlines, of Canada, at the end of this month.


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