Security Costs and T5 Debacle Blamed for BAA Losses

By DOUGLAS HAMILTON

AIRPORTS operator BAA, part of the Spanish infrastructure group Grupo Ferrovial, said yesterday the cost of tighter security measures and money spent on the troubled launch of Heathrow’s Terminal 5 was responsible for a GBP51m operating loss for the first three months ended March 31, 2008, compared to a profit of GBP107m for the same period a year ago.

The group also paid GBP24m in the first quarter on getting T5 up and running.

The figures revealed net debt of GBP7.4m, up 6.7per cent, as concerns mount over its level of borrowings. BAA said earlier this month it was raising GBP400m from shareholders as worries surfaced over its plans to refinance debts.

Colin Matthews, chief executive, said: “Our operating profit was clearly affected by higher security and maintenance costs, reflecting the importance we place on delivering a safe and convenient service to passengers, through higher standards and better facilities.”

The company’s UK airports handled 32.3 million passengers in the first three months of the year. This represents an increase of 0.9per cent on the comparative period, after taking into account the combined effect of the extra day in the leap year, the earlier Easter holiday traffic in March, the negative impact of the crashlanding of British Airways flight BA038 at Heathrow on January 17, and the difficulties experienced with T5.

Within the traffic results, long-haul traffic continued to out- perform most other routes, with Asian sectors some of the strongest. Traffic to and from China and Hong Kong was up by 12per cent on the same period last year.

Heathrow and Gatwick both recorded increases in the period of 0.6per cent and 5.7per cent respectively. However, some reduction in routes and capacity among low-cost airlines caused a 4.3per cent drop at Stansted.

For the three-month period, Glasgow handled 1.6 million passengers, down slightly from the 1.7 million n the same period in 2007. Edinburgh recorded two million passengers, up from 1.9 million in 2007 on the back of an expanding European low-cost network. Aberdeen reported 700,000 passengers, unchanged from 2007.

Nearly half of BAA revenues come from airlines, who pay a fee for every passenger that travels through its airports. Carriers argue passengers get a poor deal for high fees, which rise to GBP12.80 per customer at Heathrow.

The Competition Commission, which is investigating BAA, agrees and has indic ated that the forced disposal of Gatwick, Edinburgh or Glasgow airports will help give passengers a better deal.

Meanwhile, British Airways and BAA said they will not shift BA’s remaining longhaul flights to T5 until after the busy summer period.

After switching some longhaul flights to the problemplagued new terminal in early June, the airline and BAA said they will transfer the rest in two phases later in the year.

BA had originally intended to shift all flights from other terminals at the airport to T5 in just a couple of days at the end of April, but that plan was curtailed by a raft of problems at the new facility that led to hundreds of cancelled flights and lost bags.

Originally published by Newsquest Media Group.

(c) 2008 Herald, The; Glasgow (UK). Provided by ProQuest Information and Learning. All rights Reserved.