Alpha optimistic despite tough year

Gavin Lipsith

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As a challenging year comes to an end, the UK-based company believes its continuing reorganisation and key contracts gained over the past year lay the foundation for growth

Alpha Airports Group has reported a 13.5% drop in underlying profit before tax against a 1.9% revenue increase for the year ended January 31 2007. Finance director Mark Adams said he was “generally pleased” with the performance given the trading climate, while chairman Martin Flower and CEO Peter Williams put the results in the context of a year spent preparing the company for strong growth in the future.

Alpha’s Airline Services division revenue dropped by 0.7% to £296.3m, reflecting the impact of the loss of the ThomsonFly catering contract in the UK, but offset by continued growth of its inflight retail business and international operations.  Underlying operating profit for the division grew by a third to £14.4m and underlying operating margins improved from 3.4% to 4.6%.  Adams explained that a focus on margin improvement and cost control in the UK, along with higher volumes and international contract wins, led to the improved performance.

In the Airport Services division underlying operating profit was down by 51.4% to £5.1m and underlying operating margins reduced from 4.2% to 2.0%, despite revenue increasing by 5.1% to £265.2m. The group’s UK business was severely affected by the fall-out of the August 10 terror plot, and the company said that increased concession fees following contract extensions had also affected operating profit.

Over the past year the company has extended its airport-wide concession at Manchester airport for 10 years, gained new concessions at Bournemouth and East Midlands airports and become one of the first batch of international travel retailers in India after securing the duty-free concession at Delhi International airport through its joint venture with Pantaloon Retail (India). The Airline Services division also gained new contracts at Sharjah International airport and with Air New Zealand and, since the year end, Etihad Airways in Australia.

As a result of the first phase of a strategic review, Alpha has committed to retaining and leveraging scale from its separate Airline Services and Airport Services businesses, and driving growth in high-margin markets while improving returns in developed markets. It said it would maintain its focus on innovation and differentiation while developing strategic customer relationships and consumer-facing brands.

Flower said: “The group is in a much stronger position as a result of the management actions taken during the year and the changes to the executive team. We can now focus on developing the business, improving our performance and building critical mass. The group’s strategic direction is both exciting and innovative and we have entered the current year with much more confidence. With a clearer strategic focus, the board’s expectations for the year are that the group will make positive progress.”

Peter Williams will talk to RavenFox.com about the results later today.