BAA UK airports post marginal retail decline

UK airport authority BAA has posted a marginal decrease in retail income for the first quarter of 2008, down 0.3% to £134m ($265.1m). With passenger traffic up 1.2% to 33.4m, net retail income per passenger dropped 1.1% to £4.18 ($8.27).

 

Retail revenue across the airports—including the concession fee from World Duty Free (WDF), which was sold to Autogrill during the period—grew by 2.8% to £145m ($286.9m), but a 70.5% increase in retail expenditure across the network, again excluding costs relating to WDF, led to the drop in net income.

 

The worst decline was suffered in the car parking sector, where income decreased by 8.3%, primarily as a result of increased competition at London Heathrow airport. Car rental (down 1.6%, foreign exchange services (down 4.1%) and landside stores and bookshops (down 2.3%) also registered decreasing income in the quarter.

 

Airside speciality retail grew strongly, up by 5.2% to £17m ($33.6m), as did catering (up 6.3% to £13m ($25.7m)) and advertising (up 15.2% to £10m ($19.8m)). Other retail, the sector which includes the WDF concession fee, grew 1.2% to £33m ($65.3m).

 

In a statement the company attributed the growth in core retail categories to “enhanced brand offerings coupled with improved passenger service delivery”.

 

BAA’s total revenue for the period grew by 8.8% to £506m ($1bn) . However, the company’s profitability was affected by security and maintenance costs, resulting in a £51m ($100.9m) operating loss for the quarter. But the sale of WDF for £517m ($1.02bn) contributed to a net profit of £482m ($953.6m), up from £73m ($144.4m) in the previous corresponding period.