BAA reports strong results despite difficult Summer

Dermot Davitt

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The UK airports group reports increases to net retail income and income per passenger

BAA reported good increases in revenue and operating profit in the six months to September 30, despite the impact of the London bombings and the Gate Gourmet dispute with British Airways during the period.

UK airport net retail income grew 3.8% to £324m ($) compared to passenger growth of 2.6%, reflecting an increase in net retail income per passenger of 1.2% to £4.08 ($).

London Heathrow retail income grew 3.4% to £120m ($) in the first half, benefiting from the opening of the departure lounge extension of terminal one in May which included over 20 new shops and restaurants. Retail income at Gatwick grew 1.6%, despite a decline in car parking income due to increasing competition from off-airport operators. Stansted and the Scottish airports continue to perform well with strong retail income growth of 8.3% and 14.3% respectively.

World Duty Free's revenue grew 1% in the period to £200m ($) with operating profit rising by 7.7% to £14m ($).

BAA said its specialist store strategy has been further expanded with the opening of Sunglasses at Gatwick South Terminal, and a Men's Grooming area within the new departure lounge extension at Heathrow's T1.

At group level, passenger traffic rose 2.5% to 82.3m in the period. Revenue was up 6.4% to £1,17bn ($) and operating profit grew 9.6% to £412m ($).

BAA CEO Mike Clasper commented: "Our clear strategic focus, supported by skilful innovation, has once again demonstrated its value in today's results. We have turned a traffic increase of 2.5% into an underlying 6.4% increase in revenue and a 9.6% rise in operating profit. We have delivered this performance despite a slowing UK economy and the impact of this summer's London bombings and the Gate Gourmet dispute. These results demonstrate the strength of our business, our assets and our management.

"We remain confident of delivering a good retail performance, maintaining tight control of costs and, as announced on 20 September 2005, we anticipate around 3% traffic growth for our UK airports this year."