Profits slip but retail remains robust for BAA

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BAA's pre-tax profits slip 11.2% to £127m ($178m) for the three months to June 30, but results are boosted by a 3.2% growth in net retail income, to £130m ($182m)

BAA today reported a fall in pre-tax profits of 11.2% to £127m ($178m) for the first quarter of the financial year to June 30, but said it had started to see an improvement in passenger growth and revenues towards the end of the period. BAA's retail operations proved one of its strengths, with net retail income rising 3.2% to £130m ($182m) and net retail income per passenger up 0.8% to £3.99 ($5.60). World Duty Free Europe operating profit was steady at £5m ($7m) on revenues of £87m ($122m).

The company also said that the effects of SARS and the war in Iraq had hit its profits by an estimated £15m ($21m). The two events affected Heathrow more than its other locations. Heathrow delivers the group's highest yields. BAA said extra investment in security also affected the figures at its UK airports.

BAA group retail director Brian Collie said: ?The group performance figures highlight the scale of the range of factors affecting the business. However, even in the face of the lingering but declining influence of the Iraq and SARS crises, our retail performance was strong.?

Despite reduced passenger volumes at Heathrow, the company was pleased with the returns from high-spending passengers at terminals three and four. Across its UK airports, BAA recorded a 2.2% increase in passenger numbers, to 32.7m. The decline at Heathrow was offset by strong growth at Stansted, Edinburgh, Glasgow and Southampton. BAA said that it was now predicting passenger traffic growth for the whole year of around 4% at its south-east airports, although traffic at Heathrow is expected to be flat.