Strong retail performance underpins BAA results

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Increases in net retail income and in sales at World Duty Free (WDF) Europe were central to a robust performance from BAA's retail division, in full-year results announced today

The group as a whole posted a 1.4% drop in operating profits to £553m ($807m) with pre-tax profits down over 6% to £512m ($747m).

There was also a net exceptional loss before tax of £187m ($273m) comprised mainly of the disposal of WDF Americas.

Revenues at WDF Europe rose 6% to £341m ($498m) while net retail income per passenger rose 4% to £3.95 ($5.77). Operating profit at WDF Europe was steady at £18m ($26m).

BAA airports handled 121.9m passengers for the year, down 2.2%, due to the US economic slowdown, the impact of foot and mouth disease and September 11, said BAA.

Group retail director Brian Collie said: "We had an exceptionally strong first half (where net retail income rose 7%), despite significant pressure from the slowdown in the US and the foot and mouth outbreak. September's tragic events intensified those pressures in the second half and the repercussions will clearly stay with the industry for some time to come. However, at BAA we responded quickly and appropriately by working in close co-operation with our business partners as passenger volumes and profiles at each terminal underwent rapid change."

He continued: "Despite the extraordinary difficulties imposed upon us by external events this year, we have continued to improve the retail offer and have seen the benefits of new space at Gatwick and Stansted and the latest phase of Heathrow's major redevelopment of Terminal 3. This is a commendable performance in a year of unprecedented difficulties and disruption in our market and is clear evidence that our retail strategies are working."

BAA said its strategy to focus on core airports business was highlighted by the fact that its seven UK airports accounted for 95% of retail revenues.

The group said it anticipated modest growth in air traffic for the first half of the next financial year, with stronger growth in the second half.

BAA has announced an investment programme of £8bn ($11.7bn) to develop its airports and infrastructure over the next 11 years, including the new London Heathrow terminal five.