TBI profits fall as retail contribution grows

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TBI, the airport operator that owns London Luton, Belfast International and Cardiff International airports in the UK and other overseas locations, has posted a fall in full-year pre-tax profits to March 2004, but said there are encouraging signs of recovery in the aviation market.

Although turnover rose from £177.6m ($327m) to £186.2m ($343m), profits fell from £11.2m ($21m) to £6.2m ($11.5m) compared to the previous year, mainly due to a writedown of goodwill in its airport services business.

About 40% of the company's income derives from commercial activities, including retail, car parking, foreign exchange and car hire. Average spend per passenger across these sectors was £6.90 ($12.70) for the year, up slightly on the previous year. TBI said: ?While the way in which we earn aeronautical revenues is very much driven by the type of airline the passenger is flying on, the way in which we earn the increasingly important commercial revenues is driven by the reason that the passenger is travelling rather than their mode of transport. For example, a business passenger behaves pretty much identically regardless of whether they are flying on a low cost airline or on a full service airline.?

Most of its stores are operated by concessionaires who generate rent for TBI. Across its business, TBI earned £13.3m ($24.5m) from its concessionaires, a rise of 16% on the previous year. TBI said it was planning to enhance the retail business at Belfast and said a new enlarged shop at Stockholm-Skavsta airport was already showing increased penetration and spending levels.

TBI chief executive Keith Brooks said: ?Overall, this has been a year of steady improvement for the Group which has seen us further strengthen our platform for growth. Within the context of a continuingly tough environment, our core European airports remain well placed to take advantage of the continued expansion in low-cost travel, in particular, and there is a clear indication of markedly improved trading across our US businesses. We will also continue to focus on driving revenue and managing costs.?

The company also told investors to expect some divestments of ?non-core? businesses.