Passenger fall hits BAA profits

Gatwick is worth about �1.8bn, regulators have said

Airport operator BAA has said its 2008 profits fell by 18.4% as the economic downturn dented passenger numbers.

It reported an profit of �582m before tax and interest, down from �713m in 2007, as 2.7% fewer travellers went through its seven UK airports.

It added its sale of Gatwick Airport was on schedule, with initial bids received from potential buyers.

However, BAA made no comment on the sale of Stansted, which is expected after a Competition Commission ruling.

Warning of another "challenging" year, BAA chairman Colin Matthews said "its performance was affected by a drop in passengers, which reflects the general economic situation".

A company spokesman said that higher staff wages and costs associated with Terminal 5 had also played a part in the profit fall, which came despite revenue rising 14.3% to �2.59bn.

The operating profit - which includes exceptional costs and a revaluation of the business's investments - was �23m, down from �476m in 2007.

Potential bidders

In December last year, the Competition Commission said BAA - which is owned by Spanish firm Ferrovial - had to sell off three of its seven UK airports, including two in south-east England and one in central Scotland.

The commission said its decision was subject to a final consultation, with its final report due in late February or early March.

BAA'S AIRPORTS

Heathrow

Gatwick

Stansted

Southampton

Edinburgh

Glasgow

Aberdeen

However, BAA has ruled out the sale of Heathrow, indicating that Stansted could be up for sale as well as Gatwick.

It will also have to dispose of either Edinburgh or Glasgow airports.

The sale of Gatwick was expected to be completed in the first half of this year, BAA said.

BAA had put Gatwick on the market following the Competition Commission's initial report in August.

Several firms are said to be interested in the airport - which is expected to sell for up to �1.8bn.

Finance difficulties

It was likely that if Stansted was put up for sale, would-be bidders would be the same firms that had shown interest in Gatwick, said analyst Douglas McNeill of Blue Oar securities.

But he added the sale price would be less than that achieved in more buoyant economic times.

"Airport takeovers require debt finance to a large degree, which is extremely hard to come by at the moment," he told the BBC.

Stansted saw the worst level of passenger falls at its London airports, down 6%, with the collapse of airlines such as business class carriers Maxjet and Eos.

And Ryanair and Easyjet have been scaling back the number of flights they operate from the airport, saying that the fees they are charged make it too difficult to turn a profit.

Gatwick was affected by the failure of XL Leisure, Zoom and Sterling airlines, pushing passenger figures 2.8% lower.

Meanwhile, at Heathrow, growth in long-haul traffic partially offset weaker domestic business, taking the overall passenger downturn to 1.4%.