Heathrow Business Travel Growth Cuts BAA Losses

October 27, 2010

Bookmark and Share

UK airport operator BAA said rising business traffic helped shrink losses in the first nine months of 2010 and unveiled plans for a bond issue to refinance part of its GBP£2 billion (USD$3.2 billion) debt.

BAA, owned by Spanish infrastructure group Ferrovial, said its pre-tax loss for the nine months to the end of September narrowed by 75 percent to GBP£192.6 million as revenue rose 4.4 percent to GBP£1.54 billion.

The owner of London's Heathrow said passenger traffic at the capital's busiest airport jumped 4.4 percent to 19.5 million from July to September compared with a year ago and that it was bullish on its prospects for the remainder of the year.

"Although the UK economy is in a tough state, many parts of the globe are growing very fast so business travel to those places is buoyant, " BAA's chief executive Colin Matthews said.

"Heathrow is exposed to global business activity and that's one reason why it's been so strong but with UK spending cuts there will be less money in people's pockets so no one is predicting an easy time in 2011."

BAA was last year hit by an impairment charge of GBP£225 million on the sale of Gatwick airport and an exceptional pension cost of GBP£262 million.

Global airlines have increased their profit forecasts this year as recession fades and traffic rises.

Industry body IATA said it expected the industry to post a combined net profit of USD$8.9 billion, more than three times the previous forecast of USD$2.5 billion made in June.

BAA, which also owns London's Stansted airport, said it hoped to raise between GBP£250 million and GBP£325 million through a bond issue to refinance the remainder of a GBP£465.8 million loan facility, which is due in 2011.

Ferrovial last week said it plans to sell a 10 percent stake in BAA to halve its debt pile.

Earlier this month BAA was told it would have to break up its network of British airports after the UK Court of Appeal overruled a previous decision in its favour.

BAA will have to dispose of Stansted airport, northeast of London, and either Edinburgh or Glasgow airports in Scotland within two years, after the court said an original ruling by the Competition Commission had not been influenced by bias.

(Reuters)