Business travel driving passenger numbers up says a resurgent BAA

BAA shrunk its losses in the first nine months of this year helped by a resurgence of business travellers, Britain's biggest airports operator disclosed yesterday.

It came as BAA, which has been ordered by the Competition Commission to sell either Edinburgh or Glasgow airports as well as Stansted, following its previous regulator-enforced disposal of Gatwick, also said plans for a bond issue to refinance part of its 2 billion of debt was progressing well.

The company, owned by Spanish infrastructure group Ferrovial, said pre-tax loss for the nine months to end-September narrowed 75 per cent to 192.6 million from 784.7m as revenue climbed 4.4 per cent to 1.54bn.

The owner of London's Heathrow said passenger traffic at the capital's busiest airport jumped 4.4 per cent to 19.5 million from July to September compared with a year ago. Strong global travel offset continuing uncertainty about the UK's prospects, it said.

"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."

However, Matthews added: "BAA has delivered good results and we have strengthened our financial position through refinancing of nearly 2bn of debt. Our capital investment programme remains one of the largest of its kind in Europe, and will support the UK economy as the pressure on public-sector spending increases."

Passenger numbers at Heathrow over the nine months edged down 0.6 per cent at 49.6 million, but Stansted fared worse, with numbers down 7 per cent at 14.4 million as key demand from holidaymakers fell amid fewer scheduled flights and economic uncertainty.

BAA said the Icelandic volcano and the British Airways cabin crew industrial action also held back the overall performance. The volcanic ash closed both airports for five days in April, and the BA strikes, which disrupted services at Heathrow on 34 days in the first half of the year, are estimated to have cost the operator 2.2 million passengers.

BAA managed to reduce its losses partly because the previous period included a 262m pension charge and an accounting writedown following the sale of Gatwick airport.

The group, privatised in 1987 from the former British Airports Authority, claimed that 97.9 per cent of customers passed through Heathrow in an acceptable allocated time compared with 98 per cent the year before, with 98.3 per cent at Stansted compared to 99.6 per cent the year before.

BAA's other airports in Edinburgh, Aberdeen, Glasgow and Southampton are not included in the latest accounts.Ferrovial announced last week that it wants to sell a 10 per cent stake in BAA to improve its capital position.