Turbulent times at BAA as Gatwick sale pushes up losses at London airports

BAA has reported an £822 million annual loss on its London airports, after the sale of Gatwick put a £277m dent in its finances.

The operator did not offer any update on its three Scottish airports as it is obliged under reporting rules only to post figures on its two remaining London hubs, Heathrow and Stansted.

It is hoped the annual accounts of BAA's Spanish parent company Ferrovial will offer a glimpse of the trading performance at Edinburgh, Glasgow and Aberdeen airports when they are released today.

The 1.5 billion sale of Gatwick last year to Global Infrastructure Partners, the investment fund that also owns London City Airport, was cited as the main cause of the losses, which widened from 324.2m the year before. But BAA was also forced to make a 217.8m exceptional charge relating to its final-salary pension scheme. The scheme's deficit increased due to changes in inflation expectations.

But once exceptional items were stripped out, losses improved by 17.5 per cent to 156.5m between 2008 and 2009.

Revenues were up 8.3 per cent to 1.98bn thanks to higher airport tariffs and retail income.

BAA chief executive Colin Matthews revealed the company planned to spend more than 1bn this year upgrading its remaining airports, which also include Southampton.

He said: "We expect 2010 to present further economic challenges for the industry as a whole, and we will remain focused on improving our efficiency and the service we offer customers."

Passenger traffic at BAA's London airports fell 3.8 per cent last year, but the company said Heathrow had proved the most resilient of all of the major European airports, with passenger numbers dropping 1.5 per cent to 65.9 million.

Passenger figures improved in the second half of the year, with strong demand from areas such as India and the Middle East encouraging growth of 0.3 per cent and 1.1 per cent in the third and fourth quarters respectively. Of the two London airports, Stansted was the greater casualty, with passenger traffic dropping by 10.7 per cent to 20 million although the decline did ease to 5.7 per cent in the closing three months of last year.

BAA said operational and performance standards had improved, with the proportion of aircraft leaving Heathrow within 15 minutes of schedule increasing to 77 per cent, from 69 per cent in 2008. The proportion of baggage not accompanying passengers on their journeys almost halved, while 97.9 per cent of passengers passed through airport security in less than five minutes.

Analysts said at the weekend that BAA was likely to opt for a sale of Glasgow airport over Edinburgh to meet competition concerns, as new figures showed the capital's terminal appeared to be winning the battle in attracting new airlines and passengers.