Investment cuts into figures but Edinburgh still flying

HEAVY investment in tighter security measures and snow-clearing equipment at Edinburgh airport took their toll on profits despite turnover reaching record levels.

Latest accounts for the airport, which was sold this week in a £807 million deal, show BAA invested some £13.4m in major improvements at the site, which was one of the group’s best-performing facilities in 2011.

As well as record turnover, the company achieved an all-time high traffic figure of 9.4 million passengers.

Turnover in 2011 rose to £110m from £98.9m although the impact of the capital expenditure and higher costs saw pre-tax profit fall to £22.7m from £30.3m.

The accounts – obtained from Companies House – show that retail income, including car parking, accounted for almost a third of total turnover. A revaluation of investment properties – which mainly comprise car park sites – also led to a £6.6m unrealised gain.

At BAA’s Glasgow airport, turnover rose by just £436,000 to £81.9m, while profits slid to £13.5m from £20.5m.

Almost £11m was invested in projects including the redesign of the retail area and replacement of the airport’s boiler.

During the year, passenger traffic at Glasgow increased by 5.2 per cent to 6.9 million. In the first two months of 2012, passenger numbers have edged up by 1.4 per cent.

Earlier this week, it was announced that Global Infrastructure Partners (GIP), the owner of Gatwick airport, was buying Edinburgh airport after winning an auction forced on BAA by the Competition Commission (CC).

The firm will take ownership at the beginning of June and is expected to conduct an extensive review of operations. It has hinted it may look to more direct flight connections with overseas destinations.

Michael McGhee, the partner who led the acquisition talks, told The Scotsman that although he could not elaborate on future management or staffing of the airport, there would be a focus on improving the levels of service for passengers and the airlines.

GIP beat off a rival offer from JP Morgan Asset Management believed to be pitched at £735m. Fifty parties expressed an initial interest and four were shortlisted.

At the time the deal was announced, Laura Carstensen – a member of the original CC inquiry group – said GIP’s track record was “very strong and we anticipate that customers at Edinburgh will soon see the benefits of new management approaches”.