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War, Sars and Pensions Batter BAA

Jonathan Prynn, Evening Standard  

28 July 2003

PROFITS at London airports operator BAA slumped by more than 11% in the first quarter as post-9/11 security costs, extra pension contributions, the Sars virus and the Iraq war all took their toll.

Chief executive Mike Clasper conceded that the three months to the end of June had been challenging for the company, which operates Heathrow, Gatwick and Stansted as well as a clutch of regional airports.

Pre-tax profits for the period came in at £127m, down 11.2% on the £143m recorded for the same period last year, and at the bottom end of City forecasts. It was the second year running that first-quarter profits have been hit. In 2001 they peaked at £152m.

Finance director Margaret Ewing said the cost of hiring more security staff had shaved some £5m off profits. The company's biggest airport, Heathrow, was badly affected by the twin blow of the Sars outbreak, which devastated passenger traffic to and from the Far East, and the build-up to and execution of the Iraq war, which hit transatlantic business travel.

Heathrow traffic was down by just over 2%, a loss of 350,000 passengers compared with last year. For BAA's UK airports as a whole, traffic was up by just over 2%.

The company remains upbeat about the rest of the financial year with traffic growth accelerating to 3% in June and July and a forecast of 4% for the year as a whole. Pension costs were up by £13m on last year.

• THE chaos at Heathrow last week caused by the wildcat strike by British Airways staff has cost BAA just under £1m to date, said finance director Margaret Ewing. That was the cost of passengers delaying or cancelling their flights and the resulting loss of retail income.

She warned that the strike was 'not helpful at all' to the recovery at Heathrow following the slump in traffic in the first quarter of the year.

However, the vast bulk of the cost is expected to fall on British Airways, which is estimated to have taken a hit of £30m or more already.

The shock walkout by checkin staff resulted from a dispute over BA's new swipe-card 'clocking on' system.  


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