UK. BAA SP Limited yesterday posted a +7.3% rise in first-half net retail income per passenger across its London airport portfolio, helping to drive “resilient” revenues (up +12.8% to £1.154 billion).

BAA SP Limited is the owner of London Heathrow, Gatwick and Stansted airports. It posted a £545.7 million pre-tax loss for the period ended 30 June, more than trebling the comparable period’s losses of £135.3 million. However, that reflected over £400 million of non-cash charges related to pension schemes and accelerated depreciation of terminals that will be replaced by the new T2 at London Heathrow.

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Adjusted EBITDA rose + 28.2% to £469.9 million.

BAA Chief Executive Colin Matthews said: “BAA’s underlying financial performance remains in line with our expectations. I am particularly pleased that Heathrow continues to show its resilience, but trading conditions for the industry remain difficult and we remain focused on improving service standards and delivering a more efficient operation.”

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Chief Financial Officer Jose Leo said: “In addition to our solid operating performance, these results underline our continuing strongly cash generative business that provides a robust platform to address our ongoing investment and liquidity requirements. They also highlight the stability of the debt and gearing position of BAA’s London airports and that we continue to operate comfortably within required financial ratios.”


First-half passenger traffic across the group’s airports was 55.2 million, down -7.4%, driven mainly by the macroeconomic environment, BAA said. Adjusting for the impact of severe winter weather disruption and the leap year in 2008, the underlying rate of traffic decline is estimated to have been nearly 1 percentage point better than actual performance.

Source: BAA

“Overall traffic trends during the first half of 2009 suggest that whilst demand conditions remain weak, they have not changed materially since late 2008,” said BAA.

Heathrow maintained its resilience, with a modest passenger decline of -3.8% to 31.2 million. Groupwide, the long haul market continued to outperform the overall market with traffic down -6.0% to 19.9 million passengers. Markets such as India (+5.8%) and the Middle East (+5.6%) continued to grow despite the adverse economic conditions.

The +12.8% rise in turnover reflected increases of +24.0% in aeronautical income, +1.7% in gross retail income and +2.3% in other income. On a like-for-like basis turnover increased +3.8% to £1,098.6 million.


The group’s retail business maintained its recent strong momentum, BAA said. As mentioned net retail income per passenger increased by +7.3% to £4.72, due to a very strong performance by Heathrow as well as airside and landside shops across all the group’s airports.

This performance was based on gross retail income of £285.3 million (2008: £280.6 million) whilst net retail income (i.e. net of car park management charges) was £260.6 million (2008: £262.1 million).

Source: BAA

At Heathrow, net retail income per passenger increased by +11.1% to £5.08 or by +9.1% to £4.99 after adjusting for £2.9 million of non-recurring income. “Its performance was driven by in-terminal shopping, reflecting increased passenger numbers benefiting from Terminal 5’s high quality retail facilities, and a higher proportion of intra-terminal transfer passengers, providing longer departure lounge dwell times for such passengers,” BAA noted.

The group also noted the improved value of the offer [to foreign visitors] resulting from the depreciation of Sterling.

Net retail income per passenger also increased at Gatwick, up +2.1% to £4.53 with strength in airside specialist shops and duty and tax free more than offsetting weakness in car parking.

At Stansted, net retail income per passenger declined -0.3% to £3.79 with significant growth in airside specialist shops and duty free and tax free offset by weakness in car parking and bureaux de change. In terms of total net retail income, the main drivers of performance were airside specialist shops, duty free and tax free, advertising and car rental with market conditions continuing to challenge car parking income.

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