British airport operator BAA expects to see a modest recovery in passenger traffic volumes in 2010, it said today, but warned the industry as a whole faces further economic challenges.
The company, owned by Spain's Ferrovial, reported a 17.1 per cent increase in earnings before interest, tax, depreciation and amortisation to £885.2 million, driven by increased revenue and strong cost control.
BAA, which owns London's Heathrow and Stansted airports but sold Gatwick for £1.5 billion in December, said passenger traffic fell by 3.8 per cent in 2009 to 85.9 million.
It added that Heathrow outperformed competitors, seeing a decline of 1.5 per cent. Revenue increased by 8.3 per cent reflecting higher tariffs and a strong retail performance.
BAA has committed to investing £1 billion this year to upgrade its airports and chief executive Colin Matthews told Reuters the investment is reaping rewards by encouraging passengers to spend more inside the airports.
"Passengers who are confident and relaxed are more inclined to spend money than those who are stressed or hassled or delayed. The better we make the airport work, the better our retail performance is," Mr Matthews said in an interview.
Heathrow has faced criticism over passenger delays in the past including problems following the opening of its flagship £4.3 billion Terminal 5 in March 2008. He added that the weakness of sterling had also been a factor behind higher retail spending by passengers.
"With the pound relatively weak there's a proportion of our passengers who find the offering more attractive if they're thinking in dollars or euros," Mr Matthews said.
The sale of Gatwick and a £500 million equity fundraising in November helped the company cut debt while still increasing investment in its airports. The company has also returned to the bond markets to raise funds for the first time since 2006, raising over £900 million through offerings including the largest inflation-linked bond issued by any corporate entity since 2007.
Net debt at the year-end stood at £8.58 billion, compared with £9.43 billion at the end of 2008.
Reuters