BAA weathers air travel disruption and plans Heathrow improvements

AIRPORT operator BAA lowered its 2010 profits forecast by £10m yesterday, less than the £40m lost in disruption caused by the British Airways strikes, winter storms and volcanic eruptions.

It also rekindled plans for a high speed railway from Waterloo to Heathrow, mooting further investment in rail links and improving Terminal Two with the money originally intended to build a third runway at the airport.

Adjusted earnings before tax is now forecast to be £946m, based on 85.2m passengers using its airports at Heathrow, Stansted, Edinburgh and Glasgow.

Sales were better than expected, and helped carry revenues for the year to more than £2bn.

Passenger traffic declined more than five per cent in the five months to May, but the Spanish-owned company said “good underlying momentum”, higher spending in airport shops and lower operating costs would boost profit over the summer.

The firm revealed a £500m cash injection in January, most of which was spent on interest rate swaps to keep costs down on its £8.6bn nominal debt pile.

The operator sold Gatwick to investment fund GIP last December for £1.5bn, but is still being pursued by the Competition Commission to sell Stansted and at least one of its Scottish businesses.

BAA said in a separate statement that its massive investment plan for Heathrow airport is expected to be within its original £5.1bn target, mentioning rail links and expanding Terminal Two as options.