Heathrow profits up 10%; Stansted up 68%
15.04.08
Heathrow Airport's profits rose by more than 10% last year, despite the world's largest international airport coming under repeated criticism for poor service standards, the Times reports. Profits at Stansted rose 68% after BAA doubled the charge for each passenger using the airport. And anyone who has parked at Heathrow recently won’t be surprised to learn that it made more from airport car parking in the year than it did from shops.
Accounts for the private holding company that owns BAA show that Heathrow's operating profits rose by £40m to £438m in 2007, whilst profits at Stansted jumped to £86m. The sharp rise in profits has angered airlines who use BAA's facilities. The newspaper reports they claim BAA is making huge profits but is failing to offer a good service. Heathrow, in particular, has faced repeated criticism for long security queues and the poor quality of its infrastructure.
The rising profits will also provide airlines with further evidence that BAA is abusing its position as the owner of London's three main airports, with the Competition Commission expected to deliver its preliminary findings on whether BAA's London monopoly should be broken up this month.
Jim Callaghan, the head of regulatory affairs at Ryanair, told the Times: ‘BAA is abusing its monopoly position by charging outrageous fees while providing a rubbish service and that is why they can enjoy huge profit increases.’
BAA was bought by Ferrovial, the Spanish infrastructure company, in 2006 through a subsidiary called Airport Development and Investment Limited (ADIL), which filed 2007 accounts with Companies House last week. The ADIL figures show that revenue for BAA's seven UK airports, as well as Naples airport in Italy, was £2.2bn, up 7.9% on the previous year. It made profits of £745m, up 13.4%.
However, Ferrovial has been unable to reap the full rewards of BAA's big profit increase because of enormous interest payments on the debt taken to finance the BAA acquisition. ADIL was able to pay Ferrovial and its other backers only £86m last year after interest payments of £964m.
The Times also reports that ADIL's total debt 'stands at £16.9 billion,' which seems high to us given that it only paid £10.3bn for BAA, which included some equity from Ferrovial and its partners. It would include the debt in BAA at the time, but this was only £4.7bn, and it was our understanding that the total debt stood at around £10bn.
The Times also highlights what it describes as 'BAA money-spinners'; which make interesting reading:
Airside shops (not including Duty Free): £74 million (+8.4%)
Landside shops and bookshops: £48 million (+0.3%)
Restaurants and cafes: £60 million (+3.6%)
Bureau de change: £57 million (-1.3%)
Car parking: £164 million (+5.5%)
Car rental: £22 million (+5.3%)
Advertising: £36 million (+5%)
Full-year 2007 figures: (% comparison with previous year)
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