In the eleven months to 28 February, BAA’s nine airports handled a total of 145.1 million passengers, up 3.1% on the prior year.This includes 133.2 million for the seven UK airports.
Allowing for the later Easter holiday this year, the current trend indicates growth for the UK airports of just over 2% for the full year.
The £1.255 billion acquisition of Budapest Airport was completed on 22 December 2005.
The integration of Budapest Airport into the Group is well underway and the business’s performance over the first few months of operation provides increased confidence in the delivery of the business plan that BAA outlined at the time of the acquisition.
The UK airports’ retail business has continued to perform strongly and is expected to deliver growth in net retail income per passenger of around 2% for the full year.
In line with our expectations, operating costs, driven by higher staff costs, energy prices and business rates, are expected to rise by approximately 8% for the year, excluding operating costs relating to Budapest Airport.
? Heathrow Terminal 5, now three quarters complete, is on budget and on schedule to open on 30 March 2008.
Mike Clasper, Chief Executive Officer, BAA, commented:
“The Group is on track to deliver trading performance for the year in line with our expectations, a good result given the impact of a softer UK economy and increased security requirements. The momentum we are seeing right across the business, particularly with the integration of Budapest Airport, progress on Terminal 5 and the implementation of the Delivering Excellence programme, adds to our confidence that as we move forward we will deliver enhanced value for shareholders.”
Other key information:
The Group’s results will consolidate those of Budapest for the three months to 31 March 2006, including a charge of £4 million in respect of amortisation of the asset management contract for the 3 months. BAA will be amortising the asset management contract for Budapest Airport (acquired for £1,052 million) over the 75 year life of the agreement. We expect the annual amortisation charge will be around £14 million.
In November, we announced the Delivering Excellence programme which is designed to contribute £45 million per annum of sustained benefits from 2008/09, incurring £90 million of exceptional operating costs (of which £16 million was recognised in 2004/05).
Of the £90 million exceptional costs outlined in November approximately £50 million (of which approximately £20 million will have been incurred in cash during the year) will be included in the 2005/06 results. The £3 million per annum of sustainable benefits expected in 2005/06 will be delivered.
The agreed forward sale of the ground lease of the Heathrow Terminal 5 hotel to Arora International Hotels has now completed, generating a profit for the Group of around £40 million.
As at 28 February, BAA was on plan to invest £1.5 billion for 2005/06 in line with its long term capital programme, of which around £1 billion is related to the development of Terminal 5. Taking into account this investment, we forecast our basic regulated asset base for our three price-regulated London airports to be around £9.9 billion? at the year-end and £9.6 billion post profiling adjustments.
The Group’s net interest charge before capitalisation, for the 11 months to 28 February, was £231 million. Capitalised interest was £133 million, which reflects the Group’s ongoing capital investment programme and related assets under construction. £107 million relates to Terminal 5.
As at 28 February the average interest rate on the Group’s gross debt of £6,198 million (reflecting the recent £1,940 million bond issuance, which settled on 15 February) was 5.62% and net debt had risen to £5,298 million (from £3,543 million at 30 September 2005), reflecting financing of Budapest Airport and the Group’s ongoing capital investment programme.
The Group’s results to 28 February include (as a “certain re-measurement” item) a net loss of £79 million for the 11 month period, being the net loss (before related tax) arising on the re-measurement and disposal of derivative financial instruments, together with the associated fair value net losses on underlying hedged items that are a part of a fair value hedging relationship.
Passenger traffic in 2006/07 at our three price-regulated airports is currently forecast by BAA to be 126.7 million passengers: 69.6 million at Heathrow; 34.1 million at Gatwick; and 23.0 million at Stansted.
Passenger traffic in 2007/08 at our three price-regulated airports is currently forecast by BAA be 130.5 million passengers: 71.5 million at Heathrow; 35.3 million at Gatwick; and 23.8 million at Stansted.