Cheap airfares help BAA profits
 |  Heathrow airport is the world's busiest international hub. |
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LONDON, England (Reuters) -- Britain's biggest airport operator BAA posted a 16 percent jump in first-half earnings on Tuesday, meeting expectations as cheap airfares and stronger economies drove up passenger numbers.
The owner of London's Heathrow airport, the world's busiest international hub, said current growth rates could not be sustained next year but remained comfortable with market forecasts for the current year and beyond.
The only surprise in the results was a £7 million ($12.8 million) provision related to a legal spat between BAA and low-cost carrier Ryanair over airport charges.
BAA's shares, which have risen 2.7 percent in the past three months compared with a 6 percent gain in the broader market, were unchanged at 573-1/2 pence.
"We remain of the view that BAA is a quality operator and that passenger forecasts are unlikely to see a significant change as the year unwinds," Panmure Gordon said in a note to clients.
BAA said pretax profit for the six months to end-September was £363 million compared with 312 million pounds a year earlier.
The result was in line with a consensus forecast of £364 million, according to seven analysts polled by Reuters.
"We are comfortable with the forecasts this year ... next year we will see some slowdown in growth," Chief Executive Mike Clasper told reporters on a conference call.
Ryanair and BAA in court battle
First-half group operating profit rose 11.4 percent to £391 million. The figure included a £6-million asset write-off related to Heathrow Express check-in facilities.
BAA also made a £7 million provision in the accounts to offset additional charges to Ryanair since July over non-payment of airport fees. However, Clasper said BAA was confident of winning the case and the provision would be returned to profits.
Ryanair and BAA filed legal action against each other in the High Court last month over fuel levies at Stansted Airport.
Air travel has been steadily recovering from last year's woes, when the effects of the Iraq war, SARS virus and a global economic downturn caused a drop in passenger numbers.
BAA, not as sensitive to economic cycles as airlines, draws its income from airline take-off and landing fees, car parks, retail rent, airport advertising and its duty-free shops. Current high fuel prices do not hurt its earnings.
The company is tipping current year net retail income per passenger in line with last year. It expects passenger traffic to grow 6 percent.
Clasper warned the company faced the challenge of difficult industrial relations across the aviation industry. Heathrow was narrowly spared a strike by more than 10,000 British Airways staff in August which would have hurt earnings.
BAA said construction of a fifth terminal at Heathrow, due to open in 2008, remained on budget and ahead of schedule. Capital expenditure was seen peaking at £6 billion in 2008.
