Results For Nine Months to December 2003

BAA, the international airports group and owner of seven UK airports, including the world's busiest international airport, Heathrow, reported on Monday a continued year on year improvement in passenger numbers, revenue and profit in its third quarter and said that it expected this trend to continue.

"Operationally, passenger numbers continued to rise, retail performance has been excellent and operating costs, including increased security and maintenance expenditure, have come in on target", commented Mike Clasper, Chief Executive of BAA.

Group revenue was 499 million pounds sterling for the quarter, an increase of 4.2% on the comparable quarter in 2002 (479 million pounds restated), while Group operating profit rose 8.0% to 149 million pounds (2002: 138 million pounds). For the nine months, Group revenue increased 3.5% to 1,540 million pounds (2002: 1,488 million pounds restated) and Group operating profit grew 1.0% to 500 million pounds (2002: 495 million pounds).

Traffic

In the three months to 31 December 2003, traffic at BAA's UK airports increased 5.6%, to 31.8 million passengers (2002: 30.1 million). Passenger numbers were up at all airports except Aberdeen. Heathrow passenger numbers rose 3.4% to 15.9 million (2002: 15.4 million) reflecting a continued steady recovery in economic conditions and passenger confidence following the Iraq war and SARS epidemic. Growth was strongest at Stansted and Southampton, which recorded increases of 19.5% and 76.7% respectively as a result of the continued growth in low cost services. For the nine-month period UK passenger traffic grew by 3.4%.

Total revenue and airport charges

UK airport revenue, including WDF, increased by 8.1% to 455 million pounds (2002: 421 million pounds) in the three month period, with Heathrow revenue growing by 8.7% to 212 million pounds (2002: 195 million pounds). Stansted showed the fastest growth of the South East airports, increasing revenue to 35 million pounds (2002: 30 million pounds) while Southampton doubled its revenue to 6 million pounds.

Underlying this increase in total revenue was a 9.5% increase in airport and other traffic charges (from 158 million pounds, restated, to 173 million pounds). This reflects the 5.6% growth in passenger traffic and the regulatory price increase at Heathrow and Gatwick, partially offset by yield dilution at the other airports.

Operating profit

Operating profit for the three months at the UK airports (excluding WDF) grew 9.8% to 135 million pounds (2002: 123 million pounds). Heathrow's operating profit increased 13.8%, reflecting both the rise in airport charges yield and the strength of the retail performance, while Stansted's operating profit was stable at 8 million pounds (2002: 8 million pounds) as operating costs increased to support the airport's faster than expected traffic growth. Gatwick also reported a flat operating profit of 15 million pounds (2002: 15 million pounds) primarily as a result of the planned increases in security costs. Southampton's revenue growth led to an operating profit of 2 million pounds (2002: 1 million pounds).

For the nine-month period, operating profit of the UK airports, excluding WDF, rose 1.8% to 458 million pounds (2002: 450 million pounds).

During the third quarter, WDF increased its operating profit 14.3% to 8 million pounds (7 million pounds) and 10.5% to 21 million pounds (2002: 19 million pounds) for the nine-month period.

FMI:  www.baa.com