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BAA losses decreasing in spite of challenges

Airports operator BAA revealed narrowed first half losses yesterday despite the impact of the volcanic ash cloud and the British Airways cabin crew strike.

Passenger numbers dropped by 4.5% to £38.7m at the Ferrovial-owned group's Heathrow and Stansted airports, and the week-long closure of European airspace because of ash cost the company £36m.

But BAA's revenues rose by 2.2% to £958m, and the group's loss of £260m was a 34% improvement on last year's £392m black hole.

The biggest boost came from a 10% rise in retail income per passenger at Heathrow and Stansted, helped by a £1bn annual capital investment programme at the hub airport, the company said.

And Colin Matthews, the BAA chief executive, stressed that the company's investment in Heathrow will continue despite the coalition Government's scrapping of plans for a third runway at the congested hub.

The UK domestic market saw the most savage declines in the six months to June, with passenger numbers down by 13.5% to just three million at BAA's two London airports.

BAA faces industrial relations issues of its own. The group refused to comment on the on-going dispute with the Unite trade union yesterday. Some 6,000 BAA staff are to be balloted about possible strike action in a row over a pay offer derided by Unite as "paltry".