BAA London trebles losses

Airports operator BAA said it does not need to sell Gatwick airport despite an impending debt bill of 1 billion pounds, as losses at its London division more than trebled in the first half.

Chief Executive Colin Matthews told Reuters talks were ongoing with potential buyers for Gatwick nearly a year after it was first put on the market, and insisted it would not sell at any price and did not need the proceeds to manage debt.

"We can't guarantee we will receive an acceptable price, and we won't sell Gatwick if we don't" he said in an interview.

"We have a 1 billion pound bank debt due in the first half of 2010. People assume we need the proceeds from selling Gatwick ... they like to think we don't have a choice but we do" he added.

BAA London, majority owned by Spain's Ferrovial , said pretax losses more than trebled to nearly 550 million pounds in the six months to end June.

The company said the ballooning losses across Heathrow, Gatwick and Stansted were due to various exceptional items such as increases to its pension deficit and the depreciation in value of older terminals at Heathrow.

PLATEAU

BAA London's debt rose to 9.7 billion pounds. Ferrovial secured a debt-funded takeover of BAA which also owns Southampton and three Scottish airports at the top of the market in 2006, but has since struggled with falling passenger numbers and competition concerns. 

Earlier this year the Competition Commission ruled that BAA should sell Gatwick, Stansted and one of Edinburgh or Glasgow. The company had already put Gatwick on the market, but has since appealed the ruling.

Its case will be heard in October, and Matthews declined to comment on future developments in light of the appeal.

BAA London said first half passenger numbers across the airports were down 7.4 percent year on year, but Matthews said he saw signs that the downturn had reached its nadir.

"I can see evidence that the performance has plateaued" he said, although he would not forecast the timing of an upturn.

Matthews defended the performance of the much maligned airports monopoly, revealing that capital expenditure of 500 million pounds had been piled into London airports in the first half mostly into Heathrow with a similar amount due in the second period.

Adjusted to exclude exceptional items, the company posted earnings before interest, tax, depreciation and amortisation (EBITDA) of 469.9 million pounds in the six months to end June, up from 366.6 million last year.