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Monday, 29 July, 2002, 14:49 GMT 15:49 UK
BAA warns of weak passenger revival
Travellers moving through Heathrow airport
Travellers: Still wary of flying
Airports operator BAA has warned of stagnant passenger numbers, as airlines struggle to regain trade lost after the 11 September attacks.

BAA, the UK's largest airports firm, reported passenger numbers down 1.7% to 32 million during the April to June period.

Mike Hodgkinson, chief executive, BAA
Mike Hodgkinson: BAA is "well placed"
And the firm said that passenger traffic would remain "relatively flat" in forthcoming months.

The warning comes a week after the government revealed plans to boost airport capacity, with three extra runways at Stansted, one more at Heathrow and a new airport near London among proposals.

'Investment essential'

But BAA said it was confident that airlines would eventually see growth in customer numbers return.

"Passenger demand... will double over the next 20 years," BAA chief executive Mike Hodgkinson said.

"Investment in the future is, therefore, essential."

Work is set to begin "around the end of the year" on Heathrow's Terminal 5, which will handle up to 30 million a year, and for which BAA gained planning permission in November after a bitter contest with local protesters and environmental campaigners.

Shopping boost

BAA saw pre-tax profits slide by almost 6% to 143m during the three months.

The decline would have been steeper were it not for "strong" performance at the firm's airport stores division, with average retail income per passenger rising by 3.9% to 3.96.

"Airport retailing has continued to perform well," Mr Hodgkinson said.

"Strong retail income and continued tight cost control... mean that BAA is well placed to ride out the current difficult period for the aviation industry," he added.

Mr Hodgkinson's assessment of the retail data was mirrored by Merrill Lynch analyst Marcus Curley, who described as "reasonable" the overall results.

Investment bank ABN Amro said it on Monday upgraded its rating on BAA shares to "buy" from "add".

BAA shares stood 8.5p higher at 474.5p in late afternoon trade in London on Monday.

See also:

24 Jul 02 | England
23 Jul 02 | Politics
29 May 02 | Scotland
10 May 02 | Business
19 Apr 02 | England
19 Apr 02 | Business
28 Mar 02 | England
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