The British airports operator BAA plc has posted a near 18% rise in profits.

Before taxes, the profits came in at £480m ($782m), towards the upper end of analysts's forecasts.

104.5m passengers travelled through BAA's seven British airports in the 1997/98 financial year - a record, and Sir John Egan, BAA's chief executive, is confident for the future.

He predicts even more traffic this year, raising the company's growth forecast from 5% to 6%.

"Traffic growth continues to underpin confidence in our ability to grow profits," Sir John said.

However, BAA share prices dropped on news of the good result, as investors tried to sell with a profit. At 11:30 BST (10:30 GMT) the stock had fallen 18½p to 659½.

Nigel Davies, an analyst at broker Panmure Gordon, said he expected to see some profit-taking after a jump of almost 50% in the share price so far this year. The year's low had been 451p per share.

The company has special hopes for more traffic at Stansted, its third airport in London, which has been chosen by several airlines as a battleground for developing the European low-fare market.

British Airway's Go and Richard Branson's Virgin Express have joined low-cost carrier Ryanair at Standsted.

Next year, however, BAA will have to brace itself for smaller profits, when duty-free shopping for travellers within the European Union will be abolished.

The company estimates that it will suffer a loss in operating profits of around £40m in the first year, but that the shortfall will be reduced in the years thereafter.
 

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