BAA Forecasts London Airports' Passenger Growth

The number of passengers using London's three main airports is expected to grow by 3% per year to about 165 million by the middle of the next decade, airport operator BAA forecast today.


The number of passengers using London's three main airports is expected to grow by 3% per year to about 165 million by the middle of the next decade, airport operator BAA forecast today.

But passenger demand for the London area is projected to grow by about 4% a year, meaning there will be about 19 million ``lost'' passengers a year by 2015-16, the company added.

Passenger numbers at Heathrow are expected to grow from the current 67.4 million to 85.0 million by 2015-16.

Gatwick is forecast to increase from 32.8 million to 40.0 million, and Stansted from 22.2 million to 40.5 million.

Over the next 10 years, BAA plans to invest £9.5 billion in its three London airports.

The company said it expected that air fares would decline, on average, by about 1% a year in real terms, with oil prices over the next decade assumed to be slightly lower than at present.

BAA chief executive Mike Clasper said today: ``This is an ambitious and compelling capital programme, designed to meet the growing needs of airlines and passengers in the coming decade.

``It is the product of careful dialogue with airlines undertaken in the constructive engagement process set in train by the Civil Aviation Authority as part of its current price review.

``Successful execution of this programme is in the interests of BAA, its airline customers and the UK's economic progress.''

BAA also gave forecasts of passenger growth for this year at its other UK airports. Numbers at Aberdeen are expected to increase from 2.9 million in 2005-06 to 3.1 million in 2006-07, with Edinburgh rising from 8.5 million to 8.8 million, Glasgow going up from 8.8 million to 8.9 million and Southampton rising from 8.2 million to 8.7 million.

BAA today laid out its defence against an £8.75 billion takeover offer by a consortium led by Spanish infrastructure giant Ferrovial, and also featuring a Canadian fund manager and the private equity investment arm of the Singapore government.

Its belief that the bid was too low was based on the projected growth of the air travel market, which is expected to run at a compound rate of 4% to 2020.

The value of its London airports were not reflected by the Ferrovial offer and it expected even higher returns from its other airports, including those in Scotland where it has an 84% share of the market for air travel.

Lastly, BAA believed its management team was creating value with 30% of senior staff recruited from leading companies around the world.

Mr Clasper said: ``My message to shareholders is: don't sell your shares. It's not the right time. It's not the right price.''

In addition to the Ferrovial approach, BAA has turned down a proposal worth about £9.4 billion from investment bank Goldman Sachs.

BAA did not offer to return cash to shareholders if they supported its stance today - a signal to the market that it wants to retain some firepower if Ferrovial returns with an improved offer that is still unacceptable.



News stories provided by third parties are not edited by "Site Publication" staff. For suggestions and comments, please click the Contact link at the bottom of this page.

We Recommend