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BAA says first-half net income fell on terror alert

BAA Plc, the UK airport operator acquired by Grupo Ferrovial SA in August, said first-half profit fell after a terror alert increased security costs and caused disruptions for passengers and airlines.

Net income in the six months ended September 30 dropped to £250 million ($490 million) from £256 million a year earlier, BAA said in a statement today. Revenue rose 16% to £1.36 billion (€2.027 billion) after the company acquired Budapest airport. BAA, the owner of London's Heathrow, Gatwick and Stansted airports, handles 90% of airline passengers in southeast England and 80% in Scotland. Madrid-based Ferrovial plans to spend about £1 billion annually through 2016 on upgrading terminals at the three BAA airports serving the UK capital, CEO Joaquin Ayuso said July 3. The security alert in August cost BAA £21 million, the company said. Net debt rose to £5.72 billion (€8.52 billion) from £3.54 billion a year earlier British Airways Plc, Ryanair Holdings Plc and EasyJet Plc have demanded the breakup of BAA, which Ferrovial bought for £10.1 billion, citing rising charges and expansion costs. Heathrow has almost completed a £4.3 billion fifth terminal, and BAA last year proposed a £2.7 billion second runway at Stansted. The Office of Fair Trading, the UK's antitrust regulator said December 12 BAA faces a possible breakup by the country's Competition Commission after an initial probe.

British Airways, based at BAA's congested Heathrow hub, was worst hit by the security crisis. The airline canceled 1,280 flights, stranding 80,000 people, as the discovery of the alleged plan to bomb aircraft prompted increased passenger screening and a ban on hand luggage. BAA's seven UK airports handle about 63% of flights to and from Britain. London Heathrow is Europe's busiest airport, handling 67.7 million passengers in 2005, and its biggest customer is British Airways, the region's third-biggest airline. Stansted is the largest base for Ryanair, which has its headquarters in Dublin and is Europe's biggest low-cost carrier. Other UK airports owned by BAA include Glasgow, Edinburgh and Aberdeen in Scotland; Southampton, England. The company also controls airports in Naples, Italy, and Budapest, and holds minority stakes in six Australian airports including Melbourne and Perth. Hochtief AG, Germany's biggest construction company, plans to buy Budapest airport. BAA manages Indianapolis International airport and operates retail concessions in Boston, Pittsburgh and Baltimore, according to the annual report for the year through March 2006. The UK Transportation Department's 30-year national air-traffic plan, published in December 2003, called for a new runway and terminal at Heathrow by 2020, following construction of a runway at Stansted. (Bloomberg)