British airport operator BAA posted a 17 per cent rise in full-year profit as it squeezed more growth from London's Heathrow even though it had to turn away airlines eager to fly to new markets from Britain's busiest airport.
"Chinese airlines have come to us saying they want to add routes from Heathrow to cities in China but we have to turn them away because there's no space - the airlines can't believe it when we say no," Colin Matthews, BAA's chief executive said.
"However, growth has come because there was no disruption in 2011 and thanks to aircraft sizes increasing and load factors being at record levels, which we see continuing in 2012."
A plane's load factor is a measure of how full it is.
The owner of Europe's busiest airport today reported earnings before interest, taxes, depreciation, and amortisation (EBITDA) of £1.13 billion for 2011 on revenues 10 per cent higher at £2.28 billion.
BAA said Heathrow handled a record 69.4 million passengers during the year - up 5.5 per cent - compared with the previous record of 67.9 million set in 2007, despite operating at 99.2 per cent of its capacity in 2011.
BAA, which was prevented by Britain's Conservative-led coalition government from building a third runway at Heathrow because of environmental concerns, has seen traffic to emerging markets rise in recent years but believes it is now falling behind rival European airports in the battle for these lucrative routes because of the constraints on growth.
Of Heathrow's major markets, European traffic showed the most significant year on year growth, increasing 7.6 per cent.
Mr Matthews said BAA would start paying dividends to shareholders "in the range of £60 million a quarter" next year for the first time since it was acquired by a consortium led by Spanish infrastructure group Ferrovial in 2006.
The company has guided that it expects to deliver a 14 per cent increase in EBITDA for 2012.
Analysts at RBC Capital markets said they view "the 2012 guidance of 14 per cent uplift to £1.283 billion as very achievable."
BAA must sell London Stansted airport, Britain's fourth busiest, after a court dismissed its appeal against a ruling by Britain's Competition Commission (CC) earlier this month. The company last year chose to sell Edinburgh airport after the CC ordered it to sell one of its Scottish airports.
Global Infrastructure Partners, JP Morgan Asset Management and consortiums led by Carlyle Group and 3i have made it to the second round of bidding for Edinburgh airport, sources told Reuters yesterday.
BAA, which owns London's Heathrow as well as Southampton and Stansted in England and Glasgow, Edinburgh and Aberdeen airports in Scotland, said total passenger traffic rose 3.7 per cent to 87.4 million.
Reuters