BAA has reported a sharp drop in profits on the back of lower passenger numbers and higher running costs but has said its sale of Gatwick Airport is on schedule with initial bids having been received from potential buyers. The company made no comment on the sale of Stansted, which is expected following a Competition Commission review of UK airport ownership. BAA reported an operating profit of £23 million down from £476 million in 2007. Group passenger traffic declined 2.7% to 151.4 million (2007: 155.7 million) with traffic at BAA’s three London airports declining 2.6% to 123.4 million (2007: 126.8 million).

Whilst expecting a challenging year, BAA continues to forecast an increase in its underlying profits and cash flow. The operator believes that no further significant change in operating costs is required and will continue to support further significant investment in airport facilities.

They said that despite the continued the impact of the economic environment on passenger traffic the planned disposal of Gatwick is progressing on schedule and the company will continue to step up the focus on improving service quality.

Colin Matthews, Chief Executive of BAA, said: “BAA performed strongly in 2008 although its performance was affected by a drop in passengers, which reflects the general economic situation. 2009 will be a challenging year but BAA is resourced and structured to meet those challenges and continue to invest in the capital programme that is vital for the future of the business, its passengers and our airline customers.”