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Baa Losses Treble As Passenger Numbers Tumble

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Pre-tax losses at BAA's London airports trebled to £545.7m as the group lost more than 4 million air passengers over the first half due to the recession.

Britain's largest airport owner was pushed deeper into the red by over £400m of exceptional charges, including an increased pension deficit and losses on hedges related to interest payments. Passenger numbers at Heathrow, Gatwick and Stansted fell by 7.4%, or 4.4 million, to 55.2 million.

The group said the decline in airline travel at least appeared to be bottoming out. "Overall traffic trends during the first half of 2009 suggest that whilst demand conditions remain weak, they have not changed materially since late 2008." Revenues rose by 12.8% to nearly £1.2bn, boosted by higher landing fees and an increase in the amount spent in shops by passengers, which rose to £4.72 a customer. BAA's earnings before interest, tax, depreciation and amortisation - which the group claims is a better indicator of its performance - rose by more than a quarter to £470m in the six months to 30 June.

The biggest decline in passenger traffic was at Stansted, which saw customer numbers fall from 10.8 million to 9.2 million – a decline of 14.4%. Gatwick also suffered a steep decline, with passenger numbers falling by 9.8% to 14.8 million. Heathrow was the best performer, shedding 3.8% of its customers as it handled 31.2 million travellers. Acknowledging a dispute with low-cost carriers at Stansted, the group said traffic at its Essex airport fell because its main airlines, Ryanair and easyJet, were "more willing to cut capacity during weak trading conditions". Domestic flights were the hardest hit category at the airports, with the amount of internal flights falling by 10% compared with a 6% fall in international flights and a 7.8% decline in European trips.

However, BAA dedicated a significant proportion of its first-half report to reassuring investors and creditors that it is in robust financial health despite debts of more than £12bn, of which £9.5bn is secured against its London airports.

Colin Matthews, BAA chief executive, said: "Operational performance is better. Despite a tough economic environment the financial performance was good enough for us to find £500m for capital investment."

No worries they are in excellent financial health, however isn't BAA classed as junk by the rating agencies?

Is someone telling porkies here?

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