Airport losses part of the plan, say Leeds Bradford operators

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leeds Bradford International Airport yesterday insisted that deepening losses were “as per business plan”.

The private equity-owned company blamed the £10.7m loss on disruption from Icelandic ash clouds and adverse weather and planned extra costs from its investment programme at the airport. The previous year the airport made a loss of £4.4m.

Revenue increased 5.3 per cent to £21m during the year ending March 2011 and passenger numbers rose by 10.9 per cent due to extra capacity.

“In 2011, LBIA has been one of the fastest growing airports in the UK, with traffic increases of 9 per cent in the 12 months to October 31 2011,” said Tony Hallwood, the commercial director.

“We launched 10 new routes and services this year, with a wide number of airlines and tour operators, including Jet2, Ryanair, KLM, Thomas Cook and Eastern Airways.

“We have also recently announced six new routes which will continue to deliver increased passenger numbers in 2012.

“It is entirely normal and expected that our post-tax profitability will reflect increased interest and depreciation charges during this new investment phase in our facilities.”

The airport started work on an £11m development of its passenger terminal earlier this month in an effort to attract more airlines and cope with an increase in customers. The development is part of a promised £70m programme of improvements.

Around 2.8m passengers used the airport last year, the first full year of operations from the two Ryanair aircraft based at the airport. Ryanair boss Michael O’Leary has since announced plans to base a third aircraft at Leeds Bradford.

The year also saw the first easyJet services, providing routes to Geneva, and KLM increasing the frequency of its Amsterdam flights. But the airport lost its Gatwick service in March – and its to link to the capital.

In the directors’ report, chief executive John Parkin, an industry veteran, said: “The reality of the airport business is that there is a constant threat of a downturn in demand due to adverse global economic factors or specific events, such as fuel price, a terrorist incident, avian flu and disruption caused by volcanic ash. However, as at March 2011, LBIA is currently the fastest growing airport in terms of passenger numbers in the UK.”

He said that operating costs at the airport “continue to be tightly controlled” although the accounts show an increase to £27.4m from £23m.

These include £3m in unspecified exceptional restructuring costs. The airport also had to contend with rising energy costs and increased top-ups to the pension scheme.

In addition, the company had to pay £4.4m in interest in bank loans and loans from its parent company.

The airport has been the subject of criticism from some passengers who have complained about lack of space and facilities.

Mr Parkin said: “Achieving high standards of customer service remains a key objective for the company and significant investment was made during the year to support this objective.

“The anticipated growth in passenger throughput will continue to present challenges for the future and opportunities to maximise commercial revenues.

“Planning permission for the terminal development has now been approved by Leeds City Council and includes significantly more commercial space to accommodate a new and enlarged duty free and tax free shop, an enlarged book shop, greater variety of retail units and significantly enhanced food and beverage facilities airside.

“This major terminal development scheme will also address other pinch points within the airport to ensure they will support the future growth of the airport over the coming five years.” The accounts show a fall in aviation revenue and an increase in commercial income from retail, car parking and property in the last financial year.

Operators relaunched the executive lounge as The Yorkshire Premier Lounge last year. They have also introduced a £2 charge to drivers wanting to pick up or drop off passengers outside the terminal, a decision which proved hugely unpopular among users.

The highest paid director, believed to be Mr Parkin, took a 15 per cent pay cut last year, receiving £217,000 in emoluments and benefits.

The company donated nearly £28,000 to local charities, including Yorkshire Air Ambulance.

bernard.ginns@ypn.co.uk