TBI reports rise in passenger numbers but a fall in profits

TBI, the group which operates Luton airport, yesterday reported a fall in profits despite a surge in passenger numbers brought about by the growth of low-cost airlines such as Ryanair and easyJet.

TBI, the group which operates Luton airport, yesterday reported a fall in profits despite a surge in passenger numbers brought about by the growth of low-cost airlines such as Ryanair and easyJet.

Traffic levels at TBI's six airports, which also include Belfast International and Cardiff International, grew by 15 per cent to 17.5 million passengers. But profits before tax, amortisation and one-off items fell marginally from £23.6m to £23m for the 12 months to the end of March.

At the pre-tax level, profits were down by 45 per cent to £6.2m after a £5.9m write-down in the value of TBI's airport services business in the US, which has now been put up for sale.

TBI has also decided to dispose of its Bolivian airports operation to concentrate on its UK airports and its two other overseas airports - Orlando in Florida, where domestic and international passenger numbers have begun to grow again, and Stockholm Skavsta, which has taken off following Ryanair's decision to operate services there.

Caroline Price, TBI's finance director, said the company expected the sale of the US airport services business, which manages fuel supplies and cargo warehouses, to raise at least $19m (£10m). She said the Bolivian business was being sold because it was too far away to manage properly even though it was profitable.

Despite the traffic growth, TBI said it was still adjusting to a change in passenger mix as low-cost airlines, which pay much lower charges, replaced full-service carriers. At Cardiff, for instance, British Airways, which used to pay £10 for every departing passenger, has been replaced by bmibaby which pays only a fraction of that.

TBI said that for the first two months of the current financial year passenger numbers were up by 11 per cent. However, its chairman Stanley Thomas, who owns 20 per cent of the company, cautioned that the ongoing threat of geo-political risks and higher oil prices could not be underestimated.

TBI is having to dip into its reserves to pay an unchanged dividend for the year of 2.3p, costing it a total of £12.9m. Ms Price said although the dividend was not covered by profits, it was more than covered by cash flow.

The company has been the regular focus of takeover speculation but Ms Price said it had received no approaches since the German company Hochtief decided last year not to proceed with a bid, nor was the management planning a buyout.