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BAA: No margin for error

Robert Peston | 10:38 UK time, Tuesday, 5 May 2009

The 10% fall in passenger numbers going through Heathrow, Gatwick and Stansted during the first three months of this year is one of those numbers - like the halving of Japanese exports - that shouts about the depth of the recession.

That sort of plunge in numbers flying has happened before for BAA. There was a 9.9% drop in passenger traffic during the three months that followed the September 11 terrorist outrages.

But the plunge in 2001 was fairly short-lived. By contrast, this year's fall follows a 7.1% dip in passengers for the previous three months.

That said, BAA hopes - and believes - that it's over the worst.

Its optimism is based on its analysis that the underlying passenger decline between January and March was "just" 7.2%, adjusting for the impact of a later Easter and a colder winter.

Passengers walking through Heathrow airport

BAA, which is owned by the Spanish group Ferrovial, also draws attention to the smaller fall at Heathrow (which it estimates at less than 4% in underlying terms), than at Gatwick and Stansted - since Gatwick and Stansted are being sold on the orders of the Competition Commission.

The debt-encumbered business rather needs this "glass-half-full" analysis to be true, since it only just hit the forecast it made last October for EBITDA, or earnings before interest, tax, depreciation and amortisation (the most common proxy for cash flow).

In its supplementary prospectus dated October 1, BAA forecast that adjusted EBITDA for the whole year to March 31 (not just the three months) would be no more than 5% below £1,015m, or at least £964m. In the event, adjusted EBITDA was £968m.

Phew.

If earnings had been less than half of a percentage point lower, it would have missed the target. That half percent has no statistical significance but means the world in psychological terms.

How did it scrape by?

Well, it squeezed costs. And thanks to a regulator that allowed BAA to levy increased charges on airlines for using Heathrow and Gatwick, what BBA calls "aeronautical income" rose almost a third.

Ain't it great having a de facto monopoly?

Also, the smaller numbers who flew forgot there's a recession and splurged a good deal more: there was a small increase in BAA's retail income.

But for me, the most interesting part of BAA's results announcement is a phrase that the company has highlighted in bold (presumably so that its creditors don't miss it).

In flagging up a review by the Department for Transport of how it's regulated, the airports group says it expects to be subject to a new licensing regime that would impose a "new duty on the regulator to ensure that licence holders can finance their activities".

So it would risk losing its licence to operate Heathrow if it was perceived to be too financially stretched.

The point is that BAA has an eyewatering £11.4bn of borrowings - or a hefty 11 times EBITDA - including just over £1bn that are classified as "current" (or repayable within a year").

In other words, BAA's tender parts are still in the vice-like grip of its lenders.

Still, it had a miraculous escape from bankruptcy last year: some £9.1bn of debt was due for repayment within a year, as of March 31 2008.

That, of course, necessitated the mother of all refinancings. It rather defies belief that BAA pulled off the refinancing, in the worst financial-market conditions within living memory.

But that doesn't mean it can relax. Although the recession means that its income is subject to the most painful squeeze in living memory, its lenders are unlikely to be especially tolerant or forgiving if BAA lets them down.

It matters, in that context, that in the next few weeks it achieves a decent price for Gatwick and that prospective purchasers aren't put off by the 14.6% fall in first-quarter passenger numbers - since the proceeds of that forced disposal will be used in their entirety to pay a portion off the "Refinancing Facility".

So BAA is unlikely to revert to being a dull, steady-as-she-goes utility any time soon.

And although it's understandable that for many business people and politicians the big question is whether Heathrow should be allowed a third runway, that looks almost an academic issue compared with BAA's operating and financial challenges.

Comments

  • Comment number 1.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 2.

    It's alright chaps
    It's working now
    But you got to be
    clever to link up

  • Comment number 3.

    So are you saying that BAA is bust apart from the banks not withdrawing their lines of credit?

    How do these optimistic figures fit in with those released by the EU yesterday suggesting double the forecast decline, followed by "at best" stagnation next year?

  • Comment number 4.

    It's probably a good time to rent your house out
    and travel around the world and follow the sun

  • Comment number 5.

    "prospective purchasers aren't put off by the 14.6% fall in first-quarter passenger numbers "
    peolpe who are going to purchase the airports are looking at the long term future and prospects not a quarter or 2 quarters results. all parties interested in gatwick propose an extra runway so they all see potential there. any company buying gatwick will take on the debt but knock it off the purchase price

  • Comment number 6.

    So a 10% drop in airline bookings... hmmm.

    Cheap flights for those of us not cutting back on holidays then?

  • Comment number 7.

    is there anything else left to sell off ?
    how on earth can a company with £1billion turnover be in debt for 11 billion ?
    do they pay any tax then ? great scam if they can run at a loss on a cash cow, who benefits there ?

  • Comment number 8.

    Reporting Debt Levels without reporting Asset Levels is pretty meaningless - if BAA has assets worth £50 billion then Bank Debts of £10 billion are not that major - large figure though it sounds.

    Earnings are important too but so are movements in other assets and liabilities.

  • Comment number 9.

    Less air travel? This is really GOOD news :

    - no 3rd runway required at LHR
    - less noise and air pollution

    Maybe air travel can return to being the exceptional luxury of choice rather than the god-given right of the many.

    No doubt fares would have to rise hugely to cover all those fixed costs, thus lessening demand even more, a beneficial spiral. Should cut down imports/exports a bit too and give home grown agriculture and industry a much needed lift.

    BAA is possibly held to be "too big to fail"

  • Comment number 10.

    Hmm, a non banking story- but not exactly rocket science or setting the world on fire stuff, welcome as it is.

    BAA just need to sit tight and get a decent price for Gatwick as you say, they've such a squeeze on the system that they're in a relatively strong position- hence managing to refinance in the eye of the storm presumably.

    Whether Ferrovial should ever have been allowed to buy the BAA job lot should also be put to stricter scrutiny, though given that they paid a hefty premium and will probably get stung.

    What about Fiat vs Chrysler Europe? The fuss the Germans are making re losing control of Opel and some analysis of how on earth Fiat are in a position to 'invest' (bail out) anyone given their own debt and inevitable sector worries? Second largest car manufacturer in the world?? You what?! Isn't that going to expose us to a world of walk-outs and Berlusconiesk shrugs?! From a relative small fish to a global monster in one leap, in the worst recession for nearly a century...how is this possible?!

    Would welcome something on this issue.

  • Comment number 11.

    If the rumoured figures for bids for Gatwick are as low as suggested at GBP 1.3 billion rather than the GBP 1.6 billion expected and GBP 2 billion hoped for then BAA are in a huge pickle.

    Unlike regional airports where a much larger percentage of flyers are once a year charter holiday flyers most of the flyers from Heathrow and Gatwick are business flyers and the recession will have a big impact on them as they fly less often and downsize from first to business and business to economy.

    Also how many people will continue to spend whilst waiting for flights? As money tightens GBP 6 for a Burger King meal or GBP 3 for a starbucks looks less appealing. If we are getting less for our GBP when we convert to Euros or dollars then something somewhere has to give.

  • Comment number 12.

    This suggests that the downturn is increasingly re-writing how we lead our lives.

    Less flying off on holidays. (Or is it less business trips, I wonder?). Well that ties in with many of the reports from the air operators.

    Also society seems to be being 'weaned off' of its addiction for expensive "branded" trainers - http://news.bbc.co.uk/1/hi/business/8033418.stm

    Perhaps we'll even begin to realise that there IS a difference between a 'need' and a 'want'.

  • Comment number 13.

    The results underline the need for BAA and the regulator to set new targets based on lower throughputs and higher charges at Heathrow. If the City really wants an airport in West London it will be happy to pay!

  • Comment number 14.

    Well thats another piece of good news about the economy that should have the stock market racing ahead on a solid climb with no chance of another bubble forming there.

    Repeat after me - "the stock market must recover soon, the stock market must recover soon"
    But dont ask why it has to get back to its vastly over inflated levels! It just has to OK?

  • Comment number 15.

    BAA are not the only ones to issue some worrying statistics today, a new study by the Chartered Institute of Personnel and Development has revealed the human impact of the credit crunch. More than a third of respondents were worried about redundancy and three-quarters felt their organisation had been affected by the recession with a staggering 52% claiming an increase in work related stress. This comes only two weeks after a Mental Health Foundation report that claimed that two thirds of adults polled were experiencing some fear and anxiety as a result of the downturn. Overcoming stress and improving effectiveness are becoming issues of national importance. The Survivors Guide To The Credit Crunch helps readers to boost their personal resilience and get a brighter outlook in these tough times. See the articles at http://www.thesurvivorsguide.co.uk/latestblog.html

  • Comment number 16.

    Hopefully this means more people are holidaying at home so this is good news.

    Maybe that's why the FTSE is going up cos I can't think of any reason.

  • Comment number 17.

    It's no wonder really that with number of people declared bankrupt, less of us are flying. I think the point about the differentiation between 'need' and 'want' made by Sutara is a good one, BAA's monopoly is based on want and not need, thus not really having a leg to stand on in the long run, if available funds are so hard to come by.

  • Comment number 18.

    a) Hi Mr Peston, When you do an article like this can you provide more links : - a link to the Financial statements being talked about would be good.
    b) You say "And thanks to a regulator that allowed BAA to levy increased charges on airlines for using Heathrow and Gatwick, what BBA calls "aeronautical income" rose almost a third." - I am very suspicious of this. Why ? Why well 1/3rd tells me nothing ! - if the charges to start with were £10 the point is irrelevant.
    If the charges were £10 Billion then the increase in these charges, passed on to the air passengers, might account for part or all of the drop in passenger numbers.
    This is part of your job to do this blog to tell me about the relevancy of the numbers. For it to tell me anything I need to have and idea of how much that increase adds to the price of a ticket to New York or Spain, I need to know that if your complaint is about BAA having debt worth billions that this 1/3rd increase you mention is also in the billions - it might be, it might be a very relevant point, but I don't have the time to check it all out. Most of your readers only spend a few minutes per day reading your article and don't have the time or the expertise you have to dig into the numbers and find out what's relevant - telling me things like "1/3rd" is 'no news' news. And no I just 'can't trust' you.
    PS The Dec 2007 statements I found on goolge showed an eye watering debt of 10.411 Billion... and an eye watering total assets of 17.749 Billion -leaving an eye watering net assets of 7.338 Billion - it's a big company.

  • Comment number 19.

    11.4bn debt at say 6% is roughly 650m pa, set against EBITDA of c1bn leaves +/-300m pa after interest. A fairly decent amount of cash and an ICR of c1.5x. Unless my methodology is wrong, I don't see such a problem with BAA on this aspect. However, I see more concern with the achieved sale price of Gatwick or Stanstead which could fall below the valuation on acquisition, plus the additional cost/fees of early repayment of the debt.

    However, when it comes to refinancing next time the amount to refi will be smaller as a result. And even in these cash strapped times which bank (Goldman, Macquarie etc) would not want to have a juicy loan facility against that cash cow Heathrow paying out interest, plus hefty fees etc. So not really a problem either.

  • Comment number 20.

    The issue here is if business continues to shrink for BAA, can it ever pay off its loan? And if it can't, then whoever has lent to BAA is getting less income to pay off its own debts. So there are wider implications here.

    The fact is that BAA are too big, the whole commercial airline sector is too big. It cannot be maintained. BAA may need funding if it enters more troublesome waters, but only to help the business shrink to a more sustainable level.

  • Comment number 21.

    Historically, LHR was the hub to the world
    Presently, it is struggling to stay solvent
    Futuristically, it can be bought out by foreign

  • Comment number 22.

    well the good times are gone and baa now has to obtain funds from its owners, it just shows how poor this country is, do we have anything left that is british owned.
    sadly very little from the looks of it.

  • Comment number 23.

    British Leyland V The Banks

    for months we have only had stories about banks.

    Billions piled into saving them

    Morris marina = CDO's
    Austin Maxi = CDS
    Austin Allegro = Subprime

    in the End it was all about Control and Votes.

    Billions have been thrown after back Yet

    there is a story (one of many) that is just as or maybe more important
    BUT they only wanted around £8 million for research.

    just finished reading the Book its fantastic.

    Why where they denied the money. Maybe no HQ in a LABOUR strong hold.

    yet all are life are dependant on them. They are the

    its a small little word just like banks

    perhaps Mr Bob "Banks Blog" Peston" could do an article on them ? visa via why there is no money for such a great problem


    BEES
    BEES
    BEES
    BEES
    BEES
    BEES
    BEES
    BEES
    BEES

  • Comment number 24.

    re:14 and 16

    The much trumpeted 'certain' armageddon in the financial markets has pretty well been averted by the actions of the major governments round the world. This may be a tough thing to acknowledge for many here, but it actually makes sense as we know that the worlds major corporations will not be allowed to fail, no matter how abysmally they are managed, therefore the stock market is a safe place to invest once again. The magicking away of the toxic assets held by the banks is already in progress, so the one elephant in the room that could still bring everything down is being pushed out of the door, another incentive to invest.

    It may not make much sense, given the state of the 'real' economy, but what drives markets up is appallingly at odds with what most people consider to be 'good' news. Mass unemployment is to be welcomed because of the cost cutting benefits to the companies involved, savings rates at zero or close to is also great because with no incentive to save, people will blow their money on...well, it doesn't matter what, as long as they aren't just hoarding it in the bank. Practically forced lending to people who can barely afford to repay in order to get the housing market moving again is also now seen as a worthy goal, as the taxpayers will bail out the casualties.

    You may not like it, but it may be that we have escaped anything worse than a mild recession and in a years time mr brown can point at the newly stoked boom as proof yet again pof his infallible financial genius..and you know what? People will believe him, I'm sticking a wedge on Labour at 6-1 or whatever odds they are at the moment because Cameron's deafening silence on any of the major issues is a dead giveaway that they wouldn't have done anything different, once people realise this they will just vote to leave the present incumbents in place, at least they have years of experience in 'governing'...





  • Comment number 25.

    12. Sutara wrote:

    "This suggests that the downturn is increasingly re-writing how we lead our lives."

    Every downturn rewrites how we live our lives.

    But memories are short and as soon as the economy recovers people will revert (as far as they are permitted) to their previous ways, and the hot dinner party conversation topics will once again be weekends away and rising property prices.

    It will take more than a recession to effect a permanent change in the habits of an entire nation.

  • Comment number 26.

    I am tempted to draw parallels between the travel industry and the auto industry, specifically in how the attempted "social engineering" by the government has backfired and how we are all paying the price for everyone of these attempts.

    Take note of how the government has been trying to get us out of our cars for the past number of years by making car ownership more expensive, increasing the cost of operation of a motor vehicle through an ever more creative taxation system, coupled with the stress induced by local councils doing an effective job in revenue generation through fines, fees, c-charges etc., pretending to be safety or law enforcement driven.

    Then suddenly, we capitulate, en mass. We stop buying cars. The government has won. Except, no, we weren't supposed to be that agreeable. Now we need to run out and quickly buy cars which we know we can neither afford to own, operate or simply park in front of our homes. Automotive worker unions are complaining that they need relief to hold them over until we come to our senses and allow the government to repeat the entire process on us.

    So, back to the topic at hand: Travel. From the data presented, it looks like the attempts to get us off of aeroplanes is also just starting to work, again thanks to "social engineering", messages about carbon offsets, and any other tactic that would make us feel guilty for merely thinking about a holiday offshore. How much further does travel need to contract before we are presented with the view of the starving flight attendent urging us to come back? When will this government realise that every time they want us not to do something, they run the risk of eventually wearing us down to the point of capitulation, only to be further taxed for doing so?

  • Comment number 27.

    No third runway needed then.

    If the economy recovers, oil prices will rise, and traffic will be throttled by fuel price.
    If the economy does not recover, traffic will be throttled by limitations to disposable inclome.

    Guess the protestors are right then....

  • Comment number 28.

    Who and what isn't in debt these days?!! It shouldn't be a surprise to any of us!!

  • Comment number 29.

    Ferrovial, the biggest Spanish Civil Engineering and Building Contractor, bought BAA when it's core building industry was booming and government infrastructure contracts were generously funded by EU grants and cheap loans.

    A smart move to sell BAA before Spain's building boom went bust, now nationalise BAA and make future profits for the taxpayer. Anyone know the Spanish for 'tough at the top' and 'never mix the concrete with your aeroplanes' ?

  • Comment number 30.

    It doens't help that flying from those airports is about as pleasant as the torture bit in Blackadder

  • Comment number 31.

    #25 rbs_temp

    Whilst I concur with the idea that "if history teaches us one thing, it's that history teaches us nothing", this is really about learning from experience and that's a powerful way to learn.

    I think it will actually change people's behaviour, to some degree, but probably only for the people who have actually 'had their fingers burnt' in some way. I suspect quite a lot of people will have lost, over the last few months, their appetite for living life on credit and will generally be doing - or trying to do - more saving and less borrowing.

    Of course, the next generation - i.e. those who who are just too young to directly experience the problems themselves - will almost certainly walk straight into the 'everything on the never-never' fantasy, if given the chance.

  • Comment number 32.

    Wait for the protesters to start saying there's not a need for a 3rd runway ...

  • Comment number 33.

    The same old usual story, banks lending billions to their own kind and then the wheels falling off.

    With regards to less passengers, I can only say that people have sad lives at home if they think they need to suffer any of the appalling London Airports and all that goes with them just to escape for a few days.

    Its time travel became a pleasure again and not the awful experience it is these days. Get airports to become airports, not shopping malls, we wouldnt need 20 eating dens in an airport if it was quick and easy. Shame they dont do what they say on the tin.



  • Comment number 34.

    How did a boring company/monopoly get into so much debt?

    Easy, you raise lots of cash from banks set against the monopoly itself. You then cream off a fair amount of cash for your foreign (Ferrovial) shareholders (Spanish pension funds). You then set the interest payments against the income so you pay no tax to the country (UK) that gave you the monopoly and slim the business (make UK tax payers redundant) to make it more efficient.

    Result - transfer of 'wealth' created in the UK from UK pension funds to foreign ones, less UK jobs, less income to the UK Treasury in the form of income/corporation tax plus increased welfare payments. Nothing can go wrong unless there is a credit crunch. If there is, the banks will do there best to refinance this cash cow rather than 'High Street Trading Ltd' - the interest premium may have to rise because the debt is more expensive but nevermind, remember you have a monoploy!!!

    Find next company and repeat ad infinitum!

  • Comment number 35.

    32. At 2:57pm on 05 May 2009, Jordan D wrote:
    Wait for the protesters to start saying there's not a need for a 3rd runway ...
    ========================
    I have already said it (see #9) but just for you:

    there is no need for a third runway

  • Comment number 36.

    Strangely enough, Ferrovial bought BAA for 10.3 billion, and their debt is ..er.. only 10% more than that; sounds like they just didn't pay anything out of their own pockets..... (wasn't the Man Utd. purchase funded the same way?) but borrowed it all.

    The banks are going to have a field day with Ferrovial when they come to re-negotiate their borrowing terms.

    With the state of our basket-case currency and crippled business economy, outgoing tourism traffic this summer will be way down, and only the budget airlines will be doing well from Gatwick & Stansted (Ryanair & Easyjet don't fly out of Heathrow). Oi reckon BAA in deep doo-doo.

    Too big to fail? I wonder when the time comes whether this the Govt. has the bottle to re-nationalise them.

    Regards,

  • Comment number 37.

    #36 allmyfault
    ".. Ferrovial bought BAA for 10.3 billion, and their debt is ..er.. only 10% more than that; sounds like they just didn't pay anything out of their own pockets..... (wasn't the Man Utd. purchase funded the same way?)"

    +

    Yes. Leveraged buyout, apparently.

  • Comment number 38.

    So They'll ummmmmmmmmmmmmmmmmmmm


    INCREASE the MARGIN ! Derrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr


    Robert is this the best you can muster ?

  • Comment number 39.

    Bit of a non story this one.

    A typical highly leveraged acquisition,is always going to be treading a tightish rope. Due to the monopolistic and strategic nature of the enterprise, cash flow is pretty much assured. Though holiday air travel is discretionary, air freight and a considerable amount of business travel are CONSIDERED necessary. A previous poster thought that "social engineering" had backfired, causing the fall in air travel and car sales, but I really do think it is because we are either skint, think we might become skint or the nice bank people have stopped our plastic.
    Occam =simplest. Earnings are t/o less costs not the actual t/o.Long hard day somewhere where all data capturing or potentially capturing gear banned, so no posting and now to bed.

  • Comment number 40.

    what about Obama and his Tax havens and the effect that will have on
    GB+AD fantesy Budget.

    Is it that Obama this that the UK is a tax haven for some of his Finanical Institutions ? perhaps he can take there Debt too ?

    Do they not have BEES in the City ? I guess not its all concrete

  • Comment number 41.

    LDV that a buisness going Bust

    or FIAT taking over GM (Vauxhall) Germans already saying cannot
    close any plants in Germany, Is that not protectionism. Does that
    mean it will be the English plants for the Chop ? Or is that Ok as we are in the EC ?

  • Comment number 42.

    Robert..... seen this? http://news.bbc.co.uk/1/hi/business/8034667.stm

    I'd be pleased if you would convey to your chums in the City that I'm utterly astonished a UK investor isn't looking at snapping up LDV. But then of course it's "industry" so perhaps I shouldn't be surprised.

  • Comment number 43.

    @24 i rather suspect you are right(this will be labours plans) oh and the Tories too :)

  • Comment number 44.

    flying is crap ,makes the arms ache.brownwatch 390 days. did you see his face in the labour broadcast?, 1 smile and his face nearly cracked in half.

  • Comment number 45.

    #24 put a wedge on labour at 6-1 your a bigger mug than I assumed you were.Labour have as much chance as browns got of winning smile of the year award.

  • Comment number 46.

    The BAA is like the BBC its the Emperors New clothes you pay for a service that is not worth the money its just British which means limp service but we British were used to it and liked to cue and pay well over the odds for second class service being passed off as first class. The British major airports are rubbish and the pricing of trips are well over the top and the service is usual bad, when you look ate other countries but we British are used to all this which is why we do not like change in case its better and we question what the hell have we been putting up with well now we have the BAA and what? To many share holders in this country and that is a problem.

  • Comment number 47.

    "BAA: No margin for error" Now then Robert, not becoming sheepish are you? Good header though, good to see you have a sense of humour. And my God! Don't we all need a sense of humour given the state of play.

  • Comment number 48.

    Well in the last month i have made 3 trips to sweden from edinburgh, 130UKP, 85EURO and 130UKP

    Im glad its getting cheaper to fly :-)

    joolz

  • Comment number 49.

    Interesting article as ever Mr Peston . I suppose at least this isn't another monologue on the banks (although I do rather enjoy them!) .

    What about the Royal Mail issue ? Isn't this worth covering from a business perspective OR is that just not important enough ? The Post Office is a de facto bank of sorts , so I thought that this would be just up your street .

  • Comment number 50.

    Oh dear. What a surprise. Looks like the state will have to bail out BAA. The necessity will be safety. British airports have to be run safely. If Ferrovial cannot keep up with the required costly maintenance and improvements then a state buyout is inevitable. Never mind though loads of people have made loads of money out of the privatisation and onward selling. Job done. Time to start the cycle again. Rip off Britain ripped off again.

  • Comment number 51.

    I would be so glad if BAA went under. T5 is such a disaster zone. The simple fact is that BAA exploit their monopoly position. With Heathrow T5 they designed a shopping mall that just happens to allow customers onto aircraft. For business class passengers (the mainstay of BA's and therefore T5's business) the terminal is a shocker.

    You have to walk the best part of a kilometre to get from Heathrow Express to premium checkin (with no moving walkways at all). Then the expensive auto tray return machines just don't walk. Then having got through security you are right next to the lounges but have another kilometre to walk through the terminal and then back again to actually enter the lounges (purely to force you to walk past the shops). Again with no moving walkways. The lounge has bench seating for meals so you get disturbed whilst you eat by other people sitting down and getting up. Then you have yet another monumental walk (with no moving walkways) to get to the gates.

    Where they should have made 3 terminals (A gates, B gates and C gates), they instead decided to make a ridiculous unwieldy terminal just so they could get more shops into it. Overall BAA deserves to go bust and I hope that they do.

  • Comment number 52.

    51. dave_h wrote:

    "I would be so glad if BAA went under. T5 is such a disaster zone...

    You have to walk the best part of a kilometre to get from Heathrow Express to premium checkin (with no moving walkways at all). Then having got through security you are right next to the lounges but have another kilometre to walk through the terminal and then back again to actually enter the lounges (purely to force you to walk past the shops). Then you have yet another monumental walk (with no moving walkways) to get to the gates."

    Exaggeration never helped win an argument.

    Terminal 5 may be a missed opportunity in several regards, but in terms of its layout and the number of retail outlets it is not that different to may other airports across Europe and around the world today. Even world-class hubs such as Munich and Schiphol have sacrificed space for shops and deserve the title "a shopping mall with an airport attached" just as much as T5 does. It's the way of the world.

    On the few times I have used T5 I have found it a breeze to use, and have invariably managed to get from tube train to gate in around 15 minutes (and have also got from plane to train in the same time on my return). All you have to do is check in online beforehand and head straight from security to the gates. No need to hang around in the lounges at all.

  • Comment number 53.

    ITS LAUGHABLE THAT THE FOCUS ROBERT IS ON THE ECONOMICS. THE REALITY OF AN EXPANSION AT HEATHROW IS A SIGNIFICANT REDUCTION IN QUALITY OF LIFE, A SIGNIFICANT INCREASE IN TERMS OF ASTHMA FOR CHILDREN AND 'INCREASED MORBIDITY', THAT IS PEOPLE DIE YOUNGER THAN THEY WOULD OTHERWISE DO IF IT WERE NOT FOR THE OPERATION OF HEATHROW OVER AND ALL TOO NEAR THE MOST DENSLEY POPULATED PLACES IN EUROPE - THAT IS GREATER LONDON. IF THE CHANGING WORLD GIVES US ANY LESSONS IT MUST BE THAT PEOPLE AND THEIR ALL TOO BRIEF LIVES MUST TAKE PRECEDENCE OVER SHORT TERM AVIATION. AFTER ALL DO WE REALLY SEE UNRESTRICTED GROWTH IN THE TEETH OF ESCALATING OIL PRICES. FLYING ABOUT ON BUSINESS WILL BE A COST THAT NEEDS TO BE AN EXCEPTION ITEM NOT THE RULE.

  • Comment number 54.

    So how much will traveler numbers fall this year and next ?

    Onwards and downwards...

  • Comment number 55.

    It doesn't help that BAA seem to consider they're running a shopping mall where you also just happen to be able to catch a flight.

    I didn't contribute to their shop income last time though - the bookshop in T3 was closed for renovation and I didn't bother with any of the other shops. I even take an empty bottle with me and fill it at the water fountain to avoid the inflated prices for screened water.

    Sorry BAA, the financial climate affects me as well and I prefer to hold on to my money.

  • Comment number 56.

    +52 RBS_Temp

    How dare you be so reasonable on this blog, where are your manners?
    I regularly fly to Bordeaux via BAA Gatwick, I arrive by taxi at the departure lounge, (on-line check in) deposit my sporting gear and bags, do the Sushi bar for lunch, go to my gate and fly. Its terrible isn't it?

    +54 SUPERCALMDOWN

    There is a recession, we have had them before, passengers numbers go down, next year will improve and normal growth will resume after that.

    On this blog the "Glass half full/ half empty" seems to have been replaced by the "Our glass is always full of bile" crew.

    It isn't a discussion but more a case of "I have my political view point (Left, Right or Loony) and I will invent, misinterprate, take out of context or in most cases just plain not understand any figures, statistics, historical precedent or theory in support of my obsession or against anyones elses." or "I may not have a clue what I'm talking about, BUT I KNOW I AM RIGHT!" syndrome.

    Ignorance is no excuse, for example I was involved with a little argument with ARMAGEDIONTIMES about "TRUE" non-employed figures, so off to Google and put in Disability, Incapacity, Benefits, Eurozone, Europe and lo! there were articles telling me for instance that Holland had 14% of its workforce on such benefits (Now down to 11%) and these were much more generous than the U.K (Something like 80% av. earnings).

    The point is, they were FACTS from various sources, I was not expecting the figures, I expected us to have one of the highest rates, but I found out FACTS that educated me about it.

    I commend it to this house.

  • Comment number 57.

    BAA,NO MARGIN FOR A ROAR,well done Robert ,i didnt get it at first .

  • Comment number 58.

    #56 Moncursalion-Occamist:

    "There is a recession, we have had them before, passengers numbers go down, next year will improve and normal growth will resume after that."

    +++

    Normal Growth? I think that has finished. We have come to the end of our finite resources, fuel, water, food and room. The growth cannot continue as before. Party over!

  • Comment number 59.

    11 times EBITDA* just plain ....Terminal ??

    *.......how quaint. Weren't these types of dinosaur accounting practices/methods jettisoned in 2000/2001 ??

  • Comment number 60.

    #56. Moncursalion-Occamist wrote:

    On this blog the "Glass half full/ half empty" seems to have been replaced by the "Our glass is always full of bile" crew.

    It isn't a discussion but more a case of "I have my political view point (Left, Right or Loony) and I will invent, misinterprate, take out of context or in most cases just plain not understand any figures, statistics, historical precedent or theory in support of my obsession or against anyones elses." or "I may not have a clue what I'm talking about, BUT I KNOW I AM RIGHT!" syndrome."

    An excellent summary of this and just about every other public internet forum out there, both on the BBC's website and elsewhere. Proper, mature debate about almost anything is possible only on fully-moderated boards with pre-registration.

    But reading the semi-literate, over-the-top rants on this blog does give us a good laugh.

  • Comment number 61.

    #58. Toldyouitwould wrote:

    "Normal Growth? I think that has finished. We have come to the end of our finite resources, fuel, water, food and room. The growth cannot continue as before. Party over!"

    Absolutely not. The party is never over.

    This is not Armageddon; it is a recession. It may be argued that it is a particularly severe one, but it is a recession nonetheless. We've had them before and we'll have them again. (Let me be the first to predict the recession that is looming sometime between 2012 and 2030. It's coming. I'm telling you it's coming). And once the recession is over life will return to normal and the music will start again. Of course, whether or not that is a desirable thing is another matter.

  • Comment number 62.

    ~58 toldyouitwould

    When I were nowt but a bit of a lad in the late 60's they said " Hark ye, the black gold will be gone in 30 years, the population will be so huge we'll be shoulder to shoulder with a bicuit between two!"

    Its a nice story to scare the kiddies with.

    Q'atar has 300yrs of natural gas, we haven't touched deep oil and man's ingenuity (aren't Neutron bombs lovely?) overcomes, adapts, triumphs. Well some of us anyway.

    See you in the Easyjet queue in a couple of years.

  • Comment number 63.

    45, rvpisneverinjureds

    ah rvp, my old mucker.The point of taking the price on Labour now is that there won't be an election until May or possibly June next year, Gordon will have done everything in his power by then to stoke some kind of feel good factor, no matter how artificial or short-lived. The price you get today reflects the chance of Labour winning if there was an election TOMORROW, which I agree is next to nil..however there isn't going to be an election tomorrow or the day after or the week or month after that..plenty of time for some pre election bribery to shore up the Labour vote.

    Also, it took two elections to wipe out the almost equally unpopular Major in 1992 and 97, a 157 seat lead over the next biggest party is not to be sniffed at. trust me, in a years time you won't even get 3-1 on Labour,this is the time to bet..

  • Comment number 64.

    # 61 RBS_TEMP

    See #62

    People will begin to talk.


    NOW that would make a change!

  • Comment number 65.

    Robert,
    You indicate a % fall in passenger numbers but fail to tell us from what to what.
    in BAA's 2001/2002 annual report (including 9/11 effect) they say 122 Million passengers used their airports.
    By year end 2007 158.8 million passengers passed through their terminals I make that a 30.1% increase (my maths may be wrong)even if they lost that increase things would only be as bad as after 9/11.

    Also what happens if the offers for Gatwick fall below the £1.6 billion "regulated asset base"?

 

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