Airport profits nosedive as recession hits
MANCHESTER Airport Group saw profits buffeted by the recession as operating earnings fell 28% to £56.1m in the year to the end of March.
The profits fall came as passenger numbers fell 12% to 23.9 million and group revenues fell 6.2% to £348m.
The operator of four regional airports – Manchester, East Midlands, Bournemouth and Humberside – said it hoped to return to growth next year as the economy recovers.
MAG is owned by the 10 councils of Greater Manchester, with Manchester City Council holding 55% and the other nine local authorities 5% each.
Despite the fall in profits the shareholders will be paid a £20m dividend, unchanged on last year.
Group finance director Ken Duncan said MAG had performed well in testing circumstances, and far better compared with other regional airports.
“In terms of looking at the business environment, it’s a very strong performance – we’re posting a reasonably healthy operating profit margin of 16% when Birmingham are reporting losses and Peel (Airports – the owner of Liverpool John Lennon airport) is reporting losses.”
Mr Duncan, pictured, said he did not think, despite pressure on public finances,
that the group’s shareholders would be willing to sell it to raise funds for other projects.
“We are the jewel in the crown – there has been absolutely no hint or suggestion from our shareholders that they want to sell us. I think they would sell other assets before MAG.”
Looking ahead Mr Duncan said he expects to see growth of 1% or 2% next year: “Hopefully we’re at the bottom of the trough now. It’ll be something of an anaemic recovery – we won’t see anything like the 7-8% we’ve seen previously.”
The biggest falls in passenger traffic came in short-haul and to London in particular, as a result of a quicker and more reliable train service between Manchester and the capital, lengthy industrial action at BA and also the impact of the volcanic ash cloud this year.
He said the departure of MAG chief executive Geoff Muirhead – who is retiring after nine years at the helm and 22 with the company – was “the end of an era”.
“Geoff will be staying with us in a an advisory role and as an ambassador too – it’s important his knowledge and experience retained.” Mr Muirhead will be succeeded by Charlie Cornish, who is joining from North West FTSE 100 company United Utilities.
Bottom-line pre-tax profits came in higher at £45.6m than last year, where a £42.4m fall in the value of its investment property portfolio reduced the figure to £2.2m.
Despite the healine falls, MAG said it had grown per passenger revenues across the business, with yield growth of 5% in aviation, 12% in retail and 4% in car parking.
Net group debt rose from £321.1m to £347.6m after further investment in the portfolio, particularly in Bournemouth where a new departure terminal was opened.
A major chunk of the debt of this is owed to the shareholders in the form of a £162.5m unsecured loan which was agreed in February and is repayable over the next 45 years.
