BAA passenger outlook more cautious

LONDON (Reuters) - Airports operator BAA said the recession weighed on passenger numbers in the first quarter as building costs at Heathrow helped drive it to a steep loss, though its air-side stores continued to do good business.

The operator of Heathrow and Gatwick airports said numbers fell a greater-than-expected 10 percent and it now had a "slightly more cautious" outlook on passenger traffic than previously.

But it reiterated hopes for a rise in underlying profit this year, underpinned by a strong performance by its retail operations.

The company, owned by Spain's Grupo Ferrovial (FER.MC), said its planned sale of Gatwick -- which was ordered by regulators to meet competition concerns and where passenger numbers fell more than the average -- was due to be announced within weeks.

BAA's pretax loss reached 316.2 million pounds after one-off costs from building Heathrow's Terminal 5 and from losses on derivatives contracts, compared with a loss of 55.6 million in the same period last year.

Revenue rose 15.5 percent, and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 27.9 percent due to higher tariffs, a strong retail performance and cost controls.

Passenger numbers at BAA's three airports fell to 24.8 million, with Gatwick and Stansted airports falling the most at 14.6 percent each.

Chief Executive Colin Matthews said the fact that the overall quarterly decline was similar to the last quarter could indicate the fall in traffic had flattened out, though that remained to be seen.

"(But) one of the things that these results really underline is how different the business model is at Heathrow. What Heathrow can do as a hub is compensate with more transfer traffic," he said.