August 5, 2019 / 7:51 AM / 4 months ago

BBA Aviation profit slips on weakness in Europe, higher costs

(Reuters) - BBA Aviation Plc BBA.L reported a dip in first-half profit on Monday, as it wrestled with lower jet traffic at European and U.S. airports as well as a rise in costs.

The aviation services provider agreed last week to sell its Ontic aircraft parts and services unit for $1.37 billion (1.13 billion pounds), leaving it with its Signature unit, which provides a range of services including passenger handling, aircraft refuelling and ground handling.

Overall revenue from the unit rose 23%, benefiting from the acquisition of refuelling services company EPIC. However, sales from Signature FBO, which accounts for the bulk of the unit’s revenue, dropped 1% to $897.1 million due to lower fuel prices and foreign currency fluctuations.

BBA also flagged challenges with heavy jet and charter airplane traffic, which dented its FBO operations, but said overall first-half performance was broadly in line with its expectations.

“The company uses the dreaded term ‘broadly’ in line with expectations to describe the numbers, code for not quite up to scratch,” AJ Bell investment director Russ Mould said.

FTSE 250 member BBA’s shares fell as much as 6% amid a broader market weakness on Monday.

The aviation sector in Europe has been battling higher fuel costs, stiff competition among budget airlines as well as a slowing economy and the fallout of the grounding of Boeing’s 737 MAX planes.

BBA reported an underlying pretax profit of $150.2 million for the six months ended June, compared with $153.1 million a year earlier.

The company’s net debt nearly doubled to $2.54 billion at June 30 from last year due to a change in accounting standards.

Reporting by Pushkala Aripaka in Bengaluru; editing by Gopakumar Warrier and Anil D'Silva

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