6 June 2000

More railway links planned for Heathrow

By Jim Levi

BAA has made tentative plans to turn the Heathrow Express rail station at the airport into the underground equivalent of Clapham Junction.

It would have rail links to London's Waterloo and St Pancras stations as well as the existing link to Paddington. Other links would connect Heathrow to the North and West via Reading. BAA chief executive Mike Hodgkinson said yesterday: "The station currently handles four trains per hour but has the capacity to take 16 trains."

The airport operator, which runs Heathrow, Gatwick and Stansted as well as three Scottish airports, yesterday reported that the Heathrow Express had moved into operating profits just 15 months after opening in June 1998. Overall, in its first full year to March 2000, the shuttle service made an operating profit of £4.1m, despite disruption caused by the Paddington rail crash.

The service handled a total of 4.4m passengers last year and takes an estimated 34pc of Heathrow passengers travelling to and from central London daily. "We estimate the rail link takes 3,000 cars out of the traffic flows around Heathrow," Mr Hodgkinson said.

The group also claimed yesterday that retail operations were well on the way to recovery. Revenues suffered a sharp setback after the ending of duty-free trade within the EU last year.

Overall, BAA pre-tax profits fell from £516m to £494m. Although the group made a profit of £84m on the sale of properties, this was more than offset by write-offs relating to closure and reoganisation costs. These charges had the overall effect of cutting profits to £377m, leading to a 35.5pc drop in earnings per share. Despite this fall, the dividend was raised 9pc to 16.35p.

In addition, the cash raised by the group through the sale of £337m worth of property - including a number of airport hotels - has prompted the group to propose handing £400m back to shareholders.

The group confirmed plans to sell its American duty-free shops chain. "We're not rushing to sell, but it will not remain part of the BAA Group," said finance director Russell Walls. He said the business probably had a value of £250m to £300m.