Manchester Airport Group posts big drop in profits in year to end of March

30.7.2010 (Manchester Evening News)

Manchester Airport Group today posted another big drop in annual profits but
said they would have been even lower without a tight rein on costs and an investment
programme which helped to shore up revenues.

Operating profits for the year to March 31 nosedived 28.4%, from £78.4m to £56.1m,
although turnover held up relatively well with a 6% decline from £371.3m to £348.9m.

Pre-tax profits were down from £54.2m before exceptionals in 2008-09 to £45.6m.
 In the previous year, operating earnings tumbled from £87.8m, with revenues down
6.2 per cent.

Passenger numbers slid 12% in its most recent financial year, from 27.3m to 23.9m,
and cargo volumes by 5% to 409,300 tonnes, but the group said its investment to
improve shopping areas, car park operations and other aspects of its airports
ensured revenues remained ‘robust’ and helped to offset the decline in passenger

A tight control on costs, including the loss of 110 management posts, also helped,
the group added. MAG is the country’s second largest airports operator with Manchester,
East Midlands, Humberside and Bournemouth in its portfolio.

Chief executive Geoff Muirhead, who is retiring in the autumn after 22 years
with the group and will be replaced by United Utilities’ Charlie Cornish, said
operating profits would have been £15m- £20m lower without the investment programme
and restructuring.

He said he was handing over the reins with the group in good health, adding that
the decline appears to have bottomed out and that he expects a flat year on profits.

Chairman Mike Davies said in the group’s annual report that MAG had put in a
‘solid’ performance and was well-placed to benefit from the economic upturn, although
he expects passenger numbers to recover slowly.

“The outlook for MAG is positive but challenging,” he said.

“Economic recovery in the UK and Europe has begun but is likely to be initially

He said the group had invested during the recession to improve its commercial
infrastructure and customer service standards, which will provide a solid platform
for growth as the recovery quickens.

MAG has installed security body scanners, new seating and executive lounges as
part of its strategy to improve passengers’ experience and customer satisfaction.
MAG is owned by the 10 local authorities of Greater Manchester, which will share
a dividend of £20m, the same as last year.

The group’s net debt increased from £321.1m to £347.6m.

MAG’s four executive directors received bonuses totalling £295,000 based on performance
targets achieved in the previous year. Mr Muirhead was paid a bonus of £99,000,
taking his total package to £516,000, up from £512,000. He said the bonuses were
based on targets including financial performance and service quality but had not
been paid in full