Profits soar 51% at Birmingham Airport after a year of cutbacks
Birmingham Airport has increased directors’ pay and paid dividends of close to £10 million after a profit rise on the back of cost-cutting.
Accounts – which reveal the first rise in passengers since the onset of the credit crunch – show after-tax profits at Birmingham Airport Holdings rose 51.1 per cent last year, to £8 million, despite revenue rising by less than one per cent.
The improvement in profitability came after administrative expenses fell by £4.6 million following an efficiency drive that saw the wage bill cut by more than four per cent and 29 fewer workers employed.
However, chief executive Paul Kehoe saw his pay packet increase by £49,000, to a total of £408,000, and the balance sheet reveals £9.9 million worth of dividends given to shareholders in the 12 months to March 31, 2012.
The airport recently concluded a long-running pay dispute with staff after agreeing a pay increase of 2.5 per cent, plus a one-off pro rata payment of £150, which represents the first rise in four years.
The wage bill was cut from £20.8 million in 2011 to £19.9 million last year, as the total number of employees dipped from 566 to 537. Running costs were also cut by 2.9 per cent, to £39.8 million.
However, Mr Kehoe, who took over as chief executive in 2008, saw his pay packet rise from £359,000 to £408,000 after a long-term incentive plan was added and a £100,000 bonus was paid.
An airport spokesperson said, “The airport has made changes to its structure whilst investing in its infrastructure to steer the company in the right direction for long-term growth opportunities that will ultimately support the region’s economy.
“Changes, such as the recent terminal merger which has created a more efficient operation, have helped reduce operating costs to allow the company to invest in its infrastructure even further and attract more people into the region.
"Employees benefited from a bonus during the year but staffing costs overall reduced due to restructuring which led to there being fewer employees; a recent pay award of three per cent has been agreed, backdated to April 1, 2012.
“The CEO, who is the highest paid director, has a contract which includes a long-term incentive plan triggered in the 2011/12 financial year; this was agreed before he joined the company.
"The CEO has not had a pay rise for four years and in fact his bonus and benefits reduced in 2011/2012.”
The airport’s balance sheet also shows a dividend of £9.9 million to shareholders – a prior year final dividend of £6.15 million, at 1.93p per share, and an interim dividend of £3.7 million, at 1.16p per share.
Just less than half of shares are held by Airport Group, a company owned by the Ontario Teachers’ Pension Plan, while a small majority is held among councils in the West Midlands.
The airport processed a total of 8.6 million passengers during the financial year, which represented a 0.9 per cent annual increase – the first rise reported by the airport since 2008/09.
New opportunities will open up for the airport in 2014 when the extended runway mean airlines will be able to fly to the Far East and the west coast of the US but last year Dublin continued to be the most popular destination, closely followed by Dubai and Amsterdam.
Overall, revenue increased by 0.7 per cent at the airport, to £104 million. Aeronautical income fell by 5.6 per cent to £47.6 million, but commercial revenue – from operations like retail and car parking at the airport – rose by 6.6 per cent to £56.4 million.
The directors’ report states: “Following a prolonged period of uncertainty in the UK economy and beyond, Birmingham Airport has seen a return to growth in 2011/12.
“Growth has predominantly come from a recovery in the business sector, with full-service carriers such as Lufthansa, KLM, Brussels and Turkish all experiencing double-digit year-on-year growth.
“This has been helped by factors, including the additional day in February and the non-reoccurance of the volcanic ash cloud and snow which impacted the previous year.”
