BAA faces rise in cost of tunnelling collapse
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.RUSSELL HOTTEN
BAA, the UK airports operator, may face heavier costs over last year's collapse of a rail tunnel at Heathrow after ruling out legal action against Balfour Beatty. But Sir John Egan, BAA's chief executive, refused to say how much the delays in the construction of the Heathrow Express tunnel link would mean to the company.
Insurance payouts will not cover the extra costs and there had been suggestions that BAA might seek to recover money through the courts.
Asked if he would go to court over the matter, Sir John said there was "no conflict" between BAA and Balfour Beatty, the construction company building the rail link. "We are working together. It is a partnership," he said.
He said BAA might not know for another two to three years what additional costs it faced, while talks with the insurance companies are held.
Although building work on the tunnel has now resumed, the opening of the link has been delayed by about six months to mid-1998. He stressed that, even with the delay, the Heathrow Express was a "good profitable project".
There was "a good healthy gap" between the break-even cost of the Express and the return on the project BAA was expecting. The rail link, initially costed at pounds 300m, will take travellers between the airport and Paddington station in west London.
BAA, which yesterday reported a 10.9 per cent rise in half-year profits to pounds 294m, on revenues up 5.8 per cent to pounds 698m, expects the Eurostar train service to take away more passengers next year.
Although passenger defections to Eurostar so far had been smaller than expected - about 1.5 per cent against forecasts of 2-3 per cent - the amount of lost business will rise next year.
Russell Walls, finance director, said Eurotunnel was removing 125,000 passengers a month from BAA's airports. He estimated that BAA passenger growth for the first half of 5.8 per cent would rise to around 7 per cent without competition from Eurotunnel. The lost business was hitting the London-Paris route, with London-Brussels services hardly affected, Mr Walls said.
BAA, which is looking to expand overseas, said it would only enter into international deals if they produced better returns than the UK operations. Friday sees the launch of Australia Pacific Airports Corporation, a venture between BAA and investors in Australia, where the UK company is hoping to buy airports being privatised.
Investment Column, page 22
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments