Air traffic warning for the CAA

AIRPORTS operator BAA has warned the Civil Aviation Authority that it will help bail out crisis stricken air traffic control system NATS only if the regulator allows the network to raise its prices.

NATS, which requires a £30m Government bailout, and the Civil Aviation Authority are arguing over a price increase worth just £28 for every jumbo handled by the system.

BAA chief executive Mike Hodgkinson said: 'We're not being greedy. We can only invest if the returns cover our cost of capital.' He is already battling the CAA over airport charges, which he wants to raise to pay for an £8.1bn 10-year investment programme.

Hodgkinson expects a decision by the end of the year and is hopeful. BAA predicts passenger numbers at Heathrow, Gatwick and Stansted will soar nearly 50% over 10 years to 420,000 a day.

Profits in the year to March plunged 42% to £318m pre-tax, due to disposal write-offs and the air travel slump caused by foot-and-mouth and 11 September. But shop sales rose 2% as budget travellers spent more at airports.

'Low-cost airline passengers aren't poor people,' said Hodgkinson. 'They're rich people who have just saved a lot of money on their fare.'

Dividends rise 3.4% to 18.3p. The shares jumped 4p to 616p, or 18-times likely earnings, yielding 3%. The 'war on terrorism' will cost it an extra £30m this year in additional security and insurance.