UK. Travel retailer and caterer Alpha Airports Group said today that it expects its underlying 2004/5 profit will be some ₤2.5 million below current market expectations. The fall is down to a combination of the 26 December tsunami’s impact on Alpha’s business in Sri Lanka and the Maldives and heavy investment elsewhere.
Alpha plans to announce results for the year ended 31 January 2005 on 31 March.
Alpha has been pursuing several business expansion initiatives. These have required increased revenue and capital investment in new projects, resulting in additional costs to fund the growth opportunities in the short term.
Its Flight Services’ projects in Australia and Holland have incurred higher than anticipated costs. In Australia the company incurred greater than expected start-up and operating losses at its newly-commissioned Brisbane, Sydney and Melbourne flight kitchens.
As a result of current low capacity utilisation levels, losses will continue to be incurred until the company secures additional business in 2005/6 and beyond. Alpha said it was confident that it will win new airline customers for these high quality flight kitchens.
Following significant contract changes announced early in 2004, Alpha’s Holland Flight Services business has undergone substantial change. The company has incurred “greater than expected” short-term operating losses, and has therefore implemented a redundancy programme at an exceptional cost of ₤1.6 million.
More positively, trading elsewhere in the group has been satisfactory. The retail businesses have continued to perform very well with like-for-like annual sales up over +11%.
The company had been expecting a tough year in its UK Flight Services business given the loss of the Air Canada contract from August at London Heathrow. However, with the American Airlines contract win announced in November, the launch of the Blue Sky meal service with MyTravel Airways, and the new contract win with Excel Airways at London Gatwick and across the UK, Alpha said it ended the year with a strong recovery in progress.
The Flight Services business in Jordan also had a good recovery year, and the European Inflight Retail business also continued to grow strongly, with sales up over +20% in the year.
For the new financial year 2005/6, the Asian Tsunami will continue to have a negative effect on the company’s Sri Lankan and Maldivian retail businesses. Alpha said: “It is still too early to predict the short-term timing or scale of what is an assured eventual tourism recovery.”
The current year’s expanded investment in development projects, whilst incurring costs in the short-term, is underwriting the significant growth that the company are anticipating in the new financial year, 2005/6.
However, due to ongoing losses in the newly commissioned Australian flight kitchens and the potential impact of the Tsunami disaster, the Board has reduced its expectations for the Group’s results for the new financial year 2005/6 by around ₤2.5 million.
MORE STORIES ON ALPHA
Alpha Asia Heroes to proceed despite tsunami – 25/01/05
Alpha launches the “˜Love Machine’ as it drives up average spend at Birmingham Airport – 25/01/05
