BBA reports strong cashflow as it faces tough year

The group’s flight support services include refuelling, cargo handling, ground handling and other services to the business and commercial aviation markets, and its aftermarket services and systems activities include the overhaul of jet engines, supply of aircraft parts, design, manufacture and overhaul of landing gear, aircraft hydraulics and other aircraft equipment. In 2008, sales increased by 18% to £1.2 billion (2007: £979m) while pre-tax profits fell 24% to £84.2 million (2007: £111m). Flight support operations, which generate 54% of the group’s earnings, delivered a good performance in a challenging market and gained market share in the second half of the year, BBA said. In aftermarket services and systems, APPH (pictured) generated good growth on slightly reduced margins due to increased OEM content but was impacted in the second half of the year by weakness in the regional aircraft market in the USA. Chief executive Simon Pryce said that despite 2008 being challenging, trading was in line with expectations and cash flow was particularly strong. He went on: “Although we have benefited from the relative strength of the US dollar, especially in the last quarter, our performance in 2008 demonstrates the underlying strength and cash generative nature of our businesses, the balance in our portfolio and the benefits of ongoing management action. We enter 2009 with sufficient financial flexibility and the vast majority of our bank debt is committed until 2012. However, markets remain volatile with limited visibility and we anticipate a difficult year. We have already taken actions in early 2009 to reduce our annual cost base by a further £10 million and we will continue to flex operating costs as necessary. Our primary focus remains strong cash generation and debt reduction. Due to our confidence in achieving this, the excellent long term prospects for BBA Aviation and our ability to perform robustly in these difficult markets, we will be maintaining the full year dividend and will be positioned to benefit from the recovery when it comes."