Airports operator BAA saw a 10 per cent drop in passenger numbers and suffered a sharply higher loss in the first quarter, the company said yesterday, as the recession hits air travel.

The operator of Heathrow and Gatwick airports said its outlook in terms of passenger numbers was "slightly more cautious" than its previous forecast, but reiterated its hopes for a rise in underlying profit this year on a strong retail performance. The unit of Spain's Grupo Ferrovial said its pre-tax loss reached £316.2 million after one-off costs from building Heathrow's Terminal 5 and from losses on derivatives contracts, compared with a loss of 55.6 million in the same period last year. Revenue rose 15.5 per cent.

Passenger numbers plummeted 10 per cent to 24.8 million with Gatwick and Stansted falling the most at 14.6 per cent apiece.

It also said the planned sale of Gatwick was due to be announced within weeks. Gatwick airport was put up for sale last year to meet competition concerns and BAA was subsequently also ordered to sell Stansted and either Edinburgh or Glasgow airports.

Parent Ferrovial is expected to post a 5.7 per cent drop in first-quarter core earnings after the market in Madrid closed yesterday, pressured by a drop in traffic at its airports and motorways as well as high financial costs.