In-flight caterer and airport retailer Alpha Airports warned today that troubles at its new operations in Australia and Holland are set to knock a £2.5m hole in its profits for the year.
The company, which will announce its full-year results on 31 March, said while the operations in the two contracts had won some important contracts, costs had been higher than anticipated in the final six months of the year.
"In Australia we have incurred higher than expected start-up and operating losses at our newly commissioned Brisbane, Sydney and Melbourne flight kitchens," it said in a trading update.
"As a result of current low capacity utilisation levels, losses will continue to be incurred until we secure additional business in 2005/6 and beyond," it added.
In Holland the company has begun a £1.6m redundancy programme and set aside £4m to cover losses on equipment and other assets.
While the company was anticipating "significant" growth in 2005/6, the ongoing losses in its Australian kitchens and the potential impact of the Tsunami disaster, meant Alpha also warned on its 2005/6 results.
Figures for that year were likely to be around £2m below current expectations, it said.
Elsewhere during 2004 the financial picture had been "satisfactory", said Alpha.
The retail businesses had reported an 11% hike in annual like-for-like sales.
And the UK flight services business had done better than expected, riding out the loss in August of an Air Canada contract from London Heathrow.
It had since won an American Airlines contract in November, launched a Blue Sky meal service with MyTravel Airways and landed a contract with Excel Airways at London Gatwick and across the UK.
"We end the year with a strong recovery in progress," said Alpha.
Its Jordan flight services business also reported business recovering and the European in-flight retail business saw sales rise more than 20% during the year.
Nevertheless, the Asian Tsunami would continue to have a negative impact on its businesses in Sri Lanka and the Maldives, it added.
by Nic Paton
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