Insider Media Limited

Birmingham Airport is back in the black, Insider can reveal. Following a loss-making 2010, the airport secured profit of £4.7m in its year-end results to 31 March 2011. Paul Kehoe, chief executive of the airport, said: "We are seeing a return of the business passenger, but the discretionary leisure market - which is now the bulk of our traffic - remains weak."

Despite the return to profit, the airport suffered a 5.5 per cent drop in footfall over the 12-month period. It attributed the fall to a declining air travel market and the aftermath of the Icelandic ash cloud.

Birmingham Airport made a £4.7m profit after tax at its year-end, a significant improvement on its loss of £153,000 in 2010.

A higher operating profit was the result of lower employee costs and running costs, said the airport.

Turnover was slightly down on the previous year, from £103.9m to £103.1m in 2011. Footfall also fell 5.5 per cent to 8.5 million.

According to financial accounts from the airport's holding company, Birmingham Airport Holdings, the closure of air space during the fall-out of the Icelandic volcano eruption in April 2010 "caused the largest disruption to European civil aviation since World War II".

Kehoe told Insider: "While pre-tax profits increased year-on-year, it continues to be a tough period for the aviation industry. Extreme weather and volcanic activity impacted operations and, although revenue remained flat, good stewardship through tight cost control saw profitability improve.

"Despite passenger numbers being down in 2010/2011, we have continued to invest heavily in infrastructure, including our one terminal facility and a host of new commercial offerings. Work also continues on a new air traffic control tower, which is under construction, and the runway extension project."

However, the holding company's report states that the airport experienced 4 per cent growth in its long-haul traffic division, primarily due to a rise in activity from airlines Emirates, Mahan Air and Turkmenistan Airlines.

Birmingham Airport's network of scheduled EU carriers also grew, with revenues improving by 7.6 per cent over the year. Lufthansa, KLM and Swiss International airlines were named as being among the most profitable carriers at the airport.

However, the holding company said the growth was slightly offset by a 9 per cent decline in the low-cost airline market. In a statement, Birmingham Airport Holdings said the division "has been most affected by the recession and reductions in discretionary spend". Ryanair and BMI Baby were the worst affected carriers at the airport, said the company.

The airport has made gains from a weak Euro on its long-haul flights, said the holding company, as it experienced an increase in traffic to Turkish destinations.

Looking to the year ahead, the airport said it expected to be continually challenged by high inflation levels and high fuel prices. It said these concerns were reflected in "a cautious approach by airlines and limited expansion during 2011/12".

Over the next year, Eurojet Aviation is planning a £5m investment into the site, which the airport said reflected its confidence in the air travel market.

The holding company said: "With this announcement to date and many more opportunities, we are confident that Birmingham will maintain a year of growth in 2012".

Kehoe said: "We expect the immediate future to be tough as the industry continues to face difficult economic conditions. However, the performance of a number of our airlines, including the likes of Emirates and Lufthansa, indicate growth is returning to some sectors. We are seeing a return of the business passenger, but the discretionary leisure market - which is now the bulk of our traffic - remains weak."