The crisis at London's airports saw BAA slump £1.3 billion into the red last year with its underlying performance crashing by 23%.

Despite increasing charges to airlines and their passengers and the fact that spending in the retail malls of Heathrow, Gatwick and Stansted is holding up, BAA's performance was wracked by soaring operating costs and ballooning borrowing charges.

The 2008 financial results could be the last for BAA in its current guise. The airports group, bought by the Spanish construction group Ferrovial in a controversial £15 billion deal in 2006, is already being broken up, with Gatwick, its second-largest business, up for sale.

Its third-biggest airport Stansted could follow Gatwick out of the door after the Competition Commission finalises its investigation into BAA. The regulator has already ruled that BAA's control of London's three major air hubs is anti-competitive.

A third airport could yet leave the BAA hangar, as the Commission has signalled it believes BAA's ownership of Scotland's two biggest airports, Edinburgh and Glasgow, is also anti-competitive.

BAA today refused to comment on whether the for sale sign is going up on Stansted, home to budget airline Ryanair. It said instead it may mount a legal challenge to the Commission's expected final verdict, due in mid-March, that the Essex airport should be sold.

Of BAA's airports — it also owns Southampton and Aberdeen — the three London airports increased revenues by 16% to £2.2 billion on the back of a regulated jump in the fees it charges airlines and an underlying 2.9% increase in retail spend.

However, its operating costs surged by 28% due to staffing costs, rent and rates, maintenance and energy bills. That saw the London airports' operating profits slump to £364 million from £435 million. A tripling on interest payments on its parent's debt mountain, which totals £12 billion, saw the three airports post losses for the year of £688 million against £222 million in 2007.
BAA's passenger numbers fell 2.7% but are dropping far faster this year.

Chief executive Colin Matthews said: “2009 is expected to be a challenging year with the economic environment expected to have a continued impact on passenger traffic.”