British airports operator BAA said the downturn weighed on passenger numbers in the first quarter as building costs at Heathrow contributed to a steep loss, though its air-side stores did good business.
The operator of Heathrow and Gatwick airports said numbers fell a greater-than-expected 10 per cent and it now had a "slightly more cautious" outlook on passenger traffic than previously.
But it reiterated hopes for a rise in underlying profit this year, underpinned by a strong performance by its retail operations.
The company, owned by Spain's Grupo Ferrovial SA, said its planned sale of Gatwick - ordered by regulators to meet competition concerns and where passenger numbers fell more than the average - was due to be announced within weeks.
BAA's pretax 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 and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 27.9 per cent due to higher tariffs, a strong retail performance and cost controls.
Passenger numbers at BAA's airports fell to 24.8 million, with Gatwick and Stansted airports falling the most at 14.6 per cent each.
Chief executive Colin Matthews said that the fact that the overall quarterly decline was similar to the fourth quarter could indicate the fall in traffic had flattened out, though that remained to be seen.
"(But) one of things that these results really underline is how different the business model is at Heathrow. What Heathrow can do as a hub is compensate with more transfer traffic," he said.
Gatwick airport was put up for sale last year to meet competition concerns and BAA was subsequently also ordered to sell London's Stansted and either Edinburgh or Glasgow airports.
Analysts have said they doubt Gatwick will fetch a big premium to its £1.6 billion regulated value as air traffic slumps and scarce debt funding hindered bidders.
Parent Ferrovial, which had net debt of €24.1 billion at the end of 2008, is expected to post a 5.7 per cent drop in first-quarter core earnings after the market in Madrid closes today, pressured by a drop in traffic at its airports and motorways as well as high financial costs.
Agencies