Ferrovial is still counting on a three-fold increase in profits at BAA, over the next four years. Even Heathrow, probably by common verdict Europe's worst airport, should see profits increase four-fold as more and more passengers are forced, however reluctantly, through its doors.

Ferrovial's aggressive forecasts for profits at Heathrow and its other BAA airports should come as no surprise. After all, the fact that BAA's investors, led by Ferrovial, were prepared to pay a hefty premium in June 2006 to acquire the airport group revealed that the outsiders had exceedingly high expectations of what they could achieve with these assets.

What is surprising is that almost two years into ownership, and following a catalogue of problems, Ferrovial is still so aggressive in its forecasts. The regulatory settlement it achieved with the CAA in March is key to this. The regulator was considerably easier on BAA than it could have been, after robust lobbying from the airport group.

That settlement has clearly filled the company with confidence that it can continue to push the group's margins from a mere 12 per cent to in excess of 35 per cent in three years. The fact that one investor - Canadian Caisse De Depot et Placement du Quebec - has also cashed-out, in part, realising a 15 per cent gain, will give confidence in the long-term value of the assets.

Meanwhile Collin Matthews, the recently arrived chief executive of BAA, has not baulked at Ferrovial's targets. Mr Matthews is an old hand with regulated businesses and will know lots of tricks for improving margins and convincing regulators to go easy. The new chief executive's grip on the business is also being felt in other ways, not least yesterday's departure of Mike Bullock, the managing director of Heathrow. Mr Bullock's departure should spell the end for the revolving door at BAA, which has seen a long line of senior directors leaving the airport group.

The remaining team still faces several major hurdles to pulling off their £10 billion refinancing this summer and the prevailing difficult market conditions may yet prevent this from happening. As for operations, BAA is about to enter its busiest period. if it is to go anyway towards achieving these forecasts it can not afford any more operational problems this summer.

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