Heathrow losses soar to £3.4bn: Recovery delayed until at least 2026

Heathrow pandemic losses soar to £3.4bn with Britain’s busiest airport not expected to recover until ‘at least’ 2026

  • Heathrow’s nine-month 2021 losses rise by 35.9% on 2020 levels to £1.1bn 
  • Passenger numbers remain at 28% of 2019 levels despite ‘pent-up demand’
  • Airport lashes out at airline watchdog’s customer price cap proposals  

Heathrow passenger numbers remained at 28 per cent of 2019 levels in the third quarter of 2021, with the airport warning it does not expect traffic to fully recover until ‘at least’ 2026.

Britain’s busiest airport has now lost £3.4billion since the start of the Covid-19 pandemic and losses continue to mount, rising by 36 per cent in the first nine months of 2021, compared to the same period last year, to almost £1.1billion before tax.

Heathrow told investors that the losses mounted despite efforts to cut 30 per cent of operating outgoings during the period, but reassured them of its ‘financial strength’ with £4.1billion of cash in reserve.

Heathrow passenger numbers were 28% of 2019 levels in the third quarter of 2021

In proposals published last week, Britain’s Civil Aviation Authority refused to allow Heathrow to hike the cap for its customer charges from the current level of £22 to up to £43, and instead insisted it limits the rise to a maximum cap of £34.40.

Heathrow criticised the CAA’s proposals, which it said ‘do not go far enough to ensure financeability [sic]’.

It argued that the airport had been ‘transformed’ through private investment but that Heathrow shareholders ‘have achieved negative returns in real terms over the last 15 years’.

Heathrow added: ‘The CAA’s…[proposals] do not go far enough to ensure that investors can achieve a fair return in H7 which is key to securing future private investment in passenger service and resilience for Britain’s hub airport.’

However, Heathrow did point to ‘strong pent-up demand’ as travel restrictions eased, while there was positive news on cargo traffic, which is now at 90 per cent of pre-pandemic levels.

It said: ‘As travel restrictions are lifted and demand to fly increases, we are moving into the recovery phase of our response to Covid-19.

‘This presents an opportunity to create an environment where passengers feel safe and confident to fly comfortably.

‘The steady build in passenger numbers and further lifting of travel restrictions puts Heathrow on the path to recovery. To ensure that we can meet this demand, we have been operating with two runways since early Summer and Terminals 2, 3 and 5 are fully operational.

Heathrow CEO John Holland-Kaye insists the airport is 'on the cusp of a recovery'

Heathrow CEO John Holland-Kaye insists the airport is ‘on the cusp of a recovery’

‘This provides additional capacity and ensures passengers can travel safely and securely through Heathrow.

‘As the number of passengers increases, we are removing some social distancing requirements in our terminals’.

In addition, the airport praised the UK Government’s recent mandate on sustainable aviation fuel, which is hoped to represent at least 10 per cent of use by 2030 amid a £300million UK production funding programme.

It said the mandate ‘provides leadership by example to other world leaders ahead of the COP26 summit in Glasgow’, and urged the Government ‘to set higher mandate levels for 2050 and provide a price stability mechanism, such as contracts for difference, to scale up supply as fast as possible’.

CEO of Heathrow John Holland-Kaye said: ‘We are on the cusp of a recovery which will unleash pent-up demand, create new quality jobs and see Britain’s trade roar back to life – but it risks a hard landing unless secured for the long-haul.

‘To do that, we need continued focus on the global vaccination programme so that borders can reopen without testing; we need a fair financial settlement from the CAA to sustain service and resilience after 15 years of negative real returns for investors; and we need a progressively increasing global mandate for Sustainable Aviation Fuels so that we can protect the benefits of aviation in a world without carbon.’

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