Heathrow removing cap after summer of growth – Results for 9 months ended 30 Sept 2022

posted on 26th October 2022 by Eddie Saunders
Heathrow removing cap after summer of growth - Results for 9 months ended 30 Sept 2022

Heathrow served 18 million passengers this summer, more than any other European hub, in spite of being hit harder than European rivals during lockdown.

Heathrow has announced that they are removing the cap from 30 October and working with airlines to agree a highly targeted mechanism that, if needed, would align supply and demand on a small number of peak days in the lead up to Christmas.

This would encourage demand into less busy periods, protecting the heavier peaks, and avoiding flight cancellations due to resource pressures.

While demand is stronger, it is not fully recovered – We forecast that total passenger numbers for 2022 will reach between 60 – 62 million, approximately 25% fewer than 2019.

Headwinds of a global economic crisis, war in Ukraine and the impact of COVID-19 mean we are unlikely to return to pre-pandemic demand for a number of years, except at peak times.

Heathrow priority is to build back the airport eco-system to meet demand at peak times – To do so, businesses across the airport need to recruit and train up to 25,000 security cleared people – a huge logistical challenge.

We are supporting, including establishing a recruitment taskforce to help fill vacancies, working closely with the Government on a review of airline ground handling and appointing a senior operational executive to invest in joint working.

The airport underlying losses have increased to £0.4bn in the year to date as regulated income fails to cover costs, adding to the £4bn in the prior two years.

We have acted responsibly in the face of an uncertain market to protect liquidity and cashflow and reduced gearing. We are not forecasting any dividends this year.

The experience this summer has shown that airlines will charge what the market will bear, regardless of how low the level of airport fees are.

That may be commercially rational, but what consumers tell us they value is a smooth and predictable journey through the airport.

Our response to the CAA’s Final Proposals on the H7 regulatory settlement has highlighted a number of errors which, if uncorrected, would result in insufficient investment in the service of current and future consumer needs.

Heathrow CEO John Holland-Kaye said: “We can be proud that everyone at Heathrow pulled together to serve consumers this summer – ensuring 18 million people got away on their journeys, more than any other airport in Europe, with the vast majority experiencing good service.

“We have lifted the summer cap and are working with airlines and their ground handlers to get back to full capacity at peak times as soon as possible.

“As we look to the future, we encourage the CAA to think again at stimulating the long-term investment that will deliver the smooth and predictable journeys consumer value most, rather than focusing on short-term pricing which we have seen only benefits airline profits.”

At or for 9 months ended 30 September 2021 2022 Change (%)
(£m unless otherwise stated)      
Revenue 695 2,106 203.0
Cash generated from operations 326 1,252 284.0
(Loss)/Profit before tax (1,384) 643
Adjusted loss before tax(2) (1,068) (442) 58.6
Adjusted EBITDA(1) 117 1,252 970.1
Heathrow (SP) Limited consolidated nominal net debt(3) 13,332 14,514 8.9
Heathrow Finance plc consolidated net debt(3) 15,440 15,623 1.2
Regulatory Asset Base(4) 17,474 18,674 6.9
Passengers (million)(5) 10.2 44.2 335.0