Heathrow increases its debt by almost £1 billion (total net debt £13.7 bn) to protect it from a worst-case scenario Brexit
Heathrow’s CEO John Holland-Kaye has raised nearly £1bn in debt to keep it going through a “worst-case scenario” following a hard Brexit. He said this was equivalent to 2 full years’ funding, to give the airport the level of financial resilience for a worst-case scenario. He said he expected “something close to continuity” through a Brexit agreement, but “our funding levels . . . mean we are protected. Even if we have no income for two months, we would be financially safe.” The debt deals, primarily refinancing, total £981m and take Heathrow’s total net debt to £13.7bn. A financial commented that this was an attitude of “let’s raise it while we can”, and a hard Brexit might raise fears over access to financial markets. Heathrow’s first half financial results showed a 2.3% increase in total revenue to £1.4bn compared with the 2017, but a 7% fall in pre-tax profit to £289m. Heathrow had spent money on more operational investment, such as in facilities for disabled passengers and in keeping the airport going during snows this winter. Passenger numbers rose 2.5% to 38.1m, its busiest ever first half, by use of higher load factors. Heathrow expects to spend £160m this year on the expansion project.
.
Tweet
Heathrow raises £1bn debt as it prepares for Brexit
Airport reports rise in revenues but pre-tax profit falls
Passenger numbers at Heathrow climbed 2.5% to 38.1m, making it the airport’s busiest ever first half
24.7.2018
By Josh Spero (Financial Times)
Heathrow airport has raised nearly £1bn in debt to keep it going through a “worst-case scenario” following a hard Brexit, its chief executive has said.
John Holland-Kaye said this was equivalent to two full years’ funding: “That gives us a level of financial resilience that means we’re well protected in case of whatever worst-case scenario we can envisage.”
He said he expected “something close to continuity” through a Brexit agreement, but “our funding levels . . . mean we are protected. Even if we have no income for two months, we would be financially safe.”
The debt deals, primarily refinancing, total £981m and take Heathrow’s total net debt to £13.7bn.
One analyst, who did not wish to be named, said this was an attitude of “let’s raise it while we can”, adding that a hard Brexit might raise fears over access to financial markets.
Mr Holland-Kaye said he was hoping pragmatism would prevail in the Brexit negotiations to keep “the good things we have, one of which is open access to flights between the UK and Europe. It would be suicidal for both sides to sacrifice that.”
Mr Holland-Kaye was speaking on Tuesday as Heathrow announced its first-half results, which showed a 2.3 per cent increase in total revenue to £1.4bn compared with the previous year, but a 7 per cent fall in pre-tax profit to £289m.
He ascribed the fall in profit to increased operational investment, such as in facilities for disabled passengers and in keeping the airport going through snowstorms earlier this year.
Passenger numbers rose 2.5 per cent to 38.1m, its busiest ever first half.
In June, Heathrow received parliamentary approval to build a third runway as part of its £14bn expansion project. Last week five London councils, joined by Sadiq Khan, mayor of London, and campaigning organisation Greenpeace announced they would launch a judicial review of the decision.
In its results, the airport said it expected to spend £160m this year on the expansion project.
https://www.ft.com/content/ceb7d6ce-8f55-11e8-bb8f-a6a2f7bca546
.
.
.
Heathrow’s financial results 2018
Financial results for six months ended 30 June 2018
- Download the full press release (780KB PDF)
- Download the full presentation (4MB PDF)
Financial results for three months ended 31 March 2018
- Download the full press release (784KB PDF)
- Download the full presentation (3MB PDF)
- Listen to audio recording (10.3MB MP3)
https://www.heathrow.com/company/investor-centre/results-and-performance/financial-results
.
.