Heathrow cutting 200 jobs (20% of total core staff) due to CAA restriction on landing charge rises

Heathrow Airport is planning to cut 20% of its core workforce despite turning its first profit since 2006 and said it is undergoing a “major” restructuring.  Its full-year results statement showed it made a £426m pre-tax profit last year, up from a £33m loss previously, helped by the £1.5bn sale of Stansted in February 2013. Heathrow says it is making the staff cuts due to the CAA not allowing it to increase landing charges, though  Heathrow can appeal till March 27th.  These will be reduced in real terms by 1.5% below the rate of inflation every year until 2019. Colin Matthews said the cuts are likely to affect around 200 staff but no front-line roles, such as security, will be affected. Heathrow employs 7,000 people in total but 1,000 of those roles are part of its “central” head office structure, which is where the job losses are, partly due to having sold off its other airports. In 2013 Heathrow’s revenue rose 11.3%to £2.5bn, and it had 72.3 million passengers, though that is far below earlier forecasts for 2013 traffic.  Excluding money from selling Stansted, Heathrow’s EBITDA rose 23.1% in 2013 to £1.4bn.  The number employed by Heathrow Airport Ltd in 2012 was 5,278 (compared to 5,265 in 2011 and 5,148 in 2010).  


Heathrow cutting 200 jobs to meet “draconian” CAA ruling

Heathrow Airport said it is undergoing a “major” restructuring despite making its first profit since 2006.

Colin Matthews, chief executive of Heathrow, said the opening of the new Terminal 2 in June will “be another major step in the transformation of Heathrow”. 

By , Transport and Leisure Correspondent  (Telegraph)

24 Feb 2014

Heathrow Airport is planning to cut a fifth of its core workforce despite turning its first profit since 2006.

The airport said it is undergoing a “major” restructuring in its full-year results statement on Monday, which showed that it swung to a £426m pre-tax profit last year from a £33m loss previously, helped by the £1.5bn sale last February of Stansted Airport.

It is the first year Heathrow has generated a profit since it was taken over in 2006 by a consortium led by Spanish infrastructure group Ferrovial.

Despite the profit boost, the airport is cutting costs to meet what it has previously described as a “draconian” ruling by the Civil Aviation Authority that it must reduce charges for airlines in real terms from April.

Colin Matthews, Heathrow’s chief executive, said the cuts are likely to affect around 200 staff but no front-line roles, such as security, will be affected.

Heathrow employs 7,000 people in total but 1,000 of those roles are part of its “central” head office structure, which is the focus of the restructuring.

“We are talking about people who used to work in our headquarters,” Mr Matthews said. “We used to be a company that ran more airports. We have been reducing the costs and we need to do so significantly now to get in line with the amount of money we are allowed to make from airlines.”

From April, Heathrow’s airport charges – which are typically passed on to passengers through higher ticket prices – will be reduced in real terms by 1.5pc below the rate of inflation every year until 2019.

The airport is currently examining whether to appeal the CAA’s ruling but has already started to push through a cost-cutting programme, which has also involved management agreeing to pay freezes. Heathrow and airlines have until March 27 to appeal the CAA’s ruling, which was handed down last month.

Heathrow’s revenue rose 11.3pc to £2.5bn in 2013, as more than 72 million passengers passed through its doors for the first time in its history.

Passenger numbers hit 72.3m, up 3.4pc on 2012, although the figure is still far short of the 78m passengers the hub had been forecast to reach by the CAA.

Passenger numbers were boosted by airlines using larger jets and higher load factors – a measure of how many seats on a flight are occupied.

Heathrow saw 470,000 flights take off or land from its two runways last year, 10,000 fewer than its legal limit.

The hub said it is refining its proposals for a third runway to the north-west of its current site, after the plan was short-listed by the Government-backed Airports Commission, which will recommend next year where to build extra runway capacity in the south east of England.

Stripping out the contribution of last year’s sale of Stansted to Manchester Airports Group and other exception items, Heathrow’s earnings before interest, tax, depreciation and amortisation (Ebitda) rose 23.1pc to a record £1.4bn which, Mr Matthews pointed out, is “just a touch bigger” than the £1.3bn invested in improving the airport’s facilities last year.

In June, Heathrow will open a new Terminal 2 building which will be home to 26 airlines.

Heathrow has reportedly received an offer from Ferrovial to buy its three remaining regional airports, Aberdeen, Glasgow and Southampton.

Mr Matthews declined to comment on the sale process other than to say that “ultimately shareholders will decide whether they want to keep those airports or not”.




See also report by Optimal Economics in 2011:

This states:
“Heathrow Airport is one of the largest employment sites in London with over 76,600 people working within the Airport boundary creating gross value added (GVA) of almost £3.3 billion.
A further 7,700 people are employed in the local area (Hillingdon, Hounslow, Spelthorne, Ealing and Slough) in activities which are directly related to the Airport but who work outside the Airport boundary.
GVA of £0.3 billion is supported by these jobs.
2. There are further indirect and induced jobs supported in the local area, London and elsewhere in the UK through the purchases of goods and services and through the expenditures of employees. Table 1 provides a summary of the total employment and 
GVA supported by the Airport.
3. A total of 114,000 jobs and GVA of £5.3 billion is supported in the local area by the operation of Heathrow Airport. These jobs represent approximately 22% of total employment in the local area. That is, one in five jobs in the local area is dependent on the Airport.
4. In London, some 136,600 jobs and GVA of £7 billion are supported by Heathrow. Heathrow related employment and GVA accounts for approximately 3.4% of total jobs in
London and 2.6% of GVA.
5. Across the UK as a whole, Heathrow supports almost 206,000 jobs and GVA of almost £9.7 billion. That is, Heathrow related GVA accounts for 0.8% of UK GVA. This is a
considerable contribution to the UK economy from a single employment site.”



The airport sustains approximately 76,600 jobs directly and around 116,000 indirectly in the immediate area (source of the data unclear).
Companies have a legal duty to publish, in their annual reports, the average number of employees (full time equivalents) during the financial year.  Heathrow Airport Ltd (HAL) employees are actually employed by a holding company, BAA Airports Ltd but, even so, the HAL annual accounts state the average number of employees at Heathrow.
HAL’s 2013 accounts have not yet been filed with Companies House but for 2012 the number was 5,278 (compared to 5,265 in 2011 and 5,148 in 2010).These numbers are, of course, only those directly employed by BAA/HAL.  Many more people are employed directly on site and indirectly and, in July 2013, HAL produced an estimate of 114,000 local jobs supported by Heathrow of which 76,600 were directly employed on the Heathrow site. http://www.heathrowairport.com/static/Heathrow/Downloads/PDF/a-new-approach_LHR.pdf
The actual numbers employed at Heathrow are complicated by the fact that “Heathrow Airport Ltd”  now says: “The Company has no direct employees. The staff are employed by LHR Airports Limited, a fellow subsidiary entity of the Heathrow Airport Holdings Group.”
The Heathrow Airport Ltd accounts contain employment costs, but state that: “Employment costs include recharges from LHR Airports Limited for employee services to the Group‟s business.”  link

Heathrow (SP) Limited Results for the year ended 31 December 2013
is at http://mediacentre.heathrowairport.com/imagelibrary/downloadmedia.ashx?MediaDetailsID=2064&SizeId=-1