Willie Walsh says Heathrow’s 3rd runway will never be built. Covid was its final straw …
Willie Walsh, head of IAG (parent company of British airways) has been a long standing opponent of a 3rd Heathrow runway. That is because it would provide more space for airline competitors of BA, and it would put up landing charges – deterring BA passengers using Heathrow. Now, with the Covid pandemic, he says plans for a 3rd runway should be abandoned totally. He does not expected air travel to return to 2019 levels until at least 2023, as there will be less demand for business and leisure travel, and people will continue to be afraid of contracting the virus. The only way to prevent more disease being brought into the country by returning air passengers is to ensure they are fully in quarantine for 14 days after their return. That would deter most air travel, if quarantine was fully enforced. Willie Walsh is also opposed to the runway plans, and it would mean compulsory purchase of BA’s office building, Waterside. (Walsh jokingly says he is ready to sell it to Heathrow tomorrow … but it not expecting they will ask any time soon). Walsh cannot see Heathrow being able to raise the necessary finance for a runway, which means adding to its already vast debt.
Heathrow will not get a third runway, British Airways boss says
Willie Walsh of BA’s parent firm IAG dismisses hopes of expansion
By Oliver Gill and Simon Foy (Telegraph)
7 May 2020
A third runway at Heathrow Airport will have to be abandoned after the coronavirus crisis grounded planes worldwide, the boss of British Airways’ parent firm has said.
The decades-old expansion plan has been dealt a shattering blow as passenger numbers slump due to the pandemic, according to IAG boss Willie Walsh.
Mr Walsh also warned that a proposed 14-day quarantine for all passengers coming to Britain would destroy BA’s hopes of a meaningful return to the skies this summer.
He does not expected air travel to return to 2019 levels for at least four years, and BA has said it will lay off 12,000 staff to cope.
Mr Walsh, a longstanding opponent of a third runway which would mostly be used by his competitors and would be built over the current site of BA’s headquarters, spoke out as Heathrow won permission to challenge a block on its expansion in the UK’s highest court.
He said: “What I can tell you is: there isn’t going to be a third runway.
“If Heathrow wants to build a third runway, they are going to have to acquire Waterside, which is the British Airways head office. We’ll sell it to them tomorrow. We’ll sell them Waterside. I suspect they won’t be rushing over here to shake my hands.”
The Court of Appeal concluded in February that ministers failed to take account of the Government’s commitments to tackling climate change when they gave Heathrow’s £14bn expansion plans the go-ahead.
But just one day after the airport’s boss John Holland-Kaye admitted the third runway may not become a reality for another 10 to 15 years, the Supreme Court granted Heathrow permission to challenge the ruling.
Mr Walsh, who announced he would step down as the boss of the FTSE 100 company on Sept 24, has been a vocal critic of Heathrow’s plans and warned in October that the airport’s expansion was unlikely to go ahead.
He said that the coronavirus pandemic would torpedo any remaining hope, adding: “I think it is impossible now.
“If you look at the debt that it currently has and the refinancing it is going to have to do to deal with that debt… The ability to raise additional debt to finance the expansion of Heathrow – I just don’t see how they are going to do it.”
A spokesman for Heathrow said: “We do believe that once the benefits of air travel and connectivity have been restored in years to come, an expanded Heathrow will be required.
“This privately funded project will see billions of pounds pumped into the UK’s economy, stimulating sectors across the country and creating tens of thousands of new jobs.” [They would say that, wouldn’t they? All very speculative. All rather unlikely – even by the DfT’s own figures of alleged future economic benefit. AW comment]
Jock Lowe, of rival scheme Heathrow Hub said: “Some sort of expansion is likely to be required. Throughout this entire process we have argued for incremental expansion via our own extended northern runway proposal, deemed viable by the Airports Commission. It is far cheaper and simpler to construct.” [Jock’s scheme would also be hugely damaging and disruptive; it would create vastly more plane noise and carbon emissions; and also the problems of air pollution etc. It is scarcely any less damaging that Heathrow airport’s own scheme. AW comment]
IAG is hopefully that British Airways can planning a “meaningful return” to the skies in July.
The FTSE 100 firm said further restructuring will be needed as passenger demand is unlikely to hit 2019 levels for another three years at least. Airline bosses have also been unnerved after proposals for all arrivals in Britain to face a fortnight’s quarantine were floated in off-record briefings.
Mr Walsh said: “If there is a 14-day quarantine, I wouldn’t expect us to be doing any flying in that situation.
“If the UK Government introduces a 14-day quarantine I don’t think there will be leisure or business recovery. I can’t see an environment where people want to fly into the UK if they are forced to quarantine for 14 days.”
Last week IAG said BA would cut 12,000 jobs, including around a quarter of its pilots.
Rivals Virgin Atlantic and Ryanair are axing up to 3,000 employees each as demand plummets.
The gloomy outlook for airlines has raised fears that the era of cheap mass air travel could be over.
Mr Walsh said: “We do not expect passenger demand to recover to the level of 2019 before 2023 at the earliest. This means group-wide restructuring is essential in order to get through the crisis and preserve an adequate level of liquidity.”
The update came as IAG sank to a €1.9bn (£1.7bn) pre-tax loss for the three months to March 31, which compared with an €86m profit for the same period last year. Revenues fell 13pc to €4.6bn.
IAG said coronavirus was having a devastating impact on global air travel, adding that it expects its second quarter to be significantly worse than an already bleak first one.
UK taxpayer loan
The firm tapped the Government’s Coronavirus Corporate Finance Facility loan scheme for the largest companies for £300m in April to bolster its finances, taking its state-backed funding to about £1.2bn including support for Spanish operations.
Passenger numbers have fallen by 94% since late March with most aircraft grounded. The company has kept some planes airbourne for operating limited passenger, repatriation and cargo flights.
Even with a “meaningful return to service” in July, the business said overall passenger capacity will fall by about 50pc this year.
It warned that the plan to resume flying is still highly uncertain and depends on whether lockdowns and travel restrictions are relaxed.
A string of countries have banned international flights altogether or imposed quarantines on visitors that make holiday and business travel almost impossible.
Airlines around the world are struggling to survive the crisis, or relying on government bailouts to weather the storm.
On Monday, the European Commission approved the French government’s €7bn bailout of Air France-KLM. Lufthansa expects to finalise terms of a bailout from the German government in the coming days.
Bailouts have angered some airline bosses including Ryanair’s Michael O’Leary and Mr Walsh, who have been staunch opponents of state aid for years.
Mr O’Leary last week hit out at multibillion-euro packages to support Air France and Lufthansa, saying it would unfairly make previously weak airlines into the strongest players while formerly rock-solid Ryanair is left among “the cripples”.
Shares in IAG fell 2.5pc to 191p. The stock is trading about 70pc below its pre-crisis price in mid-February.