Gatwick made a £465.5m loss in 2020 as passenger numbers collapsed due to Covid
Gatwick Airport made a £465.5m loss in 2020 due to Covid. While the airport remained open all of 2020, passenger numbers fell by 78% as lockdowns and travel restrictions took their toll. All its revenue streams were affected and its loss before interest, tax, depreciation and amortisation (EBITDA) was £25.1m. The airport cut over 40% of its workforce as a result of the travel slump. The airport’s CEO Stewart Wingate wants the government to provide further financial support by extending the furlough scheme and providing full business rates relief for airports for the current financial year, not just the £8 million on offer. Gatwick said it reduced operating costs by £140m last year and deferred more than £380m from the investment originally planned for 2020 and 2021. In April 2020 it got a £300m loan from a consortium of banks, and it has had £250m under the Bank of England’s Covid Corporate Financing Facility. It has been granted a waiver to address breaches in Financial Covenants at 31 December, 2020. In December it had liquidity of £573m to meet cashflow, investment levels and interest payments for this year.
This is the Gatwick press release:
Gatwick publishes 2020 annual results, with renewed optimism for international travel to return in Summer 2021 whilst maintaining its financial resilience
Despite an encouraging start to 2020 passenger numbers at Gatwick fell 78% in the year ended 31 December, 2020 due to the impact of COVID-19. The airport remained open throughout the pandemic, however all revenue streams were impacted and the collapse in passenger demand led to a £465.5m loss for the twelve-month period and negative EBITDA at -£25.1m.
Decisive and swift action was taken to protect the financial strength of the business. A strategic reduction in capital expenditure resulted in the deferral of over £380m from the investment originally planned in 2020 and 2021. Operating costs were reduced by over £140m in 2020 through a variety of actions including restructuring and reducing staffing levels by over 40%, renegotiating contracts and consolidating all air traffic and passengers into one terminal.
To improve liquidity, in April 2020 Gatwick secured a £300m loan with a consortium of banks and the company has drawn £250m under the Bank of England’s Covid Corporate Financing Facility. The group has been granted a waiver to address breaches in Financial Covenants at 31 December, 2020. As of December 2020 Gatwick had available liquidity of £573m to meet its operating cashflows, planned investment levels and interest payments for 2021.
A priority continues to be protecting the health and wellbeing of employees and passengers with new staff COVID-19 testing measures being implemented alongside one of the UK’s first airport NHS testing sites in 2020 and walk-in and drive-through private testing facilities also being made available at Gatwick for staff and the public.
Gatwick Airport, Chief Executive Officer, Stewart Wingate said:
“It will come as no surprise that, like any other international airport, the negative impact of COVID-19 resulted in a financial loss for the business last year which sadly also saw us need to reduce our workforce by over 40%. I would like to thank all our staff, including those that have left us, for all their hard work and determination throughout these difficult times.
“Despite the immediate challenges I remain optimistic that Gatwick will recover and retain its position as one of Europe’s leading international gateways and an economic driver for the UK’s south east region. Due to our swift actions the business remains resilient and robust with our focus on ensuring we are best placed to take advantage of a return to international travel this summer.
“We are heartened by the UK Government’s COVID-19 response plan and look forward to working with the Global Travel Taskforce to develop a framework that can facilitate greater international travel as soon as possible. This will require the UK Government working with other Governments, to ease the current crippling travel restrictions and ensure a consistent, reciprocal approach for all travellers in time for this summer. Restoring passenger confidence and offering COVID-19 safe air travel while minimizing the need for cost prohibitive testing and disruptive quarantine measures is vital. Before air travel recovery begins, and in order for the industry to continue to protect as many jobs as possible, we also need the UK Government to provide further support by extending the furlough scheme for a few more months and providing business rate relief, as airports in Scotland have been afforded, for the current financial year.”
Gatwick role in importing Covid:
A lot of the Covid affecting the UK from late summer 2020 is thought to have come from Spain, and other holiday destinations, as holiday-makers flew back to the UK. To airports like Gatwick. See link
Coronavirus strain from Spain accounts for most UK cases – study
Gatwick crashes to £465.5m loss as passenger numbers collapse
By James Warrington (City AM)
Gatwick Airport plunged to a £465.5m loss in 2020 as global air traffic and passenger numbers collapsed due to the Covid-19 pandemic.
While the airport remained open throughout the pandemic, passenger numbers plunged 78% as lockdowns and travel restrictions took their toll.
Gatwick said all revenue streams were impacted and posted a loss before interest, tax, depreciation and amortisation of £25.1m.
The company, which is jointly owned by Vinci Airports and Global Infrastructure Partners, was forced to cut 40% of its workforce as a result of the travel slump.
Despite this, Gatwick said it had “renewed optimism” [they would say that, wouldn’t they?] for a return to international travel from May after Prime Minister Boris Johnson unveiled the country’s lockdown exit strategy this week.
“We are heartened by the UK government’s Covid-19 response plan and look forward to working with the Global Travel Taskforce to develop a framework that can facilitate greater international travel as soon as possible,” said chief executive Stewart Wingate.
“This will require the UK government working with other governments, to ease the current crippling travel restrictions and ensure a consistent, reciprocal approach for all travellers in time for this summer.”
He added: “Restoring passenger confidence and offering Covid-19 safe air travel while minimising the need for cost prohibitive testing and disruptive quarantine measures is vital.”
Wingate called for the government to provide further financial support by extending the furlough scheme and providing business rates relief for airports for the current financial year.
Gatwick said it reduced operating costs by £140m last year and deferred more than £380m from the investment originally planned for 2020 and 2021.
Norwegian Air scraps long-haul flights, ditches Gatwick base and cuts 2,000 staff in bid for survival
In April last year the airport secured a £300m loan from a consortium of banks, while the company confirmed reports it had drawn £250m under the Bank of England’s Covid Corporate Financing Facility.
As of December, it had available liquidity of £573m to meet cashflow, investment levels and interest payments for this year.
Gatwick increased its Government borrowing by £75m to shore up its finances during the Covid period
Gatwick has increased its Government borrowing by £75 million, trying to shore up its finances during the extended Covid travel reduction. It is thought that Gatwick has also borrowed £250 million under the Bank of England’s Covid Corporate Financing Facility (CCFF) scheme. Gatwick applied to access the CCFF in August, saying at the time it was a contingency measure and hoped not to touch the money, but now it needs the £250 million. It has 12 months to repay it. Gatwick still has the option of accessing a further £50 million under its £300million CCFF facility. The airport had a £344 million pre-tax loss for the six months to June 2020. During 2020 its number of passenger numbers fell by about 80%. It is owned by France’s VINCI Airports and $71billion fund GIP, which should be able to provide money Gatwick needs. Local community group GACC says, despite the airport’s dire financial state, it is still finding money to spend on expansion plans which will have major adverse consequences for local residents & would also fly in the face of climate change concerns.
More on Gatwick from its press release:
About Gatwick Airport
Gatwick is the UK’s second largest airport and flies a range of both short and long-haul point-to-point services. The airport is a vital piece of the UK’s national infrastructure and is also a major driver for both the regional and national economies.
In 2019, a new long-term partnership was formed with VINCI Airports who purchased a 50.01% stake in the airport. This partnership saw Gatwick Airport integrate into the network of VINCI Airports, the leading private airport operator in the world, which manages the development and operation of 45 airports located in Brazil, Cambodia, Chile, Costa Rica, Dominican Republic, France, Japan, Portugal, Serbia, Sweden, the United Kingdom and the United States. Served by more than 250 airlines, VINCI Airports’ network handled 255 million passengers in 2019. Through its expertise as a comprehensive integrator, VINCI Airports develops, finances, builds and operates airports, leveraging its investment capability and know-how to optimise the management and performance of airports and carry out extensions and upgrades. In 2019, its annual revenue for managed activities amounted to €4.9 billion, for a consolidated revenue of €2.6 billion.
Global Infrastructure Partners (GIP), which manages the remaining 49.99% interest in Gatwick, is an independent infrastructure investor that makes equity investments in high quality infrastructure assets in the energy, transport and water/waste sectors. GIP has US$68 billion of Assets under Management. Its 41 portfolio companies operate in over 51 countries with more than 67,000 employees and generate annual revenues of circa US$51 billion.