Heathrow losses now £2.9bn and consolidated net debt £15.2 bn

Heathrow has announced that its cumulative losses from the Covid-19 pandemic have hit £2.9 billion. In its results for the first half of 2021,  Heathrow’s revenue dropped from £712 million in the first six months of 2020 to £348 million in the first half of 2021, which is 51.1% less than in the first half of 2020, and 76.2% less than the first half of 2019. Its pre-tax loss widened 18% to a little over £1 billion.  It had 3.85m passengers, which is 75.1% less than the same period in 2020, and 90.1% less than the first half of 2019.  Heathrow (it has a complex structure of numerous companies and levels) had  consolidated net debt of £15.2 billion — not much less than the airport’s £16.9 billion regulated asset base (RAB), or the CAA’s proxy for its value.  Heathrow had been allowed, by the CAA, to increase its RAB by £300 million, to £16.9 billion.  Its chief executive John Holland-Kaye is using the half-year figures to warn about a covenant waiver on its various loans.  The group of Heathrow companies has £4.8 billion of liquidity, (ie. ability to borrow) with average cost of debt just 1.64%. 


Heathrow’s results for the half year to 30th June 2021



Heathrow Airport’s pandemic losses hit £2.9bn

26 July 2021 (ITV)

Heathrow has announced that its cumulative losses from the Covid-19 pandemic have hit £2.9 billion.
Fewer than four million passengers travelled through the west London airport in the first half of the year.  It took just 18 days to reach that total in 2019.


The airport warned that its passenger numbers could be lower this year than in 2020.

Some 22.1 million passengers used the airport in 2020, with more than half of those travelling in January and February, before the virus crisis led to a collapse in demand.

Heathrow described recent changes to the quarantine and testing requirements for people arriving in the UK as “encouraging”, but warned that the rules are “holding back the UK’s economic recovery”

….   stuff about Covid, quarantine etc …

Heathrow’s revenue dropped from £712 million in the first six months of 2020 to £348 million in the opening half of this year.

Meanwhile, pre-tax loss widened 18% to a little over £1 billion.




Alastair Osborne writing in The Times, business commentary;


[Heathrow’s billionaire owners] span the Chinese government and sovereign wealth funds from Singapore and Qatar: a crew happy to take out £3.8 billion of dividends in the good times.

And, even if the airport has racked up £2.9 billion of losses since corona struck, it’s not as if investors have been hard hit. The nearest thing to a cash call is £750 million raised last year via ADI Finance 2: one of the holding companies in Heathrow’s eight-tier, tax-friendly corporate structure. Indeed, the owners have spent the pandemic badgering the Civil Aviation Authority to jack up landing fees to recoup £2.6 billion lost to Covid: a campaign so far yielding an undeserved £300 million. [Its RAB].  Even that’s proved the cue for more bleating, with Heathrow calling the sum “disappointing” and taking the fight to the next regulatory review.

Instead, Heathrow’s mainly continued with its preferred form of finance: the debt that in happier times enabled the owners to juice up returns. It’s topped up with £1.4 billion since the start of this year, raising consolidated net debt to £15.2 billion — not far shy of the airport’s £16.9 billion regulated asset base, or the CAA’s proxy for its value. And, even if chief executive John Holland-Kaye is now using the half-year figures to warn about a covenant waiver, the group has £4.8 billion of liquidity, with average cost of debt just 1.64 per cent.

Lenders clearly think the airport has a future, despite the first half 75 per cent drop in traffic to 3.9 million passengers. And so does Holland-Kaye, who’s not given up on a third runway: a landing strip he somehow equates with a “cleaner, greener and more resilient economy”. So, given all that, he’s got no case to demand taxpayer “financial support . . . as long as restrictions remain on travel”. They’ll be around in some form until the world has a grip on Covid. He can’t just have the upside of running Britain’s biggest airport.



See earlier:

Heathrow at risk of defaulting on its £15bn debt as UK-US flights not returning soon

Heathrow has now made a loss of at least £3 billion, due to the pandemic.  It is now at risk of defaulting on its huge £15bn debt, after talks stalled over the return of flights between Britain and America.  Heathrow had been depending on lucrative trans-Atlantic flights resuming by the start of July.  At the end of June, Heathrow warned its bondholders that if its profits are £66m or more lower than expected by December 2021, then it will breach the strict rules governing its complex portfolio of loans.  It does not look likely that flights to the US will return to anything approaching 2019 levels for a long time.  Up to 2019, North America was Heathrow’s single biggest market making up almost 19m of its 81m passengers in 2019. Heathrow is believed to have the support of its lenders despite the prospect of a potential breach of its banking covenants, the rules that govern loans. Shareholders, which include Spain’s Ferrovial and the state of Qatar, injected £600m into the business when it faced the prospect of a similar breach last year. 




CAA rules that Heathrow can only raise £300m out of £2.6bn through higher charges, plus another £500 m

Heathrow’s bid to increase airport charges to recover £2.6 billion lost during the coronavirus pandemic has been rejected by the aviation regulator, the CAA – which said its expenditure had been “disproportionate and not in the interests of consumers”. The CAA is allowing Heathrow to initially raise only an additional £300 million through higher charges, out of the £2.6 billion it asked for. “The CAA has agreed to a limited, early adjustment to HAL’s RAB of £300m and will consider this issue further as part of the next price control (H7)” which starts on 1st January 2022. The CAA has agreed to allow Heathrow to raise charges to recover the £500 million “it incurred efficiently” on its plans for a 3rd runway, between 2017 and 1st March 2020. Heathrow said it faces loses of around £3 billion due to the Covid pandemic.  IAG, which owns British Airways, the largest airline at Heathrow, said it is “extremely disappointed” with the CAA decision, which means more expensive tickets for its consumers from 2022. Heathrow wants concessions by the CAA, though its shareholders have earned nearly £4 billion in dividends in recent years.

Click here to view full story…

Heathrow makes £2bn loss in 2020 due to the pandemic – warning on continuing to be a “going concern”

Heathrow lost £2 billion in 2020 because of the fall in passenger numbers due to the Covid pandemic. The numbers are lower than for perhaps 50 years, and the airport is issuing a warning about its future.  Its pre-tax loss was £2.01bn for its full-year compared to a £546m profit in 2019.  Revenues fell 62% £1.18bn, with passenger were at 22.1 million, 73% less than in 2019.  This led the airport to issue a warning, that the “existence of a material uncertainty… could cast significant doubt upon the group and the company’s ability to continue as a going concern”. Nobody knows how much air travel will happen this year.  Heathrow desperately wants relief on all its business rates, an extended furlough scheme for its staff, and a revival of VAT-free airport shopping for tourists to the UK. John Holland-Kaye makes his usual statements about how vital Heathrow is to Britain … Since the start of the pandemic, the airport has cut operating costs by nearly £400m, reduced capital expenditure by £700m and raised £2.5bn in funding. And it says it ended 2020 with £3.9bn of liquidity, which it says is enough to last until April 2033 even if there is no recovery in passenger numbers. Which begs the question of why it needs more government support now.

Click here to view full story…