Heathrow new CEO likely to want expansion in numbers, but no new runway
Thomas Woldbye, Heathrow’s new chief executive, is understood to have begun disbanding the 3rd runway team, and the airport’s runway plans have been shelved, as leaked details of the airport’s “better not bigger” strategy can be revealed. Woldbye is instead understood to be exploring how to squeeze millions more passengers through the airport without expanding its footprint. This comes with Heathrow’s Spanish owner Ferrovial facing a protracted process to sell its stake to a Saudi-backed consortium for £2.4 billion. It is believed that a new Heathrow team is pulling together plans under the internal strapline of “better not bigger”, which was originally coined by anti-expansion campaigners. Leaked details of the plans reveal that annual passenger numbers could hit 96 million by 2036, up from the record 80.9 million in 2019, if all of its initiatives can be realised. A “core” case is understood to forecast a rise to 86 million passengers. One way to increase passenger numbers is to make more efficient use of the runway so that planes could take off and land closer together. They will also want to increase Heathrow’s annual flight cap from 480,000 to 505,000, though this would require government consent.
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Heathrow third runway shelved as airport seeks to be ‘better not bigger’
Chief executive Thomas Woldbye exploring how to squeeze millions more passengers through the airport without expanding its footprint
By Oliver Gill, The Sunday Times
Sunday February 25 2024
Thomas Woldbye, Heathrow Airport’s chief executive, is understood to have begun disbanding the third runway team
Heathrow’s third runway has been shelved as leaked details of the airport’s “better not bigger” strategy can be revealed.
New chief executive Thomas Woldbye is understood to have begun disbanding Heathrow’s third runway team in favour of exploring how to squeeze millions more passengers through the airport without expanding its footprint.
The move comes with Heathrow’s Spanish owner Ferrovial facing a protracted process to sell its stake to a Saudi-backed consortium for £2.4 billion.
City sources said that a new Heathrow team was pulling together plans under the internal strapline of “better not bigger”, which was originally coined by anti-expansion campaigners. Sources close to Heathrow insisted that they “did not recognise” the motto.
Leaked details of the plans reveal that annual passenger numbers could hit 96 million by 2036, up from the record 80.9 million it welcomed in 2019, if all of its initiatives can be realised. A “core” case is understood to forecast a rise to 86 million passengers.
The 2019 record was previously considered the maximum number of passengers it could support without expansion. But one source familiar with the new plans said: “There’s loads that can be done without spending billions.”
Among the proposals to increase passenger numbers is a plan to use more buses to transport passengers from the terminal to the aircraft so that planes can be parked further afield. Other initiatives include more efficient use of the runway so that planes could take off and land closer together.
Increasing Heathrow’s annual flight cap from 480,000 to 505,000 is also under consideration, though this would require government consent.
City sources said that there was limited appetite among shareholders for big spending on a radical expansion of the airport. In 2018 it was estimated that building the third runway would cost £14 billion.
“Longer term, we’re reviewing our plans to make sure the airport has the capacity the UK economy needs, while boosting the resilience of our operations for our customers and meeting our sustainability commitments.”
https://www.thetimes.co.uk/article/e4eea062-560c-4d9b-a580-c992f94529c9
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SUNDAY 25 FEBRUARY 2024
Heathrow denies report that third runway plans have been shelved
BY: GUY TAYLOR (City AM)
The Sunday Times reported the Hounslow hub had begun disbanding its third runway team in favour of exploring how to expand capacity without expanding its carbon footprint.
Heathrow has denied a report that its long-delayed third runway proposals have been shelved as part of a leaked new strategy.
The Sunday Times reported the Hounslow hub had begun disbanding its third runway team in favour of exploring how to expand capacity without expanding its carbon footprint.
City sources told the newspaper Heathrow had begun drawing up the plans under the header “better not bigger,” a term originally used by anti-expansion campaigners.
The sources said there was limited appetite among shareholders for big expenditure on a radical expansion of the hub.
But Heathrow has hit back at the report.
“The speculation in today’s Sunday Times is wrong, and the plans and actions described are not reflective of our strategy for future growth,” a Heathrow spokesperson said in a statement today.
“Heathrow connects the whole of the UK to global growth, but we’re operating almost at capacity which limits the UK’s economic potential. Of course we’re looking at how we can optimise the current airport to achieve short-term growth within our current infrastructure,” a spokesperson said.
“Longer term, we’re reviewing our plans to make sure the airport has the capacity to drive more global connectivity for the UK economy, while boosting the resilience of our operations for our customers, increasing competition for passengers and meeting our sustainability commitments.”
In an interview with City A.M. last week, chief executive Thomas Woldbye said the plans to expand were “hugely important.”
He told City A.M. the airport was picking apart the details to “make sure we take the right decision at the right time… this is so important that we have to make sure we get it right and we can’t rush it”.
“We’re coming up with the updated strategy during the next couple of months and that will include a piece on how we handle capacity, and also how do we can handle capacity until we get to the third runway, because that is by nature quite a few years into the future,” he said.
The news comes at a time when Heathrow looks likely to fall into the hands of a number of Middle East investment funds from the UAE, Saudi Arabia and Qatar.
https://www.cityam.com/heathrow-denies-report-that-third-runway-plans-have-been-shelved/
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Some possible changes at Heathrow, to persuade ever more passengers to use it
People already badly affected by Heathrow are concerned about what might happen, with new Saudi ownership, after Ferrovial. The Saudi-backed consortium is poised to seize control of the airport, but it is far from a done deal. However, plans are already underway that could have ramifications for those living nearby. According to sources close to the bid, they have a multi-pronged strategy to broadly increase the number of passengers, even without — for the foreseeable future, at least — the construction of a third runway. Updating Heathrow’s technology is key in the strategy, with things like scrapping airline-specific check-in desks. There could be an App to get passengers to the shortest queue to drop off their luggage. Luggage tags could also be scrapped in favour of computer chips or QR codes linked to passenger booking information. And other changes. The thinking is that if the new owners can improve life for passengers, making it less stressful and decreasing waiting times, airlines will be able to persuade more people to fly. And more passengers mean more revenue for Heathrow, which currently gets £26.77 per person from its airline customers.
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More Heathrow shareholders plan to sell stakes alongside Ferrovial
Ferrovial agreed to sell its 25% stake in Heathrow in November for £2.4bn to French private equity company Ardian (15%) and the Saudi Public Investment Fund (10%). Now 3 other Heathrow shareholders that together own 35% of the airport, have said they want to sell out too, as part of £2.4bn Ferrovial deal agreed. It has been suggested, by someone in the know, that Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ), Singapore sovereign wealth fund GIC and the UK’s Universities Superannuation Scheme all intend to exit. So with 25% and 35%, that is 60% of Heathrow’s ownership. As part of the Ferrovial deal, the airport’s other shareholders were given the option to sell their own stakes at the same valuation, with the Saudis and Ardian offered first refusal. This could be a problem for the Ferrovial sale, and the £2.4bn deal could collapse if all the shareholders cannot find buyers. Ferrovial said it was a “condition” of the transaction that the “tagged shares” were also sold. Neither Ardian nor the Saudis are compelled to buy the new shares on offer. The Saudis don’t want more than 10%. They might be able to find a 3rd investor to come in and buy the 35%.
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Heathrow considering smaller ways to increase flights, rather than a 3rd runway
Heathrow is exploring options for expansion that would prioritise smaller improvements before considering if it could go for a 3rd runway. New Chief Executive, Thomas Woldbye, who joined in October, has apparently launched an internal review into the options to increase its capacity. No decisions have yet been made. One option under consideration is a new plan to initially focus on easier and cheaper improvements within the airport boundary, as there are serious concerns about the feasibility of a 3rd runway. The world has moved on since Heathrow got consent for a new runway, with travel demand altered since Covid, and a different political and regulatory environment, as well as far higher construction and financing costs than before. The cost estimate was £24 billion in 2019. Heathrow is also in the middle of a change in ownership, as Ferrovial agreed to sell their 25% stake to a consortium lead by Saudi Arabia’s sovereign wealth fund (PIF). One major problem for a 3rd runway is having to put a section of the M25 into a tunnel (very costly) and demolishing local homes. The Climate Change Committee says there should be no airport expansion, unless the sector has a way to genuinely cut CO2 emissions.
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Ferrovial to sell its 25% stake in Heathrow for $3 billion to Ardian (15%) and Saudi Arabia’s PIF (10%)
Infrastructure giant Ferrovial has reached an agreement with two different buyers to sell its entire 25% stake in Britain’s busiest airport, Heathrow, for £2.37 billion ($3.01 billion) the company said in a statement on Tuesday. Ferrovial said the buyers for the stake in FGP Topco – the parent company of Heathrow Airport Holdings Ltd – were private equity fund Ardian and Saudi Arabia’s Public Investment Fund (PIF). Ardian would acquire a 15% stake and PIF a 10% stake. The transaction is subject to regulatory conditions and must comply with the right of first offer and full tag-along rights, which may be exercised by the other FGP Topco shareholders, Ferrovial added. Ferrovial expects to complete the sale by mid-2024. Ferrovial also has a 50% stake in three other British hubs: Aberdeen, Glasgow and Southampton. It also has a 49% stake in the new Terminal One at New York City’s JFK airport.
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