General News
Below are links to stories of general interest in relation to aviation and airports.
Campaigners tell Heathrow to accept reality, and give up on plans for a 3rd runway
No 3rd Runway Coalition campaigners say Heathrow should accept what is now financial reality and give up on its plans for a 3rd runway. Heathrow made a £2bn loss in 2020, and is asking for more government finance in the form of extending the furlough scheme - and also full relief from business rates. Heathrow’s financial frailty is obvious; it has net debt of £15.2bn as of September 2020. It is now so highly geared with debt, that it has reached a leverage ratio of 97% — higher than any comparable UK infrastructure or utility operation. In June last year the ratings agency, Standards & Poor’s, put Heathrow on “credit watch with negative implications” — a 2nd credit downgrade in just 2 months. Then Heathrow sought waivers on covenants from holders of £1.1 billion of bonds. Any further downgrade would render these bonds junk, making the airport an extremely unattractive asset for investment. Its shareholders have not contributed more cash. John Holland-Kaye has told staff that the publicised “£3.2bn war chest” is merely the liquidity that can be mustered when "we have drawn down all the cash and credit facilities at our disposal”. ie. more future borrowing. With its precarious finances, it is no longer appropriate for Heathrow to be pursuing a 3rd runway.
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Heathrow adding a new £8.90 per passenger pandemic tax from April
Heathrow has added a new charge on all outbound flights from April. It will charge £8.90 extra in what the airport is calling a United Kingdom Exceptional Regulatory Charge. It may only last for a year, and Heathrow says the CAA has approved it. Other major UK airports have said they will not be implementing a similar fee. Paul McGuinness, chair of the No Third Runway Coalition, criticised the airport for adding on the extra charge. “Yes, aviation has dipped during the pandemic, but it’s the shambolic financial management of Heathrow – the massive borrowing, the large dividends payments to its foreign owners and the total lack of reserves – that is forcing the airport’s management into trying, by stealth, to raise these passenger tariffs.” A Heathrow spokesperson said: “Heathrow makes absolutely zero profit from these services [sic]. The price is calculated purely to cover the cost of operating and maintaining the infrastructure that supports them.” Airlines say the reason for the increase is the amount it charges them for baggage handling, water, electricity and other services. It is possible the tiny extra charge will make some people choose another airport to fly from (but it is probably too low to do that).
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Fuels made from renewably sourced electricity the ONLY way to keep flying in future
Two experts from New Zealand have written about the future of low carbon air travel. Aviation is a problem for NZ due to its geographic position. But the experts say "the global 1.5C target allows no room for fossil fuelled commercial aviation by 2050. So the public, the aviation and tourism industries, and the government must turn their attention to first capping and then reducing emissions." They consider the only viable option for air travel is fuels made from surplus electricity. NZ has plentiful wind and sun (most countries do not have as much) to make this potentially possible - though huge amounts of electricity would be needed, competing with other increasing uses. The other key tool is to greatly increase the cost of carbon. This is currently around $ NZ 39 per tonne CO2, and the Air New Zealand offset price is just $23. The price needs to rise to at least $ NZ 140/tCO2 by 2030. Even that would have little impact on air travel demand. The NZ Parliamentary Commissioner for the Environment (PCE) recommends a distance-based departure charge like the UK's APD. They say hopes of electric planes, or hydrogen, "will not arrive fast enough nor scale up quickly enough, and mainly serve to delay action now."
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Government should call in Leeds Bradford airport expansion plans, due to climate impact
The government is under growing pressure to halt a proposed expansion of Leeds Bradford airport, which critics say would wreck efforts to tackle the climate and ecological crisis and undermine the government’s credibility ahead of the COP in Glasgow in November. The expansion would allow an increase in passengers from 4 to 7 million per year by 2030. It was recently given conditional approval by Leeds city council despite widespread opposition from local MPs, councils, residents and environmental groups. Lawyers have written to Sec of State Robert Jenrick asking for the decision to be "called in." A Leeds University climate scientist, Jefim Vogel, says the airport expansion would only benefit “relatively few people”, and would contribute towards a global climate catastrophe. The Leeds Council decision illustrated how many councillors don’t fully comprehend the severity and urgency of the global climate situation. Jefim told councillors: “If we allow the climate crisis to escalate, it will make the COVID crisis look like a bed of roses. The climate crisis stands above short-term economics. Millions of lives and livelihoods and the safety of human civilisation are at risk." The emissions from flights using the expanded airport would dwarf those of the rest of the city.
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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.
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British Airways owner IAG hit made a record loss of – €7.4bn in 2020 (cf. +€2.6bn profit in 2019)
International Airlines Group, owner of BA, has reported a record annual operating loss of €7.4bn (£6.4 billion) for 2020. Its passenger capacity last year was only a third of 2019 and in the first quarter of this year is running at only a fifth of pre-Covid levels. The loss included exceptional items relating to fuel and currency hedges, early fleet retirement and restructuring costs. The loss compares with a €2.6bn profit in 2019. IAG is trying to cut its cost base and increase the proportion of variable costs to better match market demand. IAG’s passenger revenues fell 75% from €22.4bn to €5.5bn last year but its cargo business had “helped to make long-haul passenger flights viable” during the pandemic. Cargo revenues increased by almost €200m to €1.3bn and IAG also operated more than 4,000 cargo-only flights in 2020. It is not providing guidance on its finances for 2021. Airlines do seem to understand, at last, that for acceptable Covid safety of air travel, people need to be vaccinated or have proper proof they are not able to spread the virus. IAG spent €4.1bn in cash last year – almost €80m a week (£11.4 million per day). IAG’s market value has halved to £9.6bn since the start of the pandemic. When Covid is less of a threat, low-cost carriers may emerge in stronger shape than airlines like BA.
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Open letter from NGOs to government: aviation and shipping must be fully included in net zero legislation
A group of leading environmental NGOs has written an open letter to the government in support of the Climate Change Committee’s recommendation that international aviation and shipping emissions (IAS) should at last be formally included within the UK carbon budgets. IAS are now the only emissions category not so included, resulting in a situation where aviation emissions are insufficiently controlled by policy and the industry is in a privileged position compared to all other businesses. In its 6th Carbon Budget Report published in December, the CCC identified reasons why IAS exclusion from the UK carbon budget can no longer be justified. These include their inclusion opening up the possibility of the two sectors achieving lower emissions; the UK’s overall emissions reduction strategy should be integrated across the whole economy; doing this would set a good example to other countries; and there is no longer any justification, in terms of difficulty of calculation, for omitting them from carbon budgets. The CCC said inclusion of IAS will "ensure that the UK takes full responsibility for these emissions and that, where necessary, effort in other sectors can be altered to ensure overall UK emissions are within the necessary limits".
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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 because of 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.
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European Union’s EASA considering carbon ranking data on flights
The European Union may be planning to create a new system to rank flights and aircraft according to their carbon emissions. The European Union Aviation Safety Agency (EASA), the continent’s safety regulator, has put out a tender to develop a classification system to do that. The aim is “providing reliable, comparable and verifiable information” to clients to help them make sustainable decisions. This might be done by the end of 2022. Air travel has started to come under pressure as individuals, and even companies, became more alert to environmental and sustainability issues - and the climate impact of flights. There is no further information about this at present.
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Canadian teachers don’t want their pensions invested in expanding Bristol airport
Since 2014 the Ontario Teachers Pension Plan (which has some 329,000 members) has owned Bristol airport. Now some of the Canadian teachers in the pension plan say they stand in solidarity with the thousands of residents who oppose its expansion. In an open letter, six current and former teachers in the plan said they do not want their money used in such a “financially risky and unethical way”, and they would not want a foreign investor paving over their green spaces. They ask the pension plan to instruct the airport to withdraw its appeal, and stop trying to overthrow the democratic will of the local communities. The OTPP has rejected the teachers’ claims that the airport’s expansion - refused last year by North Somerset Council - was incompatible with the council's climate change commitments. The teachers said the pension plan had pledged to invest in “climate-friendly opportunities” and must invest with conviction and integrity. An OTPP spokesperson gave a waffly response about how the airport was intending to eventually become carbon neutral ... and "net zero by 2050." The airport's appeal will be heard at a public inquiry in July. The deadline for comments is February 22. OTPP also owns part of London City Airport. The USS owns 10% of Heathrow.