Heathrow raises passenger forecast but £4bn financial hole stunts growth
Heathrow announced today it was raising its passenger forecasts for 2022 despite pandemic-related losses swelling to £4bn.
The London hub’s forecast increased to 65 per cent of pre-pandemic levels, going up from 45.5m to 52.8m due to a peak in passenger demand over the summer.
After experiencing a bleak January and February as a result of the Omicron variant and the war in Ukraine, the airport reported a surge in passenger numbers after the “unexpectedly quick removal” of the UK’s travel restrictions.
Nevertheless, numbers are expected to go down drastically from September onwards as demand remains volatile.
“We are already seeing airlines cancelling services into the autumn and the realities of higher fuel costs, lower GDP growth, the war in Ukraine and the ongoing pandemic will drag on demand,” said a Heathrow spokesperson.
Because of the situation, the airport said losses would exceed £4bn, around £200m more compared to 2021.
Even though revenues climbed to £516m and its adjusted EBITDA turned positive to reach £273m, the airport will not return to profitability and dividends until the end of the year.
“We are still in a pandemic with many markets still closed, nearly 80% with testing and vaccination requirements and another variant of concern could see the return of UK travel restrictions,” they added.
Heathrow was one of the airports that was hit the worst by the pandemic, struggling behind its rivals.
Gatwick said in March it was expecting a strong summer season following the end of travel restrictions, while Stansted’s owner MAG Airports said it was feeling optimistic about the future.
In recent weeks, several of the country’s largest airports made the headlines after passengers complained about hour-long delays at security as a result of post-pandemic staff shortages.
Heathrow said it was less impacted compared with rivals, as more than 95 per cent of passengers got through security within five minutes during the busy Easter break.
“I want to reassure passengers that we’re redoubling our efforts to ensure this summer’s journeys go safely and smoothly,” Heathrow’s boss John Holland-Kaye said.
“These past few weeks have only reinforced our view that passengers want easy, quick and reliable journeys every time they travel.”
For the past few months, the hub has been at odds with both the Civil Aviation Authority (CAA) after the regulator set the interim cap Heathrow can charge its airline customer to £30.19 per passenger, City PM reported.
Heathrow accused the CAA of threatening its post-Covid growth, arguing the current proposal was unacceptable.
The hub had initially lobbied for the cap to be set between £32 and £43 per passenger, antagonising airlines who said the measure was compromising the sector’s recovery.
According to City PM calculations, Heathrow would make £2.3bn if prices were set at £43 per person, but instead is expected to gain £1.6bn from the current interim cap.