UK. London Heathrow Airport today reported half-year results, with retail revenue declining by -55.8% year-on-year to £150 million. The result was largely driven by a -60.2% fall in passenger traffic to 15.4 million due to the COVID-19 crisis.
Retail revenue per passenger increased +11.1% to £9.72, though the company noted that the figure was distorted due to much-reduced passenger volumes.
Heathrow said it expects passenger traffic for 2020 to fall by -64% compared to 2019 to 29.2 million, “with a return to pre COVID-19 traffic volumes not anticipated until after 2022”. Group EBITDA and cash flow from operations in 2020 and 2021 are expected to “reduce significantly compared to prior expectations”.
Currently, said Heathrow Airport, around 40% of commercial outlets are open across terminals 2 and 5 after the restart of operations in June.
Heathrow also called on the UK government to establish a robust passenger testing regime instead of imposing selective quarantine rules on travellers.
It said: “The government’s risk-based approach to allow quarantine-free flights from low and medium risk countries is very welcome, but only covers 30% of Heathrow’s markets. Establishing an alternative to quarantine for COVID-free passengers from other countries should be a priority. Pre-flight testing for passengers from high risk countries will allow long haul flying to resume, which is critical for the UK’s economic recovery.”
Total revenue in the first six months fell by -51.3% year-on-year to £712 million, EBITDA plummeted -75.5% to £222 million and Heathrow recorded an adjusted loss before tax of £471 million in the period compared to a profit of £153 million in H1 2019.
Q2 figures highlighted the scale of the crisis for the business. Passenger numbers fell by over -96% as global aviation came to a virtual standstill. Q2 revenue fell -85% to £119 million and adjusted EBITDA turned to a loss of £93 million.
On its financial position, the airport company said: “Cash reserves are sufficient until at least June 2021 with no revenue. We have agreed a waiver on financial covenants until the end of 2021 and maintained our Investment Grade credit rating status.”
Heathrow has reduced its average monthly cash burn from £240 million to £159 million, with a target to bring overall operating costs down by a minimum of £300 million this year. A reduction in capital expenditure will mean delays to Heathrow’s expansion programme.
Heathrow CEO John Holland-Kaye said: “Today’s results should serve as a clarion call for the government – the UK needs a passenger testing regime and fast. Without it, Britain is just playing a game of quarantine roulette. As many of our customers have experienced, it’s difficult to plan a holiday that way, let alone run a business. Testing offers a way to safely open up travel and trade to some of the UK’s biggest markets which currently remain closed. Our European competitors are racing ahead with passenger testing, if the UK doesn’t act soon global Britain will be nothing more than a campaign slogan.”
