UK. Gatwick Airport today reported a predictably troubled set of first-half results reflecting the devastating impact of the COVID-19 crisis.
After an encouraging start to the year, passenger demand collapsed by -66% year-on-year due to the pandemic, leading to a -61% fall in revenue and a -98% fall in EBITDA (see chart).
While traffic has been gradually building back up since mid-June/July, near-term uncertainty remains as to the pace of recovery, with the timing of UK quarantine decisions a key factor, the company said. Traffic is not projected to reach 2019 levels until 2024.
As a result of the pandemic, the South Terminal was closed on 15 June and is expected to remain shut until summer of 2021. On Wednesday, Gatwick Airport announced a consequent business restructure that will result in around 600 job losses, or the equivalent of 24% of its current workforce.
In the six months ended 30 June 2020, net retail income decreased by -60.5% year-on-year to £35.5 million (US$47.1 million). Net retail income per passenger rose +16.8% to £4.73 (US$6.27) due to new contract terms across multiple categories as well as strong F&B sales growth prior to the pandemic.
75% of shops and food & beverage outlets in the North Terminal are open in line with Government COVID-19 safety guidelines. Commercial negotiations with tenants are ongoing, the airport company said.
Commenting on the retail performance, the airport company said: “All categories have seen the extreme impact of COVID-19 due to the reduction of the number of passengers travelling and the various Government restrictions that have been implemented to control the spread of the virus.
“As the number of passengers is set to increase in July and August, Gatwick is working with retailers to re-open their units at the airport. Gatwick is also working closely with concessionaries to ensure the appropriate measures and processes are in place to safeguard passenger safety whilst they travel through the airport and whilst they enjoy the retail offering.”
Gatwick Airport Chief Executive Officer Stewart Wingate said: “Like any other international airport, the negative impact of COVID-19 on our passenger numbers and air traffic at the start of the year was dramatic and, although there are small signs of recovery, it is a trend we expect to continue to see. However, we are focussed on ensuring the business remains robust and is best placed to take advantage of future growth.
“As with any responsible company we have protected our financial resilience by significantly reducing our operational costs and capital expenditure. We are going through a proposed company-wide restructuring programme and I want to thank all my staff for their hard work to date whilst we go through this difficult time. We will emerge a fitter and stronger organisation, best placed to remain flexible and agile in responding to growth opportunities. This includes continuing to do all we can to protect the safety and wellbeing of our staff and passengers.
“Despite the immediate challenges I remain resolutely optimistic that Gatwick will recover and retain its position as one of the UK’s leading travel hubs and economic driver for the region.”
