Heathrow Airport announces £2bn annual loss due to COVID-19 pandemic
Heathrow Airport has reported an annual loss of £2bn – underlining the devastating impact of COVID-19 on the aviation sector.
In total, passenger numbers collapsed to 22.1m, more than half of whom travelled in January and February. Overall revenue fell 62% to £1.2bn and adjusted EBITDA fell to £270m.
Government policies over recent months have effectively closed borders – putting further pressure on many within the industry.
The airport said that they had received no government support, other than furlough,
and have not been given relief from business rates, unlike other airports, retail and hospitality businesses.
Senior leadership at the airport believe the Spring Budget is the key opportunity for the Chancellor to support the sector by providing 100% business rates relief, extending the furlough scheme and reversing the tourist tax.
John Holland-Kaye, CEO of the airport said: “2020 has been the toughest year by far in Heathrow’s 75-year history. We have had no support from Government, other than the national furlough scheme, and no action as yet from the CAA to enforce protections assumed in our license, though they have recently recognised that they need to take action in these exceptional circumstances.
“Now, after 12 months with very few passengers, we are only just starting to see daylight at the end of a very long tunnel. While so much has changed, we still retain some of the strengths from February 2020. Heathrow, the UK’s only hub airport and biggest port, has a critical role to play in rebuilding the national economy and connecting all of Britain to global growth.”
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown., said: “Heathrow Airport has been plunged into the toughest crisis in its history and is fighting for survival as demand for international travel has plummeted.
“As lockdowns and quarantine restrictions seized up the global tourism, Heathrow Airport Holdings, owned by the FGP Topco consortium, dropped to a £2 billion loss in 2020.
“There had been high hopes that fortunes for the travel industry would change rapidly following vaccine breakthroughs but the mutation of the virus causing fresh spikes of infection across the world has seriously set back its recovery.
“Far from being a bustling hub of activity, vast departure and arrival halls have fallen silent as passengers disappeared. The 22 million people who did pass through in 2020 mainly travelled during January and February 2020 before the crisis hit. Cargo volumes also fell by 28% as the pandemic sent shockwaves through supply chains.
“Heathrow does have a £3.9 billion pound support cushion of liquidity to see it through, but there could be yet more turbulence ahead if restrictions severely curtail the summer season. Updates from EasyJet, Ryanair, TUI and Thomas Cook indicate there has been a jump in bookings to European destinations following the road map to re-opening announced earlier this week by the Prime Minister. But the skies are still not clear for take-off given that non-essential travel from the UK has been banned until at least May 17th. Facing a further drain on finances, the industry is hanging on an update from the government’s global travel taskforce on April 12th when it is due to lay out the flight path to reopening. In the meantime it’s desperate for more government help in the form of an extension to the furlough scheme and 100% business rates relief.
“Heathrow’s woes are not surprising given how the companies which use the airport have suffered over the crisis. The worst London listed performer in the travel and leisure sector was British Airways owner IAG which saw its shares fall by 57% since last February as it has also tried to navigate the pandemic storm.
“The obstacle to overcome to see sustained recovery for the travel industry is that vaccine roll outs and infection rates are erratic in different parts of the world. It’s no surprise that Heathrow Airport has joined the clamour of calls for a common international standard for travel, to try and get the industry back on an even footing.’’