Heathrow’s growth kickstarted in 2022 but volatility prevails

Heathrow welcomed 9.7 million passengers in Q1 2022 in line with our forecasts. January and February were much weaker than expected due to Omicron-related travel restrictions, while March demand increased after the unexpectedly quick removal of all UK travel restrictions on 18th March

Heathrow will remain lossmaking in 2022 as COVID losses top £4 billion – Despite increased outbound demand, Heathrow is not forecasting a return to profit and dividends in 2022. Although Q1 2022 revenue climbed to £516m and adjusted EBITDA turned positive to reach £273 million, total pandemic losses have now topped £4.0 billion. Heathrow liquidity remains strong with gearing decreasing to pre-pandemic levels

Easter fuelled by last-minute bookings as they planned for a safe and smooth summer getaway – Once it became clear UK travel restrictions would be fully lifted, they worked extremely hard putting in place a plan to welcome back a surge of last-minute bookings for the Easter getaway – with over 95% of passengers through security within 5 minutes. They are planning to continue delivering a good service over a busy summer, opening up Terminal 4 by July and recruiting over 1,000 new security officers. They are also assisting airlines, ground handlers and retailers to fill over 12,000 vacancies across the airport. A smooth arrival journey is more important than ever as many people begin travelling again for the first time, and we rely on Border Force having the right plans and resources in place for the summer peak.

Summer travel bubble, but winter freeze on horizon – they are seeing a temporary increase in demand driven by UK outbound leisure passengers taking advantage of removed UK travel restrictions and redeeming travel vouchers accrued during the pandemic. As a result, they are updating their 2022 passenger forecast from 45.5 million to 52.8 million, which represents a return to 65% of pre-pandemic traffic this year. However, demand remains very volatile and they expect these passenger numbers to drop off significantly after the summer. They 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. 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

Sustainable Aviation Fuels Incentive starts delivering lower-carbon flights from Heathrow – Heathrow introduced a SAF incentive in 2022 to encourage airlines to shift to lower-carbon fuels. Already this year, we have transitioned 0.5% of the airport’s fuel to SAF, making Heathrow the largest user of SAF out of any major airport globally. This is only the start, and they recognise there is much further to go – so we will be scaling-up our incentive programme over the coming years and will continue to seek a UK mandate for 10% SAF use by 2030

Heathrow CEO John Holland-Kaye said: “I want to thank colleagues who worked very hard to ensure the start of 2022 has gone to plan, and I want to reassure passengers that we’re redoubling our efforts to ensure this summer’s journeys go safely and smoothly. These past few weeks have only reinforced our view that passengers want easy, quick and reliable journeys every time they travel and we can continue to deliver that for less than a 2% increase in ticket prices. The CAA should be aiming to secure this win for passengers instead of pushing plans which will cut investment in service, increase queues and make delays a permanent feature post-COVID. We have a lot of work to do to reclaim Heathrow’s crown as Europe’s largest airport which will deliver more competition and choice for passengers and more growth for Britain, and we need the regulator to help us do it.”