Heathrow loses status as Europe’s largest airport

Heathrow blames lack of Covid testing as passenger numbers fall by more than 84% and losses rise to £1.5bn.

Heathrow Airport has claimed the UK is “falling behind” because the UK government has been too slow to embrace passenger testing, as it revealed that passenger numbers fell by over 84% in Q3, with losses widening to £1.5bn in the nine months up to 30 September 2020. 

The news comes as Paris Charles de Gaulle has overtaken Heathrow as Europe’s largest airport for the first time, with Amsterdam Schiphol and Frankfurt close behind. 

All three continental rivals have already implemented Covid testing regimes, while the UK government has announced an intention to introduce testing for passengers from high risk countries by 1 December to help restart the UK economy.

The airport says that keeping people safe remains top priority, having invested in what it claims to be UK aviation’s most extensive array of Covid-secure technologies, and says that rapid testing technologies are already helping to open up overseas markets safely.

The airport has also dampened its forecast for future demand. Passenger numbers are now forecast to be 22.6m in 2020 and 37.1m in 2021, compared to its June forecast of 29.2m in 2020 and 62.8m in 2021, and 2019 actuals of 81m. The airport says the reduction is caused by the second wave of Covid and slow progress on introducing testing by the UK government to reopen borders with “high risk” countries.

Heathrow’s losses have widened to £1.5bn in the first nine months as passenger numbers in Q3 remained down over 84%. Q3 revenue fell 72% to £239m and Q3 adjusted EBITDA fell to £37m. However, the airport says it acted quickly to reduce its monthly cash burn by over 30%, cutting at least £300m of operating costs and cancelling or pausing over £650m of capital projects. 

Despite the losses and the ongoing pandemic, Heathrow says its finances remain robust, with liquidity at the end of September boosted further in October to £4.5bn. 

The airport also claims its cash reserves are sufficient for the next 12 months even under an extreme scenario with no revenue, and well into 2023 under its current forecast. Investor confidence remains strong, according to the airport, with 94% of creditors agreeing a waiver on financial covenants until the end of 2021, and the airport has maintained its Investment Grade credit rating status

Warning of more turbulence ahead, the airport says that further savings are planned, but says it aims to protect employment, offering all frontline workers a job with market-rate salaries guaranteed at or above the London living wage.

Heathrow CEO John Holland-Kaye said: “Britain is falling behind because we’ve been too slow to embrace passenger testing. European leaders acted quicker and now their economies are reaping the benefits. Paris has overtaken Heathrow as Europe’s largest airport for the first time ever, and Frankfurt and Amsterdam are quickly gaining ground. Let’s make Britain a winner again. Bringing in pre-departure Covid tests and partnering with our US allies to open a pilot airbridge to America will kickstart our economic recovery and put the UK back ahead of our European rivals.”

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