In a trading update, Heathrow on Wednesday (26 April) revealed an adjusted, pre-tax profit of £139 million for the three months to 31 March. This compares with a loss of £223 million for the same Q1 period last year.

Heathrow’s Q1 revenue, meanwhile, increased from £516 million to £814 million, while operational cash flow improved from £278 million to £374 million.

Last month, the CAA denied Heathrow permission to almost double its passenger charges – the fee is charges airlines, per passenger, to use the airport.

Heathrow had proposed to increase the charge from £22 to between £32 (45%) and £43 (95%). The CAA, meanwhile, proposed an increase in the cap to between £24.50 and £34.40 before introducing an interim price cap of £31.57 per passenger.

It resolved last month to maintain the cap at the same level for the rest of the year before reducing it to an average maximum of £25.43 in 2024 and maintaining it at broadly the same level for the rest of the five-year term. Heathrow has appealed the settlement to the Competition and Markets Authority.

"Heathrow remains loss-making and we do not forecast any dividends in 2023," said the airport announcing its Q1 results on Wednesday. "Heathrow has not yet returned to profit with adjusted losses of £139 million in Q1 due to the revenue allowance in the CAA’s H7 settlement being set too low."

The airport nonetheless talked up a strong start to the year, welcoming just shy of 17 million passengers during Q1 and laying claim to having retained the crown of being Europe’s busiest airport.

It said half-term and Easter had passed off without significant incident, despite Border Force strike action, owing to "robust contingency plans". It also stressed passengers would be able to "travel as normal" over the King’s coronation and half-term peak travel periods, "regardless of further strike action".

"We are working with partners on further improvements to service, such as Border Force’s successful trial of extending eGates to 10+ year-olds over Easter," said Heathrow.

‘Strong start’

Chief executive John Holland-Kaye used the announcement to caution government against stifling the UK’s competitiveness, compared with the EU, by removing VAT on shopping to "drive more spend in shops, restaurants and attractions across Britain", branding it a "tourist tax" of sorts.

However, he hailed renewed connectivity with China, with 10 routes now up and running after the country re-opened its borders post-Covid in January, as well as with other parts of the UK thanks to new Loganair routes to Scotland and Northern Ireland.

"2023 has got off to a strong start," said Holland-Kaye. "I’m proud of the way colleagues are working together to deliver great passenger service every day. We are building our route network to connect all of Britain to the growing markets of the world – now we need the government to lure international visitors back to the UK by scrapping the ‘tourist tax’."

Heathrow also said it was making "continued steady progress" towards its sustainability goals after having its 2030 carbon reduction goals validated by the Science-Based Targets initiative. It also urged the government to do more to drive production of sustainable aviation fuels in the UK, and "move faster" to bring production onshore to increase energy security, create new jobs and help the country "level up".