The UK’s busiest airport on Tuesday (26 April) said it was not forecasting a return to profit or dividends this year, highlighting a range of headwinds – including higher fuel costs, lower GDP growth, Russia’s invasion of Ukraine and the transition to living with Covid.
In a first-quarter trading update (three months to 31 March), Heathrow revealed total cumulative losses during the pandemic now exceeded £4 billion.
It also reported a pre-tax Q1 loss of £191 million, up from £307 million a year ago. Q1 revenue, meanwhile, climbed from £165 million to £516 million, with adjusted earnings before earnings before interest, taxes, depreciation and amortisation (Ebitda) increasing from -£20 million to £273 million.
Nearly 10 million passengers travelled through Heathrow during Q1, up from 1.7 million a year ago. This is despite "much weaker than expected" early-year demand owing to the restrictions reimposed to combat the Omicron variant of Covid-19.
Heathrow, though, said demand in March subsequently spiked following "the unexpectedly quick removal" of all UK travel restrictions on 18 March.
Chief executive John Holland-Kaye thanked staff for their hard work to ensure a smooth start to the year. Addressing passengers directly, he vowed to "redouble" efforts to ensure summer 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," said Holland-Kaye, alluding both to the "chaos" that has gripped UK airports in recent weeks and the CAA’s impending ruling on the passenger fees Heathrow can charge.
Heathrow claims more than 95% of passengers cleared security "within five minutes" over Easter despite a "surge in last-minute bookings". The airport plans to reopen Terminal 4 by July and recruit more than 1,000 new security officers.
This is part of a wider recruitment drive at Heathrow, which will see the airport seek to fill more than 12,000 vacancies across the airport – including ground handling and retail posts.
‘We’re still in a pandemic’
"A smooth arrival journey is more important than ever as many people begin travelling again for the first time," said the airport, adding – in a pointed barb – that this was reliant on the UK’s Border Force "having the right plans and resources in place for the summer peak".
Following the spring uptick, Heathrow has increased its full-year passenger forecast from 45.5 million to 52.8 million, which would represent a return to 65% of pre-pandemic traffic.
However, it warned demand remained "very volatile". "We expect these passenger numbers to drop off significantly after the summer," said Heathrow.
"We 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."
