Heathrow cuts losses after ‘extraordinary’ summer

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Heathrow airport has sharply cut its losses and raised its passenger forecasts following an “extraordinary” summer of travel. 

The UK’s biggest airport on Thursday said it expected 79.3mn passengers to travel through it this year, up from a previous forecast of between 70mn and 78mn. 

Heathrow raised its forecasts after it handled 29mn passengers this summer, as airports and airlines across Europe enjoyed soaring demand for travel.

The airport reported particularly “robust” demand from long-haul markets including Asia-Pacific, where there has been a rapid recovery to 94 per cent of pre-pandemic passenger numbers following the reopening of many borders earlier in the year. The airport now expects total passenger numbers to return to 2019 levels next year.

Many of the airlines that operate from Heathrow have reported bumper profits, but Heathrow has remained lossmaking for the year to date. 

The airport reported an adjusted pre-tax loss of £19mn for the first nine months of the year, down from a £442mn loss for the same period in 2022. 

This came despite an increase in operating profit to £1.1bn, from £685mn, as revenues rose from £2.1bn to £2.7bn.

Heathrow pinned its overall losses on the higher cost of servicing its debt following rises in interest rates, and a cap imposed by the UK aviation regulator on the landing fees it can charge airlines.

The cost of servicing Heathrow’s £15.8bn debt pile rose from £1.1bn to £1.2bn, while operating costs rose from £854mn to £1.03bn.

The UK’s competition regulator this month upheld a decision by the Civil Aviation Authority that Heathrow should cut its charges to airlines by almost a fifth from £31.57 per passenger to £25.43 from next year. 

“The charges we are allowed to levy are too low,” said Heathrow’s chief financial officer Javier Echave. “The change in inflation and interest rates should have been factored in by the regulator, but unfortunately they have not got it right,” he said.

Echave said the airport had managed to reduce its losses “because we have had an extraordinary summer” which saw it become the world’s best connected airport, with flights to more than 200 destinations.

He added that the airport could return to profit as soon as this winter. The airport does not plan to pay its owners a dividend this year.