Gatwick Airport retail at £7.7m in H1 as pax collapse suffocates revenues

By Luke Barras-hill |

LGW says the UK is lagging behind countries such as France and Germany, where travel bookings are on average more than 50% of pre-pandemic levels.

Retail income at London Gatwick Airport (LGW) fell by 78.9% year-on-year to £7.7 million/$10.6 million in the six months ending 30 June 2021, according to results published today (13 August).

Revenue from duty and tax free stores suffered a decline of -82% to £1.7m as net retail income dropped 78.6% to £7.6m, though spend per passenger increased by 167.9% to £12.67, according to financial statements from Ivy Holdco Limited whose wholly-owned subsidiary Gatwick Airport Limited is the licensed operator.

The decline in retail revenues were outstripped by that of passenger numbers, which nosedived 92.4% year-on-year for the period in question to total 569,000.

Pax volumes collapsed due to the prolonged, adverse impact of international travel bans coupled with government restrictions.

STRONG LIQUIDITY POSITION

The airport said it ‘has worked closely with retailers to reopen their units and to ensure the appropriate measures are in place’ to protect travellers after the UK eased Covid-19 restrictions, adding: “Against a backdrop of unusual trading circumstances, spend per passenger has been encouraging for those who have travelled, although this has been affected by minimum guarantees.”

Total revenue dropped by 70.7% to £42.3m, hurt by low traffic and ‘a limited retail proposition’ due to the aforementioned government restrictions.

The airport shed £244.6 million over the period, with all revenue streams suffering. EBITDA totalled £50.2m.

Gatwick Airport/Ivy Holdco Limited. Click to enlarge.

A ‘strategic and sustained’ curtailment of capital expenditure resulted in the deferral or cancellation of investments worth £570m originally planned for 2020, 2021 and 2022.

Senior net debt reduced by 10.3% in H1 year-on-year to £2,778.5.

As of 30 June, Gatwick’s liquidity totalled £779m, including £624m in case reserves to service operating costs, planned investment and interest payments for at least 12 months.

Stewart Wingate, CEO, Gatwick Airport.

‘SIMPLIFY TRAVEL RULES’

The airport, which continues to operate flights in and out of the North Terminal only, is forecasting 9.1m passengers in 2021.

It expects to serve circa 72% of pre-pandemic passenger volumes at 33.5m in 2022, though it made clear that demand is uncertain and is being driven by the government’s travel restrictions that have delayed the recovery to Q3 this year.

The airport handled 46.6m passengers in 2019 prior to the crisis.

Paying tribute to airport staff during a challenging period, Gatwick Airport CEO Stewart Wingate said: “In the UK we are all emerging to enjoy more freedoms due to our world class vaccination programme, however we are in danger of squandering the advantage that vaccination programme has afforded us for international travel.

“Our government needs to act now and remove unnecessary and costly PCR testing requirements for passengers, particularly for those double vaccinated.”

He added that the UK is at threat of continuing to fall behind countries in Europe and the US where the travel restrictions have loosened.

The airport is calling on government to remove testing requirements for travellers from green list countries and for those double-vaccinated travellers from amber countries.

In addition, it is advocating for single lateral flow tests for those non-vaccinated travellers from amber list countries.

More than 75% of the UK population have now received two vaccinations.

Gatwick Airport/Ivy Holdco Limited. Click to enlarge.

“The UK travel recovery should not be allowed to lag behind the US and Europe,” added Wingate. “Passengers need the travel rules simplified so they can choose to travel more freely and enjoy much needed breaks and reunions with family and friends which are currently much more attainable for those in Europe and the US.”

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