LHR reports -63% slide in retail revenue; blames UK Gov for stalling on tests

By Charlotte Turner |

L-to-R: Dufry CEO, Julián Díaz in deep conversation with John Holland-Kaye at the opening of LHR's T3 new store back in 2018.

L-to-R: Dufry CEO, Julián Díaz in deep conversation with John Holland-Kaye at the opening of LHR’s T3 new store back in 2018.

London Heathrow Airport reported another dramatic retail revenue decline of -63.2% in the first nine months of this calendar year, as passenger numbers remain historically low, whilst retail revenue per passenger increased 18.1% to £10.38 over the same period; up from £8.79 in 2019.


Dufry’s World Duty Free holds the core duty free contract at Heathrow Airport operating stores in all its terminals and as reported was able to re-open select stores in June and July of this year.


However, in line with other international airports, the UK’s biggest airport knows that its retail income per passenger is largely distorted due to the reduced passenger numbers and is not sustainable.


“Britain is falling behind because we’ve been too slow to embrace passenger testing,” said Heathrow CEO John Holland-Kaye. “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.”


Earlier this year, Heathrow Retail Director, Fraser Brown, featured in TRBusiness’ Adapt & Survive video interview series.



Keeping people safe remains top priority for LHR, which has invested in UK aviation’s most extensive array of Covid-secure technologies, it has claimed.


“New rapid testing technologies are already helping to open up overseas markets safely.”

Unsurprisingly the airport has revised down its traffic forecast to 22.6m in 2020 and 37.1m in 2021, compared to the June forecast of 29.2m in 2020 and 62.8m in 2021, and 2019 actuals of 81m.


“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,” added Heathrow while confirming that for the first time, Paris Charles de Gaulle has overtaken it as Europe’s largest airport, with Amsterdam Schiphol and Frankfurt close behind.



All three of its rivals have implemented testing regimes. 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.

Total revenue losses widened to £1.5 billion in the first nine months of this year as passenger numbers in Q3 remained down over 84%. Q3 revenue fell 72% to £239 million and Q3 adjusted EBITDA fell to £37 million.


“We acted quickly to reduce our monthly cash burn by over 30%, cutting at least £300 million of operating costs and cancelling or pausing over £650 million of capital projects,” said Heathrow.

“Further savings are planned, but we are protecting employment, offering all frontline colleagues a job with market-rate salaries guaranteed at or above the London Living Wage.”


According to the airport operator, its finances remain robust and liquidity at the end of September has been boosted further in October to £4.5bn. Cash reserves are sufficient for the next 12 months, it said, even under an extreme scenario with no revenue, and well into 2023 under our current forecast.


“Investor confidence remains strong with 94% of creditors agreeing a waiver on financial covenants until the end of 2021,” added LHR. “We have maintained our Investment Grade credit rating status.”


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