London Heathrow Airport reported today (26 October) retail revenues of £413 million/$467 million (+238.5%) in the nine months ending 30 September.
The result was outstripped by growth in passengers numbers, which surged 335% to reach 44.2 million compared with the same period in 2021 – but this was down by 27% against the nine months in 2019.
At £143m (+240.5% versus 9m 2021), income from retail concessions took the lion’s share of total retail revenue, financial results from Heathrow (SP) Limited revealed.
Retail revenue per passenger lifted 22.2% to £9.34.
Total revenue from aeronautical, retail and other segments were up 203% for the period (-9% versus 9m 2019) to £2,106 million, with adjusted EBITDA increasing by 970% (-14% versus 9m 2019).
Passenger cap to lift this week; Up to 25,000 staff needed
The airport handled 18 million passengers over the third quarter and confirms it will lift its controversial 100,000 daily passengers cap on Sunday 30 October.
Passenger numbers are now forecast to reach between 60-62 million in 2022, an approximate 25% decrease on 2019.
Given the updated traffic outlook, EBITDA for 2022 is expected to be circa £1.6bn.
Pre-pandemic record volumes are unlikely to restore for a number of years, according to the hub, notwithstanding peak times, due to the ongoing war in Ukraine, global economic headwinds and the impact of Covid-19.
Heathrow says it is working with airlines on a ‘highly targeted mechanism’ that is able to react to align supply and demand during peak days in the build up to Christmas.
Its implementation is designed to foster demand in less busy periods, protecting heavier peaks, and thus avoiding flight cancellations due to pressure on resources.
To build back capacity, the airport acknowledges it needs to recruit and train up to 25,000 security cleared individuals, something it describes as ‘a huge logistical challenge’, and is working closely with government on a review of airline ground handling and appointing a senior operational executive to invest in joint working.
Despite underlying losses of £4.4 billion accrued over the past few years – including a £400m increase year-to-date as regulated income fell to cover costs – Heathrow maintains confidence in its robust balance sheet and says it has acted responsibly in the face of market uncertainty to protect liquidity and cashflow, and reduce gearing.
It is not forecasting any dividends this year.
The airport brands the recently announced ICAO agreement on net zero international aviation by 2050 a ‘landmark’ in decarbonising a sector perceived as ‘hard to abate’.
It lauds Sustainable Aviation Fuel (SAF) as the key technology to remove fossil fuels from flying and confirms that an incentive introduced this year for airlines to use SAF at Heathrow is proposed to increase in 2023.
“We can be proud that everyone at Heathrow pulled together to serve consumers this summer – ensuring 18 million people got away on their journeys, more than any other airport in Europe, with the vast majority experiencing good service,” said John Holland-Kaye, CEO, Heathrow Airport.
“We have lifted the summer cap and are working with airlines and their ground handlers to get back to full capacity at peak times as soon as possible. As we look to the future, we encourage the CAA to think again at stimulating the long-term investment that will deliver the smooth and predictable journeys consumer value most, rather than focusing on short-term pricing which we have seen only benefits airline profits.”
All images courtesy of Heathrow/Heathrow (SP) Limited.