£3.8bn stall but still flying: UK’s biggest airport looks ahead after ‘worst year in Heathrow’s history’
Heathrow has revealed 2021 was the worst year in its history, as passenger numbers fell to 19.4 million – the lowest since 1972 – while cargo went down 12 per cent as a result of the pandemic’s impact on aviation.
In the year ended 31 December, the London hub reported that, despite its efforts to achieve £870m in costs savings over the last two years, pre-tax losses amounted to £3.8bn because of lower passenger numbers and higher fixed costs.
Heathrow added that its £4bn liquidity remains sufficient to support recovery but the airport didn’t pay dividends in 2021 and is not forecasting to do so this year.
“While 2021 was the worst year in Heathrow’s history, I am very proud of the way that colleagues focussed on passengers, and we were able to maintain our position as one of the top 10 airports in the world for service,” commented Heathrow’s chief executive John Holland-Kaye.
“Demand is now starting to recover and we are working closely with airlines to scale-up our operations and reopen Terminal 4 for the summer travel peak.”
Despite the removal of UK travel restrictions, passenger numbers in January and February have remained 23 per cent below forecast. In January demand levels slumped 56 per cent as more than 1.3 million travellers didn’t book or cancelled their trips because of Omicron.
Heathrow bosses said they are expecting a surge in outbound travel, which should help the airport meet its 2022 target of 45.5 million passengers.
Inbound travel will remain a key challenge for the airport, as testing requirements remain in 63 per cent of Heathrow’s markets. According to Holland-Kaye, pre-pandemic travel numbers will not go back to normal until all travel restrictions are removed.
“Until we can get rid of the routine testing and the risk that [travel curbs] are going to be reintroduced at a short notice, we’re just not going to get back to the normal travel levels that we enjoyed two years ago,” he told Morning Wire
According to Victoria Scholar, Interactive Investor’s head of investment, while outbound travel is destined to come back, pre-pandemic inbound travel levels could be more difficult to obtain.
“Boris Johnson’s ‘Living with Covid’ plan to lift all remaining restrictions, coupled with pent-up demand for holidays should see a surge in bookings this year, although international business travel could remain subdued as working from home and Zoom meetings become the new norm,” she said.