Heathrow has downgraded its passenger forecasts amid the “seismic” impact of Covid-19 on aviation.
Passenger traffic this year is expected to be down to 22.3 million, a decline of 300,000 on projections issued with third quarter results as a result of the November lockdown in England.
Numbers are now forecast to fall by 54% in 2021 to 37.1 million over pre-Covid levels in 2019.
Adjusted earnings [ebitda] are forecast to slump this year by 86.8% to £254 million compared to 2019 as a result of reduced passenger numbers, “somewhat mitigated” by £300 million in cost cuts.
Equivalent Profits for 2021 are projected to reach £493 million next year, driven by a recovery in passenger traffic and additional cost reduction initiatives, the airport’s December investor report revealed.
Heathrow said: “Covid-19 continues to represent a seismic challenge for the aviation industry, including Heathrow.
:The pandemic drastically reduced air travel as governments around the world closed their borders and airlines dramatically cut capacity.
“Whilst we welcome the progress made by the government’s Global Travel Taskforce in establishing an initial testing regime, the speed of recovery remains uncertain and depends on making further progress with passenger testing to replace restrictive quarantine measures.”
The London hub added: “Our focus remains on protecting people’s safety and the financial resilience of Heathrow, preserving our cash position and reducing costs. Despite our deteriorated traffic outlook, we do not forecast any covenant breach in 2021.
“Our liquidity position remains strong with £4.6 billion of cash and committed facilities available to the business as at 30 November 2020, sufficient to meet all obligations until 2023 under our traffic forecast.
“Cost savings initiatives will continue into 2021 to protect our cash position.
“Given the deteriorated traffic outlook, Terminal 4 will be non-operational until the end of 2021. Work also continues to ensure all salaries are aligned to market rates.”
The airport welcomed this week’s Supreme Court’s ruling, backing a third runway
“This is the right result for the country, which will allow Global Britain to become a reality,” Heathrow said.
“As passenger numbers recover, our immediate focus will be to continue to ensure their safety and to maintain our service levels while we consult with investors, government, airline customers and regulators on our next steps regarding the expansion project.”
A revised business plan is being submitted to the Civil Aviation Authority today, with the regulator expected to publish initial proposals for future charges in summer 2021.