The global Covid-19 pandemic has pushed Heathrow to report a pre-tax loss of £471m in the first six months of 2020, with passenger numbers down by over 96% as global aviation came to a virtual standstill.
The airport anticipates a gradual recovery as countries reopen borders, but that 2020 passenger volumes will be more than 60% lower than 2019. Q2 revenue fell 85% to £119m and adjusted EBITDA turned to a loss of £93m, with the airport recording an adjusted loss before tax of £471m in the first six months of 2020.
Cargo volumes were also down over 30%, hit by loss of passenger flights. Cargo at the UK’s biggest port usually travels in the hold of passenger planes, but an increase in cargo-only flights has not offset the loss of passenger flights to long haul markets.
The airport says it acted quickly to reduce its average cash burn by over 30%, cutting at least £300m of operating costs and cancelling or pausing over £650m of capital projects. They say they have tried to protect as many jobs as possible and maintain pay at or above the London Living Wage.
Heathrow insists that its finances remain robust, with cash reserves sufficient until at least June 2021 with no revenue, and they claim to have agreed a waiver on financial covenants until the end of 2021 and maintained their Investment Grade credit rating status.
Airport bosses also say the UK’s economic recovery depends on restarting aviation and, although they have welcomed the government’s risk-based approach to allow quarantine-free flights from low and medium risk countries, say this only covers 30% of Heathrow’s markets.
They claim that establishing an alternative to quarantine for Covid-free passengers from other countries should be a priority for government, saying that pre-flight testing for passengers from high risk countries will allow long haul flying to resume, which they say is critical for the UK’s economic recovery.
Heathrow CEO John Holland-Kaye said: “Today’s results should serve as a clarion call for the government – the UK needs a passenger testing regime and fast. Without it, Britain is just playing a game of quarantine roulette. As many of our customers have experienced, it’s difficult to plan a holiday that way, let alone run a business.
“Testing offers a way to safely open up travel and trade to some of the UK’s biggest markets which currently remain closed. Our European competitors are racing ahead with passenger testing, if the UK doesn’t act soon global Britain will be nothing more than a campaign slogan.”