UK. London Heathrow Airport today reported first-quarter results to 31 March, with retail revenue declining by -15% year-on-year. This was driven by a -18.3% fall in passenger traffic to 14.6 million; the airport company said April figures would be around -97% down year-on-year.
Retail revenue per passenger increased +4.0% to £9.28. The airport company said: “The retail revenue per passenger increase is due to minimum value guarantees included in many of our concession agreements providing a bottom threshold while passenger numbers declined.” [Note: An interview with Heathrow Retail Director Fraser Brown will appear shortly.]
Total Q1 revenue declined by -12.7% to £593 million. March revenue alone declined by -28.9%, which reflects the impact of reduced passenger numbers after the UK entered lockdown, and most outlets closing from the last week of the month. Heathrow has also consolidated activities into T2 and T5.
Adjusted EBITDA decreased -22.4% to £315 million, resulting in an Adjusted EBITDA margin of 53.1%. The group recorded a loss before tax of £278 million (compared to £132 million profit in Q1 2019) and a loss after tax of £352 million (from £102 million profit in 2019).
A Heathrow statement said: “We expect passenger demand will remain weak until governments around the world deem it safe to lift travel restrictions. Heathrow is working with partners round the world to establish a Common International Standard for safe air travel to help the economy recover from the COVID-19 crisis.”
The company added: “We are ready to work with governments and the global aviation industry to agree a consensus around standardised processes for responding to health crises like COVID-19 in the future. This could include a number of measures such as a health passport, health screening, enhanced cleaning standards and innovation which will reduce physical contact in airports. Common measures across the world would help passengers build confidence in flying so that the personal and economic benefits of global travel can continue after COVID-19.”
Amid the crisis, Heathrow has taken action to conserve cash and reduce costs by around -30%, through cutting management pay, renegotiating all contracts and consolidating operations. Capital expenditure has been cut by £650 million.
The company noted that it has £3.2 billion in liquidity, “sufficient to maintain the business at least over the next 12 months, even with no passengers”.
Heathrow CEO John Holland-Kaye said: “When we have beaten this virus, we will need to get Britain flying again so that the economy can recover as fast as possible. That is why we are calling on the UK government to take a lead in setting a Common International Standard for safe air travel.”
