Heathrow at risk of defaulting on its £15bn debt as…

heathrow-at-risk-of-defaulting-on-its-15bn-debt-as…

Heathrow at risk of defaulting on its £15bn debt as…

Heathrow at risk of defaulting on its £15bn debt as UK-US flights not returning soon
2021-07-05 18:03:00
Heathrow has now made a loss of at least £3 billion, due to the pandemic.  It is now at risk of defaulting on its huge £15bn debt, after talks stalled over the return of flights between Britain and America.  Heathrow had been depending on lucrative trans-Atlantic flights resuming by the start of July.  At the end of June, Heathrow warned its bondholders that if its profits are £66m or more lower than expected by December 2021, then it will breach the strict rules governing its complex portfolio of loans.  It does not look likely that flights to the US will return to anything approaching 2019 levels for a long time.  Up to 2019, North America was Heathrow’s single biggest market making up almost 19m of its 81m passengers in 2019. Heathrow is believed to have the support of its lenders despite the prospect of a potential breach of its banking covenants, the rules that govern loans. Shareholders, which include Spain’s Ferrovial and the state of Qatar, injected £600m into the business when it faced the prospect of a similar breach last year. .Tweet     Slow return of transatlantic travel fuels Heathrow fears Its earlier profit forecasts assumed that flights across the Atlantic would restart in July By Oliver Gill, CHIEF BUSINESS CORRESPONDENT (The Telegraph) 3 July 2021 Heathrow Airport is at risk of defaulting on its £15bn debt mountain after talks stalled over the return of flights between Britain and America. The travel hub has warned lenders that if profits are only £66m worse than expected by December 2021, then it will breach strict rules governing its complex portfolio of loans. Its profit forecasts were set out in an update to bondholders at the end of last month and assumed that flights across the Atlantic would restart in July – but officials are increasingly adamant there will be no return to normality this summer. Washington insiders have been spooked by rising rates of the Delta coronavirus variant. The chances that flights will restart imminently are “zilch”, one person said, with talks now expected to drag on until September instead. Before the pandemic, North America was Heathrow’s single biggest market with almost 19m of its 81m passengers coming from the region in 2019. EU countries are capitalising on Boris Johnson’s decision to stick to tighter rules. French President Emmanuel Macron has embarked on a charm offensive to woo Wall Street investment bankers, who are weary of the UK”s tough border controls. John Holland-Kaye, Heathrow’s boss, said: “Britain’s economic recovery is falling behind its European rivals because we have been slow to restart international aviation. The UK has always been better connected to the US than its European rivals, but now they have more flights and more passengers from the US than we do.” Heathrow is believed to have the support of its lenders despite the prospect of a potential breach of its banking covenants, the rules that govern loans. Shareholders, which include Spain’s Ferrovial and the state of Qatar, injected £600m into the business when it faced the prospect of a similar breach last year. Separately, the owner of Stansted and Manchester airports will go to the High Court this week to in a legal bid alongside Ryanair and the owner of British Airways o

Read More


Share this post