Heathrow investors may soon realise “the days…

Heathrow investors may soon realise “the days of plenty are over”, with returns cut
2020-03-03 12:31:00
Heathrow’s planned 3rd runway plans took a very substantial knock on 27th March, when the 3 Appeal Court judges ruled that the Airports National Policy Statement was invalid.  It had not properly taken carbon emissions, and the Paris Agreement, into account. The Government now has to decide what to do about the NPS. The scheme is looking less attractive for its investors. The Sunday Times has written that “Heathrow’s owners, which have siphoned off a stream of dividends over the past decade, are about to learn that the good times are coming to an end.” …”Heathrow was bought for £10.3bn as part of the airports monopoly BAA in 2006 by a consortium led by the Spanish infrastructure giant Ferrovial. After an initial period when lenders restricted dividends, payouts have flowed, while debt has soared. From 2012, the airport has paid out more than £4bn of dividends, including £500m announced last week.”  Currently Heathrow investors earn more, the more Heathrow spends and builds.  “But that may be about to change…” The CAA may soon get much tighter on returns to investors, as they are being with NATS.  .Tweet   Forget the third runway, Heathrow’s payouts are on the line The huge returns to the airport’s owners are under threat By John Collingridge (The Sunday Times) March 1st 2020 As the clock ticked down to Heathrow’s date with destiny at the Court of Appeal last week, the airport’s boss made one last attempt to burnish its green credentials. The west London hub had become carbon-neutral, John Holland-Kaye declared, and would go even further by planting trees in Scotland and restoring peat bogs in Lancashire. It was a “significant milestone and a testament to the determination of our airport to help spearhead a new era of sustainable aviation”, said the urbane chief executive. However, the calculation excluded the hundreds of thousands of flights and millions of cars that use the airport. Only the physical infrastructure — terminal buildings and baggage handling gear — was counted. It was a futile PR gesture. Last week, climate change campaigners delivered a hammer blow to the airport’s £14bn plan [maybe as much as £30 billion]  for a third runway when three High Court judges ruled that expansion was illegal as it did not take into account the Paris climate agreement. That agreement, from 2016, under which the government pledged to restrict climate emissions, was not factored in when ministers approved the third runway, they ruled. Add to that opposition from Boris Johnson, and the airport’s expansion plans have been left in tatters. Other problems are also mounting. Heathrow’s owners, which have siphoned off a stream of dividends over the past decade, are about to learn that the good times are coming to an end. The Civil Aviation Authority (CAA), which polices the charges that Heathrow levies on every ticket, is about to clamp down on the airport’s returns. Competition could also be on the way, too, via an attempt by hotels tycoon Surinder Arora to build a rival terminal at the airport. Heathrow was bought for £10.3bn as part of the airports monopoly BAA in 2006 by a consortium led by the Spanish infrastructure giant Ferrovial. After an initial period when lenders restricted dividends, payouts have flowed, while debt has soared. From 2012, the airport has paid out more than £4bn of dividends, including £500m announced last week, to investors including sovereign wealth funds from Singapore, Qatar and China — as well as USS, which invests on behalf of British academics. Under a complex regulatory system, investors are rewarded based on the size of Heathrow’s asset base, (RAB) which now stands at £16.6bn. That means the

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