Heathrow’s financial problems deepen, especially if it has 15% less…

heathrow’s-financial-problems-deepen,-especially-if-it-has-15%-less…

Heathrow’s financial problems deepen, especially if it has 15% less…

Heathrow’s financial problems deepen, especially if it has 15% less passengers in 2022 than forecast
2022-01-31 11:41:00
Heathrow has been allowed, by its regulator the CAA, to increase its passenger charge from £19.36 to £30.19 this year until the summer. After that the CAA will probably rule on charges for the next 5 years.  Heathrow wanted a larger increase, to £43 per passenger, and based some of its profit forecasts on that – and is peeved with the CAA for limiting its charges. Heathrow has net debts of £15.4 billion .  It says that if its number of passengers in 2022 is more than 15% below its forecast of 45.5 million, it will have financial problems – though “no covenant breaches are forecast in 2022” but that is possible. Its forecast aeronautical revenue for 2022 has been revised down to £2.19 billion, and its underlying earnings down to £1.04 billion.  If Heathrow has to breach its covenant terms with its lenders, it becomes a less attractive (aka lucrative) investment, and its credit rating  eg. by Standard & Poor’s and Fitch.  The airlines using Heathrow are, predictably, deeply opposed to yet higher Heathrow charges. .Tweet Passenger charge row casts cloud over Heathrow profit forecast By  Alistair Osborne  (The Times) January 29 2022 Heathrow’s lobbying for a huge increase in charges has angered the airlines that use the airport and pay for the privilege Heathrow has cut its profit forecasts and warned of a possible breach of its banking covenants after claiming that the aviation regulator should have allowed it to raise its passenger charges by more than 56%. In an update to investors, Britain’s premier airport accused the Civil Aviation Authority of making “material and basic errors”, despite allowing an inflation-busting rise in charges from £19.36 to £30.19 per passenger. The increase, from the start of this year, covers the period until this summer, when the regulator is expected to rule on charges for the next five years. After lobbying for a rise to as much as £43 per passenger, the airport had budgeted last year for an increase of “approximately £7 per passenger” more than the regulator eventually allowed. Based on a forecast of 45.5 million passengers, it said that it faced a “reduction” of £307 million in forecast aeronautical revenues for 2022 and a similar drop in underlying earnings. The figures have been revised down to £2.19 billion and £1.04 billion, respectively. The airport, which has £15.4 billion of net debt, said that “no covenant breaches are forecast in 2022”, though it warned that they were possible “if cashflows from passengers are more than 15% below forecast”. Its owners include Ferrovial, the Spanish construction group, and state-backed funds in China, Qatar and Singapore. The airport’s lobbying for a huge increase in charges has angered its airline customers. Luis Gallego, chief executive of International Consolidated Airlines Group, the British Airways owner, said the airport was “now 90% more expensive than its European competitors. Hiking prices will be detrimental for the UK’s economic recovery.” Willie Walsh, the former IAG boss who heads the International Air Transport Association, has accused the r

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