Wednesday, 29 July 2020

Heathrow takes steps to combat COVID-19 - Results for the 6 months ended 30th June 2020

 John Holland-Kaye wants COVID-19 testing on arrival and after 7 days                   Photo Heathrow Airport
London Heathrow Airport's boss calls on the government to do more to protect his job, his company's profits and the commercial aviation industry in the UK. He made the headline-grabbing statement on the day the airport released more details of its latest results and what it has done to combat the effects of coronavirus COVID-19.

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.”   

During the 6 months to 30 June,  Heathrow has:



  • Safety remains our biggest priority  We are deploying UK’s most extensive array of new COVID-secure technologies to protect passengers and colleagues.
  • Significant passenger decline pushes Heathrow to loss - Passenger numbers were down over 96% in Q2 as global aviation came to a virtual standstill. We anticipate 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 £119 million and adjusted EBITDA turned to a loss of £93 million. We recorded an adjusted loss before tax of £471 million in the first six months of 2020.​
  • Cargo volumes down over 30%, hit by loss of passenger flights – Cargo at the UK’s biggest port usually travels in the hold of passenger planes. Increase in cargo-only flights has not offset the loss of passenger flights to long haul markets. 
  • Decisive action taken to protect jobs and cut costs – We acted quickly to reduce our average cash burn by over 30%, by cutting at least £300 million operating costs and cancelling or pausing over £650m of capital projects. We have tried to protect as many jobs as possible and maintain pay at or above the London Living Wage.
  • Heathrow finances remain robust - Cash reserves are sufficient until at least June 2021 with no revenue. We have agreed a waiver on financial covenants until the end of 2021 and maintained our Investment Grade credit rating status. 
  • UK’s economic recovery depends on restarting aviation - Government’s risk-based approach to allow quarantine-free flights from low and medium risk countries is very welcome, but only covers 30% of Heathrow’s markets. Establishing an alternative to quarantine for COVID-free passengers from other countries should be a priority for Government. Pre-flight testing for passengers from high risk countries will allow long haul flying to resume, which is critical for the UK’s economic recovery. 






-

At or for 6 months ended 30 June
2019
2020
Change (%)
(£m unless otherwise stated)



Revenue
1,461
712
(51.3)
Cash generated from operations
907
294
(67.6)
Profit / (loss) before tax
7
(1,059)
--
Adjusted EBITDA(1) (4)
907
222
(75.5)
Adjusted profit / (loss) before tax(2) (4)
153
(471)
--
Heathrow (SP) Limited consolidated nominal net debt(3) (4)
12,412
12,860
3.6
Heathrow Finance plc consolidated net debt(3) (4)
14,361
14,932
4.0
Regulatory Asset Base(5)
16,598
16,516
(0.5)
Passengers (million)(6)
38.8
15.4
(60.2)
 
Notes
(1)   Adjusted EBITDA is profit before interest, taxation, depreciation, amortisation, fair value adjustments on investment properties and exceptional items
(2)   Adjusted profit before tax excludes fair value adjustments on investment properties and financial instruments and exceptional items
(3)   Consolidated nominal net debt is short and long-term debt less cash and cash equivalents and term deposits, it includes index linked swap accretion and the hedging impact of cross currency interest rate swaps. It excludes pre-existing lease liabilities recognised upon transition to IFRS 16, accrued interest, bond issue costs and intra-group loans. 2019 figures are as at 31 December 2019
(4)   A reconciliation of our Alternative Performance Measures (‘APMs’) can be found in note 14
(5)   The Regulated Asset Base is a regulatory construct, based on predetermined principles not based on IFRS. It effectively represents the invested capital on which we are authorised to earn a cash return. 2019 figures are as at 31 December 2019
(6)   Changes in passengers are calculated using unrounded passenger numbers
Heathrow (SP) Limited is the holding company of a group of companies that fully own Heathrow airport and together with its subsidiaries is referred to as the Group. Heathrow Finance plc, also referred to as Heathrow Finance, is the parent company of Heathrow (SP) Limited.


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