Heathrow under fire for £525m dividend payment

Heathrow has come under fire for paying a dividend of £525 million to shareholders at a time when it faces criticism from airlines over the cost of a planned third runway.

The payout, disclosed in the airport’s 2017 financial results, was attacked by British Airways owner International Airlines Group and Heathrow Hub, the alternative scheme to expand Heathrow with an extended runway.

IAG said: “Britain needs cost-effective airport infrastructure that boosts the UK’s competitiveness, not just the airport’s shareholders.

“Heathrow is already the most expensive hub airport worldwide and the government must protect consumers by putting a cap on what they pay to use Heathrow.

“Charges should not increase from today’s levels if the airport is to have a future.”

IAG chef executive Willie Walsh and is Virgin Atlantic counterpart Craig Kreeger both appeared before MPs this week calling for a cap on charges to be imposed before Heathrow expansion is given the final green light by government.

A spokesman for Heathrow Hub said: “Heathrow airport’s shareholders and its board vetoed our cheaper, simpler, quieter scheme in 2016 because they would make less money and not because of any technical objection. This plainly is against the public interest.

“As Willie Walsh, chief executive of British Airways owner IAG and other airline executives told the Transport Select Committee this week, Heathrow airport’s plans for a third runway could cost billions more than the admitted budget of £14 biilion and are going to result in even higher charges for passengers.

“We should have zero confidence in Heathrow airport’s vague commitments to hold costs down.

“Heathrow airport’s third runway plans are another infrastructure project waiting to go wrong. We call on Lillian Greenwood, chair of the Transport Select Committee, to amend the National Policy Statement which she is reviewing so that our cheaper, simpler, quieter extended runway is taken forward instead.

“Our first phase is the cheapest option for expansion, at £3.8 billion, and would have no impact on current passenger charges.”

The airport said in its full year results: “Dividends to ultimate shareholders reflect the continued strong performance achieved by the business including delivering better value for airlines and passengers and significantly improving service.”

Heathrow told The Times that it was “completely normal for investors to receive a return when a private business exceeds performance targets, enabled by investments they made in the first place”.

It said that Heathrow had benefited from £11 billion in private investment over the past decade.

The airport is confident that the expansion will be privately funded and has vowed to keep charges close to today’s levels.

It recently announced it had identified £2.5 billion of savings, taking the cost down to £14 billion.

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