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Heathrow upgrades profit forecast amid stronger than expected travel recovery

Heathrow has upgraded its profits forecast on the back of a stronger than expected travel recovery from the pandemic.

The London hub projects passenger numbers of 61.4 million for this year.

This is at the upper end of the 60-62 million guidance  published with its results of the third quarter and 7 million higher than forecast in June. 

The figure is just over 75% of pre-pandemic 2019 levels. 

Numbers for the first 11 months of the year reached 55.7 million despite a passenger cap imposed between July and October.  

Heathrow’s financial forecast for 2023 suggests 67.2 million passengers will use the airport, representing further recovery to 83% of 2019 levels.

Adjusted ebitda is forecast to increase by 4% to £1,747 million.

The airport added that building back to full capacity remains its top priority. 

“Heathrow has already recruited 16,000 people since last November and we continue to work alongside airlines and their ground handlers to boost recruitment next year,” the airport added. 

“The work we have undertaken since summer means that we head into the winter peak without any restrictions on passenger numbers. 

“Despite potential strike action by Border Force this month, our aim is to protect full operating schedules and the vast majority of passengers will be unaffected.”

Heathrow revealed in an investor report today (Friday): ”Given the strong traffic outturn, adjusted ebitda [earnings] is forecast to be £1,678 million, an increase of £308 million versus the June forecast.

“This reflects higher revenue as demand has recovered, with operating costs flat versus the June forecast. 

“Our liquidity position remains strong, and we expect to finish the year with £4.3 billion of cash and committed facilities available, sufficient to meet all obligations until 2025 under our base case.”

Heathrow added: “In respect of aeronautical revenue, we have prepared our financial forecast using a charge of £31.57, in line with the 2023 interim price cap proposal published by the CAA on 8th December.”

But the airport criticised the aviation regulator’s proposal for an average future charge of £24.14. 

If imposed, this “would result in an airport that falls far short of what our passengers expect,” Heathrow claimed.

“Our analysis shows that the CAA’s proposals, as currently set out, are not deliverable or financeable due to errors in the CAA’s forecasts of key regulatory building blocks,” Heathrow claimed.  

“If these errors are not rectified, it will restrict investment in the UK’s hub airport when the country’s economic recovery needs it most.”

Heathrow expects the CAA to issue its final decision on charges  as part of a regulatory review early in the new year.

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