MIAMI – London Heathrow Airport’s (LHR) key stakeholder Ferrovial has indicated that it may stop investing in the airport, according to a report in the Sunday Telegraph.
Due to the impact of airport restrictions at LHR, Ferrovial has lost US$100m, according to Spanish news outlet ABC. The closing of Ferrovial’s cash tap would deal a “killer blow” to plans for a third runway at LHR.
Ferrovial has capped its red numbers until September, but it will not be able to avoid losses. The infrastructure company told the CNMV that it had lost US$100m in the first six months of the year due to air traffic restrictions that stifled activity at LHR, which is managed by a Ferrovial-owned company.
Ferrovial’s losses are well below the US$513m loss forecasted between January and September 2020, when the company was hit by the pandemic. However, losses are losses nonetheless.
Indeed, Ferrovial’s airport division an overall negative numbers, as a result of the impact of international airport restrictions at LHR. The London airport had a 46% drop in passengers, bringing the total number of passengers to 10,9 million.
On a business level, revenues are down 26.9%, while the RBE is down 54.8%. The AGS airports have also been significantly impacted by the drop in traffic, with sales down 8.7% and an RBE of -£11m.
London Heathrow’s Third Runway
In 2018 Members of Parliament (MP) in the British Houses of Commons approved what was seen then as very controversial plans to back the third runway at LHR. The vote came following 20 years of debate, failed votes, and significant opposition.
MPs backed the vote by 415 votes to 119, offering a solid majority of 296 MPs in total.
Not Everyone on Board
There were members of parliament that abstained from the vote in protest but had evidently largened the majority in favor of the expansion.
The UK’s Transport Secretary, Chris Grayling, commented on the vote, saying, “This marks a critical step towards ensuring future generations have the international connections we need, as well as strengthening the links between all parts of the UK and our global hub.”
The UK CBI also welcomed the news as “a truly historic decision that will open the doors to a new era in the UK’s global trading relationships”, with those opposite such as Friends of the Earth saying, “MPs who backed this climate-wrecking new runway will be harshly judged by history.”
Little they would know that a Pandemic would stifle the airport’s expansion plan.
In July of last year, LHR confirmed to BBC Radio 4 that it expected a two-year delay on its third runway due to the ongoing COVID-19 pandemic and the effect it was having on demand for air travel.
Passenger numbers at LHR were down 96% in the second quarter of 2020, with revenues falling 85% to £119m. At the time, the airport reported an adjusted loss of £93m.
Current Restrictions at London Heathrow
The UK’s travel red list could be scrapped by the government at the next review scheduled for early November. The review will affect travelers from LHR and other UK ports of entry.
The UK’s high coronavirus rates may result in travel restrictions to other nations, but the government’s focus on the vaccine means the red list may be phased off altogether.
Further, the UK will cease on Monday to require any travelers to quarantine in government-designated hotels, by removing the last seven countries from its “red list” for coronavirus risk, according to the New York Times.
However, the limitations on unvaccinated passengers, including the requirement that they take PCR testing and a 10-day quarantine upon their return, are likely to continue in place. Travelers must also do a PCR or lateral flow/antigen test within three days of their return, as well as a test on or before days two and eight.
Featured image: LHR’s third runway design. Render: London Heathrow Airport