Heathrow halves losses but cautious on outlook

Heathrow said on Wednesday that it halved its losses in the first half but struck a cautious note on the outlook for the second half, citing the cost-of-living crisis.

In the six months to 30 June, adjusted pre-tax losses narrowed to £139m from £321m in the same period a year earlier, as revenues grew to £1.7bn from £1.3bn. Passenger numbers were 42% higher at 37.1m.

Heathrow said it remains loss-making due the Civil Aviation Authority setting "too low a revenue allowance" in the H7 regulatory settlement to generate enough cash flow.

The airline also cautioned that overall passenger numbers remain consistently below pre-pandemic levels, and said the cost-of-living crisis is a "material" headwind for second-half demand.

Danni Hewson, head of financial analysis at AJ Bell, said: "A post-Covid travel boom has helped Heathrow pare back its losses, but it continues to blame a cap on charges for the fact it remains loss making despite a surge in passenger numbers.

"Whilst airlines have been able to hike ticket prices to help them mitigate rising prices, the airport has been locked in a dispute with the CAA over how much it can charge for landing fees.

"And with some inflation weary consumers being battered by increased mortgage payments there’s a real concern that this winter could prove a difficult one for businesses that rely on discretionary spend."