London's Heathrow Airport has moved back into profit for the first time since the Covid pandemic devastated global air travel.
On Wednesday, the consortium that owns Heathrow, FGP Topco, said it made £38 million in pre-tax profits last year, the first time the airport has been back in the black since 2019, following a loss of £684 million in 2022.
The fightback to profit was mostly down to the 79.2 million passengers, representing a 28.6 per cent increase on the year before, that passed through Heathrow last year. Heathrow celebrated the end of last year with its busiest-ever December.
“2023 was a good year for Heathrow from a challenging start to a great finish,” said Heathrow's chief executive Thomas Woldbye.
“We delivered much improved service for our customers, and managed to turn a small profit after three consecutive years of losses.”
Heathrow's announcement comes just days after Dubai International Airport announced it had played host to about 87 million passengers in 2023, a growth of 31.7 per cent on the year before.
'Magnet for international tourism'
Meanwhile, Heathrow said that UK Chancellor Jeremy Hunt should not miss an opportunity in his budget in a few weeks' time to make the UK a “magnet for international tourism” by reintroducing tax free shopping for international travellers.
“Tax-free shopping is really about creating growth in the UK, which we all want to do, and I think we should reintroduce a programme that works so we are competitive with the world around us,” Mr Woldbye told the BBC.
“We can simple see that tourists are spending elsewhere than the UK and I think that's a pity and we should change it.”
'Tough choices'
However, Heathrow said that the sustainability of its strong performance going forward is less certain, given that the settlement of the dispute between itself and its airline clients over airport charges is effectively a restraint on profit growth.
After a ruling by the Civil Aviation Authority (CAA), the charges Heathrow can levy to airlines have been reduced by 20 per cent since the beginning of the year, which the airport said means “maintaining even a small profit will require us to close a £400 million gap with efficiencies and investment trade-offs over the next three years”.
Exactly what these efficiencies and investment trade-offs will be will be released in Heathrow's refreshed business strategy, which will be released in the coming months. However no dividends were paid in 2023, and none are currently forecast for this year.
“We will have to pull every lever to become more efficient and make tough choices on where we spend and invest our money to overcome the huge cost challenge set by the CAA and remain profitable over the next three years,” Mr Woldbye said.
Meanwhile, Heathrow said it is upgrading 146 security lanes as part of its £1 billion investment in next generation security equipment. The airport announced the appointment of a lead contractor to replace the baggage system at Terminal Two.
