Yahoo Finance Heathrow warns of dark clouds for aviation recovery amid war and oil surge
Heathrow airport has warned that the Ukraine war and surging fuel prices threaten the company’s recovery from the pandemic.
On Friday it said there was now a “huge uncertainty” after Russia invaded Ukraine last month, adding to already lingering COVID concerns.
Britain’s busiest airport, which has reported £3.8bn ($5bn) in losses over the past two years, revealed that it had not seen as many passengers return in February as it expected, with 2.8 million people travelling through the hub.
This was just over half of pre-pandemic levels during the period, and 15% below its forecast total.
Some 5.4 million passengers travelled through the airport in February 2020, before the pandemic knocked the aviation industry.
Read more: UK economy rebounds in January as Omicron disruption eases
Heathrow chief executive John Holland-Kaye said: “Aviation’s recovery remains overshadowed by war and COVID uncertainty.
“But we need to ensure we are geared up to meet peak potential demand this summer and are relying on the CAA to make a fair financial settlement that incentivises investment to maintain passenger service and encourages airlines and Heathrow to work together to grow passenger numbers.”
Outbound traffic was recovering strongly. However, demand from inbound leisure and business travel remained “suppressed” by coronavirus testing and quarantine requirements in nearly two-thirds of the markets it served.
It said: “While we hope that these will be removed, we also face headwinds from higher fuel prices, longer flight times to destinations impacted by airspace closures, concerns from US travellers over war in Europe and the likelihood of new 'variants of concern', which together create huge uncertainty over the passenger forecasts this year.”
Oil prices have soared since the geopolitical conflict between Russia and Ukraine started, hitting their highest levels since 2008 last week. Russia’s economy is heavily dependent on commodity exports and a recent ban from the UK and US helped elevate prices.
The possibility of new coronavirus variants of concern emerging is also a potential threat to growth for the travel and leisure industry.
Read more: Rishi Sunak: Ukraine war creating 'significant uncertainty' for UK economy
Together these issues create “huge uncertainty over the passenger forecasts this year”, Heathrow said.
The group added that it had further concerns surrounding Border Force's ability to scale up to meet demand after several instances of queues at immigration.
It is recruiting as many as 12,000 new staff members to help tackle this issue, and plans to reopen Terminal 4 before July.
Watch: Heathrow faces 'headwinds' to COVID recovery as Russia's war raises costs and knocks confidence
