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Heathrow weighs revival of third runway after return to profit

Heathrow
Heathrow

Heathrow is plotting to revive its controversial third runway project after the airport posted its first profit since the pandemic.

Europe’s busiest airport is in the process of refreshing its expansion plans in the wake of  a strong return to travel post-pandemic.

Heathrow reported adjusted profit before tax of £38m last year, a considerable upswing following losses of £684m in 2022.

This stemmed from passenger numbers rising to 79.2m in 2023, the third-highest in Heathrow’s history.

Chief executive Thomas Woldbye, who replaced long-standing boss John Holland-Kaye in October 2023, said: “Obviously, the buoyant market and willingness to travel is important because that supports the business case for a third runway.

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“That could have been a question before Covid. But now we know that people are back to travel, maybe even more than they were before.

“Right now we are updating their project to make sure we can take the right decision. We will come out with a broader strategy in the coming months. We can’t be rushed on this.”

Heathrow chief executive Thomas Woldbye
Heathrow chief executive Thomas Woldbye said traveller numbers could soon bypass their pre-Covid levels - Heathrow

Despite the return to profit, Heathrow bosses warned that a reduction in the charges it can impose on airlines will force the airport to make £400m of savings over the next three years.

It said: “Airport charges were reduced by 20pc in real terms at the start of 2024, which means maintaining even a small profit will require us to close a £400m gap with efficiencies and investment trade-offs over the next three years.”

Mr Woldbye added: “2023 was a good year for Heathrow from a challenging start to a great finish. We delivered much improved service for our customers, and managed to turn a small profit after three consecutive years of losses.

“That’s a great platform to build on, although in 2024, we are expected to deliver even further improved service to more passengers, but with airport charges cut by 20pc in real terms.

“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 Civil Aviation Authority and remain profitable over the next three years.”

The results come less than two months after Saudi Arabia’s sovereign wealth fund agreed to buy a 10pc stake in Heathrow Airport.

Spanish infrastructure giant Ferrovial sold its 25pc share in Europe’s busiest airport to the Saudi Public Investment Fund (PIF) and to French firm Ardian, which secured a 15pc stake.

Ferrovial had been the airport’s largest shareholder since 2006 before the sale.

It has also since emerged that the UAE is in talks to buy a stake in the business amid deepening economic ties between the Gulf and Britain.

Mubadala Investment, an Abu Dhabi sovereign wealth fund, is reportedly weighing an investment after being approached by existing shareholder Ardian, the European private equity giant.