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Heathrow to welcome fewer passengers in 2021 than in pandemic year

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Heathrow
Heathrow

Heathrow has been given fresh breathing space by its lenders after warning it will welcome fewer passengers in 2021 than when the pandemic hit last year.

The airport is forecasting 21.5 million passengers this year, lower than the 22.1 million it handled in 2020.

Bosses have struck a deal with lenders to avoid defaulting on a £15bn debt pile later this year as a result of the forecasts, which are lower than previously estimated.

Heathrow said the passenger downgrade was “a consequence of ongoing political caution around border controls and the gradual reopening of international travel”.

John Holland-Kaye, chief executive, said: “The UK is emerging from the worst effects of the health pandemic, but is falling behind its EU rivals in international trade by being slow to remove restrictions.

“Replacing PCR tests with lateral flow tests and opening up to EU and US vaccinated travellers at the end of July will start to get Britain’s economic recovery off the ground.”

Fewer than four million people travelled through the airport in the first six months of the year - a number that would have taken just 18 days prior to the pandemic in 2019.

Pre-tax losses in the first half of 2021 were £868m on £348m of revenue.

Heathrow said its lenders would waive testing on banking covenants - financial ratios with which companies must comply or be in default of their loans - later this year. The move follows a report by The Sunday Telegraph earlier this month that delays to transatlantic travel left Heathrow at risk of default.

Meanwhile, Ryanair said bookings were recovering strongly - albeit at low fares.

The budget airline said it expects to carry between 90 million and 100 million passengers in the 12 months to March 2022. Ryanair flew 8.1 million passengers in the three months to June 2021.

Boss Michael O’Leary said: “If, as is presently predicted, most of Europe’s adult population is fully vaccinated by Sept., then we believe that we can look forward to a strong recovery in air travel for the second half of the fiscal year.”

Shares rose 4pc in response to the news. But some analysts were wary of the warning about Ryanair’s low prices.

Peter Knapp from brand consultancy Landor & Fitch said: “Low-cost carriers are perfectly positioned for the imminent rush to the skies, ready to capitalise on an expected boom in demand for leisure travel. But offering cheap seats is no longer a distinctive factor in an increasingly crowded market. While the likes of EasyJet have a reputation of innovation, Ryanair risks stalling as it places all its bets on just one thing: price.

“The new age of travel offers the airline an opportunity, but there’s potential turbulence up ahead. While in the short term, the future of the industry will be about low-cost, short-haul trips, representing a perfect time for Ryanair to evolve its brand beyond just being cheap, consumer needs are changing. There is increased pressure for travel brands to make people feel safe, in a considerate and importantly, hygienic way, which is not something Ryanair is typically known for.”

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