'Volatile' demand sees Heathrow rule out return to profit this year

Heathrow Airport has warned that passenger numbers could fall “significantly” after the summer, as it ruled out a return to profit despite a strong start to the year.

The airport said 9.7m passengers had travelled through Heathrow in the first quarter. January and February were weaker than expected, because of the impact of the Omicron variant, but demand rebounded quickly once UK travel restrictions were removed in mid March.

Heathrow said demand had remained strong since the quarter end, and now expects 52.8m passengers to use the airport in 2022, around 65% of pre-pandemic traffic, up from an earlier forecast for 45.5m.

However, it also warned of an uncertain end to the year: “Demand remains very volatile and we expect these passenger numbers to drop off significantly after the summer,” it noted.

“We are already seeing airlines cancelling services into the autumn and the realities of higher fuel costs, lower GDP growth, the war in Ukraine and the ongoing pandemic will drag on demand.”

Heathrow also said it would remained loss-making in 2022. Revenues for the three months to 31 March were £516m, compared to £165m a year previously, when the UK was in lockdown. Pre-tax losses narrowed to £191m from £307m, while adjusted earnings before tax, interest, depreciation and amortisation turned positive, at £273m.

But total pandemic losses have now topped £4bn, and Heathrow does not expect to return to profit or to resume dividends in the current year.

Airports across the UK faced criticism recently, as holidaymakers faced long queues and delays. Heathrow said over 95% of passengers had got through security within five minutes during the Easter getaway. More than 1,000 new security officers have been recruited, however, and the mothballed Terminal 4 is set to reopen in July.