Heathrow back in profit after strong traffic recovery in 2023

London’s Heathrow Airport enjoyed the third busiest year in its history, and made a profit for the first time since 2019 last year as it continued its recovery from the global pandemic.

A total of 79.2 million passengers passed through its facilities in 2023, nearly 30% more than the previous year.

It claims that it outperformed all other European hubs by being rated as the ‘best airport in Europe’, claimed the title of the world’s ‘most connected’ hub and broke into the top five largest airports in the world.

These achievements, it notes, are “a great credit to the teamwork and commitment of colleagues across Team Heathrow and set a strong foundation for 2024 as we attempt to welcome a record 81.4 million – more passengers than ever before”.

Heathrow CEO, Thomas Woldbye, enthused: “It 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 20% 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 CAA and remain profitable over the next three years.”

Small adjusted profit recorded for the first time since 2019

A strong Q4 performance helped Heathrow reach its first adjusted profit in four years with £38 million adjusted profit before tax.

The UK hub’s balance sheet remains strong, with gearing below pre-pandemic levels and £3.8 billion of liquidity. It notes that airport charges were reduced by 20% in real terms at the start of 2024 in line with the CAA’s H7 settlement.

As a result of the move, the airport states: “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.

“We are finalising a refreshed business strategy, which will be shared in the months ahead. No dividends were paid in 2023, and none are currently forecast for 2024, although it is plausible subject to financial performance. We will continue to review optionality through the year.”

New investments to improve service and boost resilience

Behind-the-scenes investments are said to be underway across the airport to boost passenger experience and operational resilience.

The airport reveals that it is upgrading 146 security lanes as part of a £1 billion investment in next generation security equipment, and has appointed a lead contractor to replace the T2 baggage system.

Sustainability remains at the heart of Heathrow

The airport says: “Significant strides were made towards our Heathrow 2.0 commitments, including launching the Giving Back Programme which will deliver activities to nearly 100,000 local people.

“Record amounts of Sustainable Aviation Fuel (SAF) were used at Heathrow during 2023, including powering the inaugural 100% SAF transatlantic flight, and we committed to incentivising the use of up to 155,000 tonnes of SAF in 2024.