Heathrow owner hikes earnings outlook after slashing Brexit contingency costs
The owner of Heathrow Airport has upped its earnings outlook for 2019 after slashing Brexit contingency costs.
Heathrow SP Limited said it now forecasts underlying earnings of £1.88 billion this year, up 2.2% on 2018, after its slashed costs set aside for Brexit to £35 million from £114 million.
It had previously forecast a 3% fall in annual earnings.
The group also gave assurances that even a no-deal Brexit would not have a “material” impact on the airport.
In the mid-year investor report, the group said that, excluding the Brexit contingency costs, full-year earnings are now expected to rise by 4.1% to £1.91 billion against previous forecasts of £1.89 billion.
It said this came despite an expectation for slightly more muted growth than in 2018 due to uncertainties over Brexit and the wider global economy.
The group said: “Confirmation of the aviation contingency plans and Heathrow’s unique position in the European aviation market has seen us reduce the contingency allowance to £35 million from £114 million in the previous investor report.
“While we hope that this contingency will remain too prudent, we believe it is right to retain it given the ongoing uncertainty over Brexit.”
It added: “We remain confident that Brexit will not have a material impact on Heathrow Airport even if the UK were to exit the EU without a deal.”
The group also said it has hiked forecasts for airport traffic to 80.9 million for the year, up from 80.6 million previously.
This comes as a result of an increased capacity for passengers as airlines switch to larger aircraft.
Heathrow is pencilling in slightly lower revenue growth of 3.3% for the year, to £3.1 billion.
It also sees costs rising, by 2% to £1.2 billion this year as it improves service levels, invests in future growth and faces higher regulatory costs.
Heathrow last week outlined its “masterplan” revealing it will construct a controversial third runway by 2026 and complete its expansion by 2050.
This will involve diverting rivers, moving roads and re-routing the M25 through a tunnel under the new runway.
The plans have been fiercely opposed by local and environmental groups, who are concerned over the levels of noise and pollution.