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Airport expansion plans grounded by Covid and climate change

Airport expansion plans grounded by Covid and climate change

‘Severe investment crunch’ and growing environmental concerns put projects at risk

The image of the chief executives of British Airways, Virgin Atlantic and Heathrow standing on an empty runway last week to call for a reopening of international travel sent a clear message: airports are desperate to get back to work.

The pandemic continues to be dismal for airports — in the UK they stand to lose £2.6bn between April and September as prospects rise of a second summer without mass international travel, the Airport Operators Association has warned.

Airports are faced with the twin challenge of recovering from the pandemic and coping with climate change — putting the need for expansion into question at a time when the future of travel is uncertain.

So far, most of the UK’s privatised airports have managed not to lean too heavily on government; only Gatwick, which is 50.01 per cent owned by France’s Vinci, has made use of the Bank of England’s Covid corporate financing facility, which provides temporary grants and loans.

Instead, airport owners have reduced operating and capital spending to preserve cash, which together with equity injections and the suspension of dividend payments have so far supported companies’ cash flow.

“Lenders are treating borrowers very differently than post the global financial crisis,” said John Bruen of Macquarie Asset Management, which invests in the sector through AGS Airports, a 50:50 joint venture with Ferrovial that owns Aberdeen, Glasgow, and Southampton airports, as well as the much smaller Farnborough. “Back at that time it was quite a confrontational relationship; that’s far from the case now.”

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