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Gatwick’s half yearly results show a £321m loss

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Despite an encouraging start to the year passenger numbers at Gatwick fell by 66% in the first six month ended 30 June, 2020 due to the impact of COVID-19. The airport remained open throughout the pandemic, however all revenue streams were impacted and the collapse in passenger demand led to a 61.3% fall in revenue and a £321m loss.  EBITDA fell 98.3%.

The airport says that decisive and swift action was taken to protect the financial strength of the business, following the spread of COVID-19 in March. 

Planned capital expenditure has been reduced by £157m for 2020 and £196m for 2021.  Operational costs have been also reduced by over £100m through a variety of actions including consolidating air traffic to one terminal allowing for infrastructure shutdowns, severance programmes and termination of fixed term contracts, and improving efficiencies of its services in line with reduced airline and passenger demand.

They say a priority continues to be protecting the health and wellbeing of employees and passengers and, following latest Government guidance, a wide range of health measures have been introduced and are continuously assessed to maintain and help restore public confidence in flying.  Gatwick currently has 18 airlines flying to 115 airports in 42 countries.

To improve its liquidity, in April 2020 Gatwick secured a £300m loan with a consortium of banks. As at 30 June 2020, Gatwick held a cash balance of c.£326m. In light of the forecast impact on its financial covenants, Gatwick has commenced a three-week consent solicitation process following successful discussions with its lending banks and with bondholders forming a special committee of the Investment Association, in aggregate representing c.46.9% of total secured debt.

In line with further reducing operating costs, with over 70% of Gatwick’s employees remaining on furlough, the business has announced a company-wide restructuring proposal which could result in the region of a further 600 job losses.

The airport says the restructuring will better align the business to passenger and air traffic forecasts whilst allowing it to remain agile should demand recover faster than expected. The recovery period to pre-pandemic traffic levels is forecast to be four to five years.

Gatwick Airport, Chief Executive Officer, Stewart Wingate said:

“Like any other international airport, the negative impact of COVID-19 on our passenger numbers and air traffic at the start of the year was dramatic and, although there are small signs of recovery, it is a trend we expect to continue to see.  However, we are focussed on ensuring the business remains robust and is best placed to take advantage of future growth.

“As with any responsible company we have protected our financial resilience by significantly reducing our operational costs and capital expenditure.   We are going through a proposed company-wide restructuring programme and I want to thank all my staff for their hard work to date whilst we go through this difficult time.  We will emerge a fitter and stronger organisation, best placed to remain flexible and agile in responding to growth opportunities.    This includes continuing to do all we can to protect the safety and wellbeing of our staff and passengers.

“In this post COVID-19 travelling world, we are working hard with our airlines to ensure we continue to offer our customers a wide choice of destinations and carriers.   We also expect, next year, to progress our plans to bring the existing Northern (stand-by) Runway into routine use which, as we rebuild our passenger numbers over the next four to five years, will enable us to offer even more travel choice. We will ensure we continue to deliver our operation mindful of our environmental, social and governance responsibilities.  We want to rebuild better.

Despite the immediate challenges I remain resolutely optimistic that Gatwick will recover and retain its position as one of the UK’s leading travel hubs and economic driver for the region.”

Business

Crawley MP Henry Smith launches aviation recovery plan

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Crawley MP and Future of Aviation Group Chair Henry Smith has launched the Group’s Aviation Recovery Plan to support the sector through the devastating effects of the COVID-19 pandemic.

Henry said;

“I’ve established and Chair the Future of Aviation Group, a cross-party coalition of MPs supporting the sector and urging the Government to take further action to assist this world-class industry.

“While Government deserves credit for stepping in and furloughing around 44,000 airline employees, it’s clear that the aviation sector needs further support for its employees.

“With Gatwick Airport in our borough boundary I’ve been clear that aviation’s recovery is not only about flights and trade, but what this vital sector means to hard-working families and whose employees have, in many cases, given significant periods of their lives to their careers.

“For their security we’re calling for a sector-specific extension of the Coronavirus Job Retention Scheme.

“I’m asking the Transport Secretary and his Cabinet colleagues to support the Future of Aviation Group’s Aviation Recovery Plan, which has protecting jobs and supporting businesses at its heart.”

The points included in the plan are;

    1: Introduce COVID-19 testing

    2: Introduce regional travel corridors

    3: An employment support package to March 2021

    4: Support the green recovery

    5: Take action on business rates

    6: Temporary suspension of Air Passenger Duty

    7: Support for UK travel inbound tourism

    8: Absorption of CAA/NATS charges for 2020-21

    9: Airspace modernisation

    10: Bring forward public procurement and accelerate public investment

Henry continued;

“It’s estimated that it could take a number of years to get international travel figures up to 2019 levels. We’ve heard the warnings, and it is time for action.

“The scale of the challenges encountered by the aviation, travel and tourism sectors would have been unimaginable only six months ago.

“Through the adoption of these and other policy recommendations being made by the Future of Aviation Group, the Government can reduce the scale of disruption of COVID-19 on this important industry for Crawley and UK-wide.”

The Future of Aviation Group’s Aviation Recovery Plan can be read here

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