December 2024 Investor Report

Heathrow

13 December 2024

 

13 December 2024

Heathrow Funding Limited

Heathrow Finance plc

Publication of December 2024 Investor Report

On behalf of Heathrow Airport Limited, Heathrow Express Operating Company Limited, Heathrow (AH) Limited and Heathrow (SP) Limited ("Heathrow SP"), LHR Airports Limited (as Security Group Agent) is today distributing its semi-annual Investor Report to various parties pursuant to the terms of the Common Terms Agreement entered into on 18 August 2008 (as amended) (the "CTA").

The Investor Report is also being distributed by Heathrow Finance plc ("Heathrow Finance") to various parties pursuant to Heathrow Finance's £250 million 5.75% Senior Secured Notes dated 13 October 2014 and due 2025, £275 million 3.875% Senior Secured Notes dated 5 June 2017 and due 2027,  the £300 million 4.125% Senior Secured Notes dated 15 November 2019 and due 2029 and the £400 million 6.625% Senior Secured Notes dated 12 March 2024 and due 2031  (the "Heathrow Finance Bonds"), a note purchase agreement dated 14 September 2018 (the "Note Purchase Agreement") and pursuant to Heathrow Finance's facilities agreements dated 22 November 2018, 23 November 2018, 1 February 2019, 8 May 2019, 16 August 2019 and 2 December 2019 (the "Heathrow Finance Facilities Agreements").

The Investor Report contains information relevant to creditors of both Heathrow SP (and its subsidiaries) and Heathrow Finance.

The attention of potential readers of the Investor Report is drawn to page 2 of the document, which contains an Important Notice, including in relation to certain forward-looking statements included in the Investor Report, and contains a description of the basis on which the operational and financial information included in the document has been prepared.

The Investor Report includes an updated forecast for 2024 and 2025 for the financial performance of Heathrow SP prepared on a consolidated basis, forecast nominal debt and financial ratios for Heathrow SP and Heathrow Finance. Heathrow SP, through its indirect subsidiary, Heathrow Airport Limited, owns Heathrow Airport.

This report sets out the actual financial performance and ratios for Heathrow (SP) in 2023 and forecast figures for 2024 and 2025, together with key business updates. Additional information specific to Heathrow Finance is set out in Appendix 6.

A record 76.8 million passengers chose to travel through Heathrow as of November 2024. Our traffic grew across various regions, driven by a rise in passenger ATMs and slight increases in seat factors. As a result, we remain Europe's busiest airport. For the second consecutive year, Heathrow was recognised as the most connected airport in the world. Heathrow has also been recognised as the best airport in the UK in the Condé Nast 2024 Readers' Choice Awards while the airport's premier retail offerings were awarded "Best in Class" at the Frontier Awards, and Heathrow's VIP services received the title of "Best Private Airport Experience" from the Forbes Travel Guide Awards.

We improved our service levels despite a higher number of passengers, airspace challenges, and now at-capacity terminals. With 75% of passengers rating their overall satisfaction as 'Excellent' or 'Very Good' and nearly 92% of passengers passing through security in less than five minutes, we continue to deliver value for our customers and with our departure punctuality exceeding arrivals, Heathrow is boosting operational performance across the wider aviation industry.

We now expect 83.8 million passengers in 2024 (+5.8% vs. FY23), aligned with our Q3 guidance. Adjusted EBITDA is forecasted at £1,963 million (-11.9% vs. FY23). Revenue is anticipated to decline to £3,499 million (-5.1% vs.  FY23) as we continue to see the impact of lower aero charges. Operating costs are projected at £1,535 million (+5.2% vs. FY23). The estimated Regulatory Asset Base (RAB) at the end of 2024 is £20.5 billion.

Passenger numbers for 2025 are expected to rise to 84.2 million (+0.5% vs. FY24).  Adjusted EBITDA is projected to reach £1,952 million (-0.6% vs. FY24). Revenue is anticipated to be £3,568 million (+2.0% vs FY24),  with aeronautical revenue decreasing to  £2,193  million (-1.3% vs FY24) due to lower aero charges, while non-aeronautical revenue is expected to rise to £1,375 million (+7.7% vs FY24), driven by the higher passenger volume. Operating costs are projected to increase to £1,617 million (+5.3% vs FY24) as management initiatives to contain costs are offset by higher people costs due partly to higher national insurance, cost pressures of maintaining resilience while operating close to full capacity and investment in technology and sustainability. The RAB is forecast to be £21.0 billion at the end of 2025 as we progress with our investment plans.

To create value for our customers and unlock growth, we are increasing our investment by over £200 million during H7 to £4.5 billion. We will invest over £1 billion annually in both 2024 and 2025, with our H7 investments progressing as planned.

On the regulatory front, the H8 price control process is underway. Constructive Engagement (CE) between Heathrow and Airlines has begun, and the Civil Aviation Authority (CAA) published its H8 draft Method Statement Consultation in November, together with an FTI report covering the cost of capital. We will submit detailed responses over December and January.

On December 12, 2024, Ferrovial and the Tagging Shareholders announced that they had completed the sale of 37.62% of the share capital of FGP Topco Limited; details of the new shareholders composition, as well as the new board members, can be found on page 13.

Finally, we continue to progress with our Sustainability plan. We are refreshing our People and Planet beacon (sustainability 2.0), and we are targeting 2.5% of SAF delivery in 2024, with plans to increase the incentive to 3% in 2025. We also successfully issued two sustainability-linked bonds (SLBs), becoming the first in the Sterling and Swiss franc markets to include all scopes of emissions. We also accessed the private placement market with our first use of proceeds from green issuance. These transactions reinforce our commitment to expanding our sustainable finance platform.

The Investor Report document is available in pdf format at the following link:

http://www.rns-pdf.londonstockexchange.com/rns/9482P_1-2024-12-12.pdf 

The Investor Report is available from today via the Heathrow Investor Centre at https://www.heathrow.com/company/investor-centre/reports/investor-reports

By way of reminder, pursuant to the CTA, the Heathrow Finance Bonds, Note Purchase Agreement and the Heathrow Finance Facilities Agreements (as appropriate), the following is available on the Heathrow Investor Centre at https://www.heathrow.com/company/investor-centre/reports/annual-accounts:

-    consolidated financial information of Heathrow (SP) Limited for the six months ended 30 June 2024

-    consolidated financial information of Heathrow Funding Limited for the six months ended 30 June 2024

-    consolidated financial statements of Heathrow Finance plc for the six months ended 30 June 2024

For investor enquiries please contact Leandro Garcia, Debt Investor Relations Manager, [phone].

(1)           Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation, and exceptional items

 

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