Gatwick takes further steps to protect its future resilience
London Gatwick Airport publishes its half yearly results, whilst protecting its future resilience against the economic impact of COVID-19.
Despite an encouraging start to the year, passenger numbers at Gatwick fell by 66 per cent in the first six months ending 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 per cent fall in revenue and a £321 million loss. EBITDA fell by 98.3 per cent.
To protect the financial strength of the business, planned capital expenditure was reduced by £157 million for 2020 and £196 million for 2021. Operational costs have also been reduced by over £100 million through a variety of actions, including consolidating air traffic to one terminal, severance programmes and termination of fixed-term contracts, and improving efficiencies of services.
One of Gatwick’s priority is to continue 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.
To improve its liquidity, in April 2020, Gatwick secured a £300 million loan with a consortium of banks. As at 30 June 2020, Gatwick held a cash balance of c.£326 million. 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 per cent of total secured debt.
With over 70 per cent of Gatwick’s employees remaining on furlough, the business recently announced a company-wide restructuring proposal which could result in the region of a further 600 job losses. 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.
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 2020 was dramatic and, although there are small signs of recovery, it is a trend we expect to continue to see. However, we are focused 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.”