LHR’s Debt Equivalent to the Cost of Controversial Third Runway

CF7AXK A BA (British Airways) airplane passes an A30 road sign beside Heathrow Airport, London, UK (close to Hatton Cross station).

An investigation has revealed that London’s Heathrow Airport (LHR) has, over the course of 12 years, accrued debts equivalent to the cost of its contentious third runway. However, despite this, the facility’s chief executive has offered praise to investors for creating a robust and healthy business.

London’s Heathrow Airport (LHR) may have been successful in its bid for a contentious third runway, but an investigation by the Daily Mail has revealed that the facility has accrued considerable debt over the past 12 years, This is Money reports.

According to figures from Heathrow Airport Holdings, the body which operates LHR, the airport’s debt now stands at £13.4 ($12.2) billion, a figure which is reputed to be equivalent to the cost of its proposed third runway.

The interest on this amount is costing the airport £500 ($643.5) million a year and over the course of a 12-year period, has seen the facility spend more than £6 ($7.72) billion in interest repayments.

While it is hoped that the contentious third runway will prove to be a boon to LHR, there are concerns over how both the project as well as the future of the airport will be financed.

As the outlet reports, there are fears that LHR will need to pass the cost of expansion onward to its passengers over the coming years. While it’s uncertain exactly how much of the expansion cost will need to be shouldered by individual travelers, the outlet reveals that LHR’s present consortium of owners “have invested more than £10 ($12.8) billion in the airport over the past decade.”

Offering his comments on the BBC‘s Today program last month, John Holland-Kaye, LHR’s chief executive, was quoted as saying, “We have fantastic investors – exactly the kind of people you would want in a big infrastructure project like this.”

A spokesperson for LHR was quoted by the outlet as saying, “Heathrow is a strong, healthy business with an investment-grade credit rating which we will keep throughout expansion. Expanding Heathrow will make Britain the best connected country in the world at no cost to the taxpayer. To achieve this, an appropriate return must be provided to private investors and we will work with our regulator to determine the right level.”

[Photo: Shutterstock]