Heathrow (SP) Limited Results for the 3 months ended 31 March 2019 - PowerPoint PPT Presentation

Classification: Public Heathrow (SP) Limited Results for the 3 months ended 31 March 2019 01 May 2019

Classification: Public Contents Page 1. Q1 2019 Highlights 3 2. Business Highlights 5 3. Financial Review 12 4. Strategic Update 20 5. Appendices 23

Classification: Public Q1 2019 Highlights

Classification: Public A strong start to 2019 Operational highlights • Record 17.9 million passengers, up 1.4% 1 World’s best airport in Western Europe for 5 th year running • • New domestic and international routes Financial performance • Adjusted EBITDA up 1% to £406 million 2 • Strong cost control to maximize efficiency of existing operations ahead of growth • Global investors’ appetite to invest in Heathrow with just over £1 billion raised Strategic priorities • Better service at a lower cost 3 • Ramping up for growth with commercial airline deal • Delivering a sustainable, affordable and financeable expanded Heathrow Page 4 See page 26 for notes, sources and defined terms Visit us: www.heathrow.com/company/investor-centre

Classification: Public Business Highlights

Classification: Public 17.9 million passengers, 29 consecutive months of record growth Passenger traffic by market – 2019 vs. 2018 Passenger traffic at European hubs Year on year growth in traffic for 12 months to 31 March 2019 UK 1.0m +7.9% (5.4%) Europe North America 7.3m 3.8m +1.5% M. East +6.2% +5.4% 1.8m (5.4%) Africa +4.2% 0.9m Asia Pacific +8.2% 2.8m +2.5% +2.3% +0.7% Latin America +1.2% 0.3m +5.0% Istanbul Heathrow Schiphol Charles de Frankfurt Madrid Gaulle Runways 6 2 6 4 4 4 17.9 million passengers Annual 67.6 80.3 71.3 73.1 69.9 58.7 +1.4% passengers (m) Q1 2018 Q1 2019 Q1 2018 Q1 2019 Passengers ATM 111,593 112,016 Long-haul traffic growth (%) 3.5% 2.1% Short-haul traffic growth (%) 2.6% Seats per ATM 213.9 214.3 0.6% Load factors (%) 74.1 74.7 Air China: Chengdu New routes Cargo tonnage (‘000) 417 408 British Airways: Osaka, Charleston, Pittsburgh Flybe: Newquay Virgin Atlantic: Las Vegas Page 6 Visit us: www.heathrow.com/company/investor-centre

Classification: Public Maintaining strong service standards and robust operations Quarterly passenger satisfaction Passenger satisfaction European ranking Q1 2009 – Q1 2019 Q1 2019 4.50 4.20 4.18 4.30 ASQ score (out of 5) ASQ score (out of 5) 4.00 4.10 3.80 3.90 3.60 3.70 3.43 3.40 3.50 3.20 3.30 Q1-09 Q3-09 Q1-10 Q3-10 Q1-11 Q3-11 Q1-12 Q3-12 Q1-13 Q3-13 Q1-14 Q3-14 Q1-15 Q3-15 Q1-16 Q3-16 Q1-17 Q3-17 Q1-18 Q3-18 Q1-19 LHR 2007 LHR Q1 2019 European competitors European comparators Heathrow European top quartile European average Departures Baggage performance within 15 minutes of schedule connection rate per 1,000 passengers 100% 90% 99.0% 98.8% 98.7% 83% 80% 99% 78% 80% 98% 97% 70% 96.0% 63% 96% 60% 95% 94% 50% 2007 2018 Q1 2018 Q1 2019 2007 2018 Q1 2018 Q1 2019 Terminal 5 - World’s Best Airport Terminal Best Airport in Western Europe World’s Best Airport Shopping Page 7 See page 26 for notes, sources and defined terms Visit us: www.heathrow.com/company/investor-centre

Classification: Public Progressing on all Heathrow 2.0 flagship goals Heathrow's Neighbors – Local Future Generations & Heathrow’s Colleagues UK Businesses including SMEs Population Environment A Great Place to Work A Great Place to Live A Thriving Sustainable A World Worth Travelling Economy • • • 10,000 apprenticeships by at least halve the number of An aspiration to make growth 2030 flights on non-disrupted days from our new runway carbon • Largest 100 towns and cities in that operate late after 1130pm neutral the UK connected to Heathrow • Reflect local diversity at every by 2022 by 2033 • Establishing the Heathrow level by 2025 • Airside ultra-low emissions Centre of Excellence and trial • All our direct supply chain zone by 2025 25 sustainable innovations by colleagues working at 2025 Heathrow will be transitioned • 50% airport passenger to be paid the London Living • journeys made by public We will be a carbon neutral Wage by the end of 2020 transport by 2030 and airport by 2020. halve today's colleague car journeys About the Centre of Excellence • Heathrow have set up a Centre of Excellence to seek radical new ideas and innovation in sustainability through applied research, demonstration projects and convening and incentivising the most innovative thinking • In March 2019, Heathrow launched a £30,000 sustainability innovation prize aimed at finding ideas on how to reduce carbon impacts through Sustainable surface transport, Preparing for sustainable flights and Delivering negative emissions Page 8 Visit us: www.heathrow.com/company/investor-centre

Classification: Public Heathrow expansion on track Completed To come CAA Airspace and Heathrow • CAA Heathrow consultation Future Operations consultation consultations and final report consultation 1 launched Government and policy to Secretary of updates CAA State on airline engagement 2019 2017 2018 2020 2021 • Government Heathrow Government Heathrow NPS Heathrow submits Heathrow consultation on draft statutory decision to ‘designated’ Initial Development Innovation National Policy consultation grant DCO Business by Consent Order Statement (‘NPS’) Partners Plan (‘IBP’) Government (DCO) application short list • NPS consultation 2 • Parliamentary scrutiny Page 9 Visit us: www.heathrow.com/company/investor-centre

Classification: Public Expansion – Airspace & Future Operations Consultation • Consultation concluded in March 2019 • Seeking feedback on – Local factors impacting the design of future flight paths; – Airspace change using Independent Parallel Approaches (IPA) to make better use of our existing two runways; and – How we will operate our three runways in the future • This will lead to further benefits including: – Enabling the airport to prevent and recover from arrival delays more quickly; – Improving punctuality; and – May also facilitate additional capacity in advance of the third runway being brought into operation Page 10

Classification: Public iH7 - Commercial Airline Deal • iH7 is the period from the end of Q6 in 2018 to the start of H7 in January 2022 • Our economic license was extended by one year to 31 December 2019, rolling over the current price control conditions of RPI-1.5% for the additional year. • Current HAL proposal for 2020 and 2021 is built around rebates overlaid on an extension of the existing RPI-1.5% price path and regulatory framework. CAA supports this approach in principal and is currently consulting with all stakeholders. • The commercial deal has been agreed with airlines as follows • 'Fixed' rebate of £260 million to all airlines • Up to the first £50 million is accrued in 2019 with the remainder accrued in 2020 and 2021 • Payment of the fixed rebate to be spread over 4 years from accrual • Additional volume based rebates if volumes increase above certain levels and protections if traffic falls below certain thresholds • Benefits • Allows all parties to focus on H7 • Lenders continue to benefit from all existing regulatory protections • Provides Heathrow with downside protection if traffic reduces as there will be an immediate rebate adjustment • Lower prices for airlines and faster monetisation of the rebate for consumers Page 11

Classification: Public Financial Review

Classification: Public Financial highlights Q1 Q1 Versus (£ million) 2018 2019 Q1 2018 % 680 Revenue 679 (0.1) 278 273 Operating costs (1.8) Adjusted EBITDA 402 406 1.0 Capital expenditure 179 191 6.7 Dec Mar Change from 2018 2019 31 Dec 18 % Consolidated nominal net debt 12,407 12,771 Heathrow (SP) 2.9 13,980 14,125 Heathrow Finance 1.0 RAB 16,200 16,149 (0.3) Page 13 See page 26 for notes, sources and defined terms Visit us: www.heathrow.com/company/investor-centre

Classification: Public Record number of passengers, choosing to spend more in retail Analysis of revenue (£m) • Aeronautical: delivering better value to passengers − strong growth in passenger numbers 680 679 (0.1%) − reduction in airline charges due to the commercial airline deal 397 401 (1.0%) • Continued momentum of retail growth rates − higher proportion of passengers shopping at the airport 156 160 2.6% − catering benefited from improved outlet offerings − strong growth in advertising through better 123 122 (0.8%) utilisation of media sites Q1 2018 Q1 2019 Aeronautical Retail Other • Other revenue consistent with last year Q1 2018 Q1 2019 Change % Per passenger (£) Aeronautical revenue 22.67 22.13 (2.4) 8.82 1.1 Retail revenue 8.92 Page 14 Visit us: www.heathrow.com/company/investor-centre