Heathrow chairman says third runway won't cost taxpayer

Paul Deighton, chairman of Heathrow Airport Holdings, the airport’s Ferrovial-owned operator, has written to the Civil Aviation Authority to “set the record straight” about accusations that Heathrow will struggle to fund its new third runway.

“We have an investment grade credit rating, and existing shareholders will invest equity to maintain this through the higher risk expansion period,” said Deighton. “This is a very strong position from which to finance the expansion of Heathrow. There will be no cost to the taxpayer.”

Critics of the plan for the £14 billion runway argue that taxpayers may end up footing the bill as the funding plan depends on borrowed money, when the airport is already borrowing heavily. It’s currently £13.4 billion in debt.

There could also be a significant rise in the airline landing charge, which is already the highest in Europe at £22 per passenger.

Equity in the company is valued at £703 million, but the company has been paying out more in dividends than it has made in profits after taxes. Funding the third runway could cost £2-3 billion over six years’ construction, not including potential legal claims, public transport contributions and other cost overruns.

“We welcome Heathrow airport’s renewed commitments to work with stakeholders to deliver a third runway affordably,” the CAA responded.

However, Willie Walsh, CEO of the International Airlines Group (IAG) and owner of British Airways, said it’s “only a matter of time before we start hearing excuses for massive cost escalation.”

(Source: Financial Times)